Obama attempts 'fiscal cliff' coup: winning over business leaders
The business community usually trends Republican – and President Obama didn't do much to woo it in his first term. But he's pushing hard to get CEOs on his side in 'fiscal cliff' talks.
President Obama is attempting to outflank Republicans by winning over a key and typically right-leaning constituency in the “fiscal cliff” public relations battle: American businesses.
Wednesday morning, Mr. Obama met with some 100 CEOs with the Business Roundtable. That continues a string of meetings since the November election between the president and business leaders – a group with which he did not have the best relationship during his first term, he admitted during the campaign.
In the afternoon, House Republican leadership made its play for the business community, meeting with a half-dozen small business leaders.
But the fact that the president is working so hard for business support is a threat to Republicans.
“In the PR game, the fact that the president is making such overt gestures to the business community strikes at the traditional support on the Republican side,” said Pete Davis of Davis Capital Investment Ideas. “And he’s making some gains.”
Chiefly, the president can count on broad support from business on two issues: the need for higher tax revenues and the need to pass an increase to the federal debt ceiling quickly and easily.
“I've been struck by the number of CEOs that said, 'We're willing to pay slightly higher taxes if it means that we've got the kind of certainty and stability over the long term that allows us to invest and hire with confidence.' So most folks, I think, are on board with a balanced plan,” the president said.
Some business executive are involved with nonpartisan campaigns like Fix the Debt, a movement by public policy experts and the business community to lobby Washington for a grand debt-reduction deal. They say they were spurred to action by Washington’s near-default on its debt during the summer of 2011.
Republicans refused to increase the nation’s debt limit unless the White House would agree to offsetting government spending cuts. Amid the brinkmanship, US equity markets tanked and one credit-rating agency downgraded America’s debt.
“Most of you were involved in discussions and watched the catastrophe that happened in August of 2011. Everybody here is concerned about uncertainty. There's no uncertainty like the prospect that the United States of America, the largest economy that holds the world's reserve currency, potentially defaults on its debts,” the president said Wednesday. “We can't afford to go there again. And this isn't just my opinion. It's the opinion of most of the folks in this room.”
But it isn’t as if the president has locked up corporate support – not by a long stretch. Those same corporate interests willing to stomach higher individual tax rates, for example, are also nearly unanimous about a key Republican priority: reforming entitlement programs like Medicare to stabilize the country's long-term financial outlook.
“Our nation’s entitlement programs are unsustainable. If we do not make sensible reforms, the programs will go bankrupt – and so will the nation,” wrote the US Chamber of Commerce to lawmakers in mid-November. “No one can dispute that.”
Indeed, even as some Republicans wonder whether simply agreeing to the president’s demand for higher tax rates on the wealthiest 2 percent of Americans may be politically advantageous, they still are mindful of business hesitation about a bigger tax burden for anyone.
“Unfortunately, the president’s insistence on raising taxes on these job creators will be burdensome and harmful to their operations,” said Rep. Kevin McCarthy of California, the House Republican whip, in a statement after the House GOP’s meeting with small business chiefs. “Small businesses are the engine of our economy, and House Republicans continue to have their back.”
So could business play a deciding role in the fiscal cliff debate? Perhaps at the margins, says Mr. Davis of Davis Capital Investment Ideas. But GOP lawmakers have another, far larger fear than running afoul of corporate interests.
“The thing to remember with just about any Republican in Congress is they are all terrified of a challenge from the right in the 2014 primaries,” says Davis. “If an asteroid was going to destroy Earth, half the Republicans would still be afraid about a right-wing challenge in the next primary.”