It’s shaping up to be the year the business community rolled President Obama.
Since winning the White House in 2008, Obama has largely cast big business as an adversary. He famously derided “fat-cat bankers” in 2009 and said, “They don’t get it. You guys are drawing down $10 million, $20 million bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.”
In 2011 he singled out “millionaires and billionaires … oil companies and hedge fund managers and corporate jet owners” as the targets for new taxes. At the end of 2012 he more or less got his wish, as tax hikes went into effect on people earning more than $400,000 per year, an income group that includes many owners of small and medium-sized businesses.
But Obama has since cozied up to corporate America, no doubt because he thinks that will help Democrats in the 2014 midterm elections in November. Most recently, Obama delayed the employer mandate contained in his health-reform law, giving businesses with 50 to 99 employees an extra year — until 2016 — to provide insurance for their workers as required. Bigger firms must still comply by 2015, but they now have to meet a lower threshold. It’s the second time the White House has delayed the employer mandate, which was originally supposed to go into effect at the start of this year. The White House has also delayed other Obamacare deadlines, effectively easing the burden on employers.
At the same time, Obama has made a bigger show of hosting business leaders at the White House, while informally asking dozens of CEOs to do more to hire workers who have been unemployed for six months or longer. He’s quietly promoting two trade pacts that would benefit corporate interests, while enraging traditional liberals. And there’s been nary a cross word about fat cats or overpaid CEOs or corporate jet setters in any of Obama’s recent remarks, amounting to remarkable détente with an erstwhile adversary. Here’s why Obama is making nice with corporate America:
He needs the business community more than he ever realized. During Obama’s first term, the White House assumed the economy would be in the midst of a full recovery by now — which would have allowed Obama to use big business as a traditional liberal foil. But the “jobless recovery” has left the whole economy much more deeply in thrall to businesses that control a scarce resource: jobs. It certainly doesn’t help that the Congressional Budget Office recently reported Obamacare could cut the size of the workforce by up to 2.5 million over the next 10 years. It’s no surprise, then, that businesses have gained considerably more leverage in their give-and-take with Washington.
Big business is more popular than politicians. The public image of banks and big businesses has recovered modestly since the low point of 2008 and 2009, whereas trust in Congress and the presidency has generally declined since then, according to Gallup. And trust in small businesses is considerably higher than for either group. So Obama has basically followed public opinion by dissing the business community when most of the nation blamed them for the recession, while treating them more respectfully now that they seem to hold the key to a revamped economy.
The enemy of my enemy is … corporate America. A turning point in political leverage came last fall, when Tea Partiers led the 16-day government shutdown and business groups such as the U.S. Chamber of Commerce said they had finally gotten fed up with destructive extremist politics and would begin to fund more mainstream candidates challenging Tea Partiers. That brought the business lobby much closer to Obama’s position on issues such as fully funding the government and increasing spending on things including infrastructure.
Obamacare has thoroughly weakened the president. There’s little doubt Obama’s signature health-reform law is a liability for the president and Democrats in general, due to the rocky rollout of the law in 2013 and ongoing questions about whether it will even work as intended. In fact, it’s the biggest liability for Dems in the upcoming midterms. With few of Obama’s fellow Democrats overtly backing the law (even though most of them voted for it in 2010), momentum has shifted to corporate interests seeking to roll back some of its more onerous provisions. And they're getting what they want.
Maybe Obama has a newfound respect for business. In the runup to the Obamacare launch, the president insisted shopping for insurance on Healthcare.gov would be like placing an order on Amazon (AMZN) or booking a trip on Travelocity or Expedia (EXPE). Needless to say, the cursed launch of Obamacare made the private sector look positively brilliant, since Healthcare.gov would have been Yelped into oblivion if it were a for-profit venture. So maybe Obama has come to realize running a business can be pretty darn difficult — and is newly impressed by some of the people who do it.
Rick Newman’s latest book is Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.