President Obama came into office railing against “fat cat bankers” and “corporate jet owners.” He’s going out much the same way.
The president’s rhetoric may have softened during two terms in office, but his regard for big business hasn't improvied. Obama’s latest intervention in the economy is a new executive order directing federal agencies to “detect abuses such as price fixing [and] anticompetitive behavior." Once cheaters are found, agencies such as the Federal Trade Commission and the Federal Communications Commission will impose new rules meant to bust up oligopolies, lower prices and save consumers a few bucks.
The first target: Set-top boxes cable companies typically rent to customers, which the White House says cost the typical consumer $230 a year. A better deal, Obama says, would be an open market in which any provider could sell boxes to consumers, which would lower prices and produce boxes with better features. “The cable or satellite box is just one example of an area where -- because it's been tied to the provider, and you rent it – there hasn't been much innovation,” Obama told Yahoo Finance’s Nicole Sinclair in an exclusive interview. “And so the FCC is looking … at whether it makes sense to open that up to competition.”
Most companies say they welcome competition, but the fact is, they hate it. That’s not a jab at the morality of businesspeople; it’s just easier to turn a profit with fewer competitors. And the cable companies Obama seems to be targeting are already under pressure from cord-cutters getting entertainment over the Internet and gizmos such as Roku, Chromecast and Apple TV, which bring programs right into the TV while bypassing cable.
The cable industry, clearly surprised by Obama’s latest move, fought back, faulting the president for “inflammatory rhetoric” and for politicizing a matter that ought to be handled by independent regulators. No matter. Obama says his administration plans to take more such actions, though he’s not saying which industries will be targeted. But new White House research released along with the executive order suggests the airline, financial and real-estate rental industries have undergone the sort of consolidation recently that might generate anticompetitive behavior, and warrant a fresh look from regulators.
This hunt for anticompetitive behavior comes less than two weeks after Obama’s Treasury Department announced unexpectedly tough new rules on so-called inversions – mergers that help lower the U.S. taxes paid by one or both companies – which effectively killed a huge, $160 billion merger deal between drug giants Pfizer and Allergan. Obama seemed personally offended by inversions when he described them this way, on April 5: “It’s when big corporations … effectively renounce their citizenship. They declare that they’re based somewhere else, thereby getting all the rewards of being an American company without fulfilling the responsibilities to pay their taxes the way everybody else is supposed to pay them.”
With the exception of his support for free trade, Obama is center-left on most economic issues, favoring higher taxes on the wealthy and fewer tax loopholes for businesses. So his fervor for more rules and regulations to rein in business behavior isn’t surprising. What is surprising is the broader shift in public attitudes toward corporations, which have become the bogeymen blamed for stagnating middle-class living standards.
The insurgent presidential campaigns of Republican Donald Trump and Democrat Bernie Sanders are built squarely on the anger many Americans feel toward corporate elites. Trump wants to tear up free trade deals and punish companies that send jobs overseas. Sanders wants to break up big banks already suffering from depressed profits and hike taxes on wealthy business owners. Sanders’s populist success has even pulled his rival Hillary Clinton against free trade as well. And no presidential candidate dares stand up for the corporate class, as Mitt Romney did in 2012.
Obama may feel emboldened by the anger he sees welling up outside the Beltway. In addition to new executive orders, Obama has pushed hard for tougher new environmental rules that limit the use of coal, causing severe hardship for coal producers and their employees. Other industries, such as wind, solar and natural gas production, are the beneficiaries, yet Obama has offered little sympathy toward those displaced in the shift to greener energy.
There’s not all that much Obama can do in his remaining nine months without new laws from Congress, which aren’t coming. The question for corporate America is whether the anti-business sentiment animating the presidential election will intensify or abate once Obama is gone and the next president takes office. The worst scenario for big business and Wall Street would be a Democratic sweep that puts Hillary Clinton in the White House and flips both houses of Congress into the D column, leaving business exposed to the more activist party. That’s unlikely, but so is the popularity Trump and Sanders have gained with disgusted voters. Even Obama may be surprised by the anti-corporate legions lining up behind him.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.