President Obama is not showing much effort to appeal to the wealthy who are worried that their taxes might be rising. In his press conference Wednesday afternoon, he spoke about taxes in stark terms that could easily be classified as tax warfare. Most of the Bush-era tax cuts were fine and could stay, he said. But as for the 2 percent of the individuals who make more than $250,000, and the 3 percent of small businesses whose owners make more than $250,000—well, they’re rich. And they can afford the higher taxes.
Just a few hours later, Obama convened a meeting in the Roosevelt Room with some key members of a slice of the top 1 percent—a group of CEOs of very large companies like Pepsi, Honeywell, General Electric, IBM, and Xerox. In the private meeting, which lasted more than an hour, he essentially reiterated his public statements. “The president discussed how he is pushing Congress to pass a bill that will extend the tax cuts for 98 percent of Americans,” said a source familiar with the discussion. While Obama is serious about getting a large deal and is willing to work with all parties, he reiterated that the plan must be balanced—and that means more from the wealthy on revenues, the source added. Treasury Secretary Timothy Geithner came for part of the meeting.
That Obama would call this group of CEOs into his office was both ironic and highly symbolic. Attendees included David Cote of Honeywell, Andrew Liveris of Dow, Alan Mulally of Ford, John Watson of Chevron, and Virginia Rometty of IBM. Indeed, the delegation looked a little bit like the Obama coalition: three women, including Rometty, Indra Nooyi of Pepsi, and Ursula Burns of Xerox; two immigrants, Nooyi and Australia-born Andrew Liveris of Dow; and two African-Americans, Burns and Kenneth Chenault of American Express. And Obama also checked several other boxes. There was the nation’s largest retailer (Mike Duke of Walmart) and representatives of the consumer-product (Procter & Gamble), manufacturing (Honeywell), energy, and financial-services industries. No bankers or Wall Street types, though. That’s the symbolism.
The irony? These are global firms that get most of their profits and sales, and do most of their hiring, outside the United States. Many of them also keep their profits overseas and thus benefit from some of the wrinkles in the tax code Obama has pledged to undo. And all of them will be paying higher taxes—on their income, on the dividends they pay and receive, on the capital gains reaped from selling options, on the estates they plan to leave to their children—come Jan. 1.
If Obama wanted a signal from these big shots to other executives that it was safe to hire and to invest some of their cash and profits at home, he didn’t get that.
So what was the point? The executives who came to pay their respects to Obama don’t have a collective jobs plan, or a collective deficit-reduction plan. But they are very invested in getting a resolution to the debt ceiling and the fiscal cliff. Several of the CEOs run companies that are significant government contractors and have a lot to lose from the fiscal cliff. And now that the election is over, America’s CEO class is emerging as a key source of pressure on the Republicans to make a deal and act in a bipartisan manner. Every day brings an op ed, a CNBC appearance, or some other urging from a well-known CEO for Congress (read: Republicans) to work together with the White House. “The business leaders made clear their desire for leaders in Washington to work together to solve these challenges,” said a source familiar with the meeting.
For Obama, who has always struggled to forge personal relationships with CEOs, the meeting could have served as a way to reset relationships. But if what he wanted was a laying on of hands, a signal from these big shots to other executives that it was safe to hire and to invest some of their cash and profits at home, the president didn’t get that. The CEOs were interested in speaking about corporate tax reform and other policies that would help them do a better job. When she left the White House meeting, Burns, the CEO of Xerox, said, “This is all about trying to make American business more competitive.” And some of them didn’t want to make public statements at all. Jeff Immelt, the CEO of General Electric who chairs the president’s jobs council, left the White House through a side entrance.