An Anti-Business President
An Anti-Business PresidentProfit is without honor in Obama's view.
Jun 22, 2009, Vol. 14, No. 38 • By FRED BARNES
Is President Obama anti-business? The obvious answer is yes. Yet he insists he's a free-market guy who hates "meddling in the private sector" but has been forced to. So in deciding whether he's anti-business, let's be fair and judge Obama by nonideological and nonpartisan standards. I have four criteria: his appointments, his policies, his decisions, and his own words.
Democratic presidents are not famous for appointing businessmen, merchants, or entrepreneurs to their cabinet or senior White House staff. These are people who have started or run private businesses, created jobs, met payrolls, and made profits. Thus they might be sensitive to how government can help or hurt business enterprises, especially during an economic downturn.
The number of such people appointed by Obama: zero. Members of his cabinet and White House staff come predominantly from government, academia, think tanks, and the law. True, several were business consultants, Defense Secretary Bob Gates and Veterans Affairs Secretary Eric Shinseki served on corporate boards, and White House chief of staff Rahm Emanuel spent four years as an investment banker between government jobs.
But there's no one who ran a company, hired or fired workers, or was an entrepreneur. Obama doesn't qualify either. He worked as a lawyer, law school instructor, and community organizer. As a community organizer, he did many things, but starting a profit-making business and creating jobs weren't among them.
Now it's unfair to conclude solely on the basis of Obama's personnel decisions that he's anti-business. But his administration clearly isn't a hotbed of free marketers--quite the opposite. If any appointees sympathize with business and appreciate how free markets work, their influence has been minimal.
Second, policies. When Obama announced last week the acceleration of his economic "stimulus," he was referring only to programs run or funded by the federal government. He offered nothing, not even a tiny tax incentive, to encourage investment in business and private job creation. This reflects Obama's policy initiatives across the board. They rely entirely on more government spending, regulation, and control. Obama would dramatically expand government's role in health care, energy, the environment, education, and much more. His "five pillars that will strengthen our economy" consist of spending programs, regulation of Wall Street, and imaginary deficit reduction. There's no role for business.
No doubt Obama would love to see the business community produce more jobs. But he and his congressional allies have done nothing to promote this and quite a bit to restrain it, despite the job-killing recession. This amazed Richard Posner. "Re-regulating banking, hauling bankers before congressional committees, passing laws tightening credit card lending, and capping bonuses all impede recovery," he wrote in the Wall Street Journal. "All that is for later, once the economy is back on track."
Never accuse Obama of rejecting incentives. He favors them, just not for investors and business. In his town hall meeting in Green Bay, Wisconsin, last week, he said health insurance plans "should have incentives for people to use preventive services." And he praised "financial incentives" for healthful living. "If you lose weight, you will see an incentive, money in your pocket."
The third criterion is decisions made in carrying out a policy. Take the matter of propping up General Motors and Chrysler. Rather than follow a free-market approach and allow the auto companies to sink or swim on their own, he's kept them alive with taxpayer subsidies and at the expense of their investors, a.k.a creditors. Fine, but he went on to punish GM and Chrysler investors and reward the United Auto Workers, a financial backer of Obama's presidential campaign last year.
We also saw last week how Obama is handling the case of Delphi, the bankrupt auto parts manufacturer funded mainly by GM. His Auto Task Force brokered the sale of Delphi to a private equity firm, absent an auction or open bidding. This, in effect, put Obama in the leveraged buyout business. Lenders to Delphi complained, and a judge ordered an auction.
Once it intervenes, the Obama administration invariably seeks to extend its control. After bailing out banks, Obama sought authority to seize any financial institution whose collapse might be "a systemic risk" to the economy. The Obama administration would decide if there's such a risk.
And now that troubled banks are paying back some of the bailout money, Treasury Secretary Tim Geithner was asked recently by Senator Jim DeMint of South Carolina if those funds would be saved. Not quite, Geithner said. The administration retains the right to use an equal amount in future bailouts, he said.
Finally, what has Obama said as president about business and free markets? Not much that's favorable. In Green Bay, he said doctors who order more tests for patients because they get paid more reflect "a business mentality"--a comment that suggests what Obama thinks of business in general. By contrast, he spoke of "a mentality of, how do we make patients better?" Weeks ago, he denounced Chrysler creditors as "speculators" who refuse to sacrifice as they should.
As best I can tell, Obama loathes the profit motive or at least what he thinks it causes. He's often referred to the years prior to his election as "an era of selfishness and greed." It's not surprising he's capping the pay of CEOs whose firms took bailout money. But he's also studying "the ways in which the means and manner of executive compensation contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system." To decipher that, Obama thinks high CEO pay spurred the economic dip.
The president's commencement address at Arizona State University in May, largely ignored by the media, was suffused with animus toward the profit motive. He said those who seek "short term gain" display "a poverty of ambition." And he characterized "the formulas for success that have been peddled so frequently in recent years" this way:
You're taught to chase after all the usual brass rings; you try to be on this "who's who" list or that top 100 list; you chase after the big money and you figure out how big your corner office is; you worry about whether you have a fancy enough title or a fancy enough car through material possessions, through ruthless competition pursued only on your own behalf--that's how you will measure success.
That's a brutal caricature of the way most people seek to get ahead in life, support a family, and gain financial security. Obama did tell business majors to "go start a company," then quickly added, "Or why not help our struggling nonprofits find better, more effective ways to serve folks in need." It's clear which path Obama prefers.
Given the evidence, rendering a verdict on Obama and business is easy. Anti-business may be too crude a label. But this we can conclude: Obama doesn't trust free markets, he prefers government over business, he thinks Americans are too concerned about money, and he has a dark view of profits. A follower of Adam Smith, he's not.
Fred Barnes is executive editor of THE WEEKLY STANDARD.