When President Barack Obama todayholds his largest private meeting with chief executive officerssince he entered the White House, he may find some of hiscorporate critics cheering.
Obama is generating more optimism among CEOs after a seriesof business-friendly decisions, such as extending Bush-era taxcuts and reaching a free-trade accord with South Korea, even asskepticism remains.
SIt"s a great step he"s taking, meeting with CEOs,General Electric Co. CEO Jeffrey Immelt, 54, who will attend thesession, told reporters yesterday after an investor meeting inNew York. The tax cuts and CEO gathering together Sare realpositives.
It has been several decades since a U.S. president heldoffice during record corporate earnings while the stock market"sbenchmark Standard & Poor"s 500 index climbed 46 percent in the21 months since he was inaugurated, all at a time with noprospect that inflation or interest rates will surge anytimesoon. Still, it"s the tax and trade initiatives that may bechanging attitudes.
Ivan Seidenberg, CEO of Verizon Communications Inc.,praised Obama during a Dec. 8 news conference for Sawillingness to learn after the president agreed to keep thetax cuts for high-income families.
SThe things that occurred in the past couple of days areextraordinary, said Seidenberg, 64, who also heads theBusiness Roundtable, an association of 193 CEOS.
Hostile Environment"
Six months earlier, Seidenberg complained in a speech thatObama"s policies were creating San increasingly hostileenvironment for investment and job creation, citing proposalsto raise corporate taxes and impose environmental regulations.
Jamie Dimon, chairman and CEO of JPMorgan Chase & Co.,yesterday praised the signal Obama sent in agreeing to extendall the tax cuts enacted under former President George W. Bush.
SIf we"re going to strengthen our economy and grow jobs,this type of outreach -- and cooperation between theadministration, Congress, and the private sector -- arecritical, said Dimon, 54, who met with Obama last week at theWhite House.
Today"s meeting, scheduled for 9:30 a.m. at Blair House,across from the White House, will include 20 executives. Asidefrom Immelt, the CEOs include Google Inc."s Eric Schmidt; IntelCorp."s Paul Otellini; Comcast Corp."s Brian Roberts; PepsiCoInc."s Indra Nooyi; Dow Chemical Co."s Andrew Liveris, and CiscoSystems Inc."s John Chambers.
More Optimism"
Steven Winoker, a senior analyst at Sanford C. Bernstein &Co. in New York, was asked whether companies would be investingin U.S. research or manufacturing plants.
SA year ago the answer was, No, not under the currentadministration rules," Winoker said in a Dec. 13 interviewwith Bloomberg Television. SI am now hearing much moreoptimism.
The reappraisal of Obama takes place as his power has beencurtailed by the election of a Republican majority in the U.S.House of Representatives, aided by more than $30 million inadvertising by the U.S. Chamber of Commerce. Democrats lost 63House seats, the largest midterm loss for the party since 1938.
In a news conference on Nov. 4 the day after the elections,Obama said he wanted to make Sclear that the only way Americasucceeds is if businesses are succeeding.
Businesses and investors already have been succeeding underhis presidency. Corporate profits in the third quarter exceededthe 2006 high before the recession. The economy is showing signsof strength, and many forecasters raised estimates for growthafter agreement on the tax cuts.
Sales Forecast
Optimism about the economy among CEOs of the nation"slargest companies rose in the fourth quarter to the highestlevel since the start of 2006 as business leaders projectedincreased sales, investment and hiring, according to a surveyreleased yesterday by the Business Roundtable.
Eighty percent expect sales will grow in the next sixmonths and six of 10 plan to boost capital spending. Forty-fivepercent say they will hire more workers, up from 31 percent inthe third quarter.
Forecasters anticipate the S&P 500 will rise another 11percent to 1,379 in 2011, pushing the index to its biggestthree-year advance since the 1990s, according to the average of11 strategists at big Wall Street banks surveyed by Bloomberg inDecember.
Skepticism on Obama
Even with that, some executives doubt there"s a change ofapproach by Obama. Rhetoric from the White House has rankledthem, including Obama"s chastisement of Sfat-cat bankers whotook large bonuses during the financial crisis and InteriorSecretary Ken Salazar"s comment in May amid the Gulf of Mexicooil spill that the government would keep Sour boot on theirneck to assure that BP Plc cleaned up the disaster.
Mike Klayko, CEO of San Jose, California-based BrocadeCommunications Systems Inc., the largest maker of switches fordata-storage networks, said there"s been a shift in attitudes byan administration that a year ago had a prevailing view thatSbusiness is evil.
There"s still a lot of Sinconsistency, though, from theWhite House, he said. SIt"s one step forward, one step backin how the administration feels about business. He said thefinancial-regulatory overhaul has Severything under the sun,and is unnecessary.
Speaking to the Argyle Executive Forum in New Yorkyesterday, billionaire real estate investor Sam Zell criticizedSthe continual bashing of the business community.
Lot of Problems"
SWe still have a lot of problems as to whether thisadministration understands the basic premise, and that is thatjobs are created by business, not by government, said Zell,who also invested in the media industry through a 2007 leveragedbuyout of Tribune Co., which filed for bankruptcy protection ayear later.
SThe president"s relationship with the business communityhasn"t improved, Mortimer Zuckerman, CEO of Boston PropertiesInc., said in an e-mail. SObama embraced the tax dealreluctantly.
Zuckerman said the financial overhaul will impose a burdenon businesses. SNobody knows how constricted the financialworld will become as a result of these new regulations, hesaid.
Ken Hicks, CEO of Foot Locker Inc., the largest U.S.athletic shoe store chain, said Obama"s agreement to extend taxrates is Sa politically expedient bill. He doesn"t agree withit, but he"s got to do it to get other things that he wants.
Unintended Consequences"
Hicks said Obama doesn"t understand business.
SWhat this administration misses many times is the law ofunintended consequences, such as the costs the health-insurance bill will impose on employers, he said.
Seidenberg"s group, representing CEOs from companies suchas Exxon Mobil Corp., released a SRoadmap for Growth on Dec.8 that called for revisions in the financial and health-carebills. The CEOs said 290 environmental regulations beingconsidered by the administration would stifle growth.
SMany of them are not fact-based, and many of them do noteven have business in the conversation, Dow Chemical"s Liverissaid at a Dec. 8 news conference.
EPA Actions
Two actions by the Environmental Protection Agency may bemore telling of a shift by the administration than the tax ortrade deals.
Within the past week, the administration announced delaysin new rules to regulate industrial boilers and ozone. Thatshowed a willingness to listen to business complaints that newregulations could impose unnecessary costs, according to theNational Association of Manufacturers.
SWe"re hopeful these are signs that there is going to be anewly invigorated growth agenda, said Aric Newhouse, seniorvice president for government relations at the Washington-basedgroup.
At today"s meeting, the executives will confer with thepresident on issues such as education, exports, regulation andthe budget deficit. Among others attending are American ExpressCo. Chairman and CEO Kenneth Chenault; Motorola Inc. co-CEO Greg Brown; Duke Energy Corp. CEO James E. Rogers, and Eli Lilly &Co. President and CEO John Lechleiter.
NextEra Energy Inc. CEO Lew Hay and DuPont Co. CEO Ellen Kullman also will be there as will UBS AG Chairman for theAmericas Robert Wolf; United Parcel Service Inc. CEO Scott Davis; Boeing Co. CEO James McNerney; David Cote, chairman ofHoneywell International Inc.; Penny Pritzker, chairman ofPritzker Realty Group; Mark Gallogly, founder and managingpartner of Centerbridge Partners LP, and venture capitalist John Doerr, partner at Kleiner Perkins Caufield & Byers.
To contact the reporters on this story:Michael Dorning in Washington D.C. at mdorning@bloomberg.net;Mark Drajem in Washington at mdrajem@bloomberg.net.
To contact the editors responsible for this story:Mark Silva at msilva34@bloomberg.net.
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