By his own account, President Obama is the champion and protector of the little guy. He said last week he wants no one left “in a second-class status in this United States of America.” He’s “determined” to “make sure that nobody out there is going bankrupt just because somebody in their family is getting sick.” He’s committed to making Washington “responsive to the needs of people, not the needs of special interests [and] not just people who are hurting now, but also responsive to future generations.” Obama identifies himself with the 99 percent.
Yet the winners in the nearly three years of Obama’s presidency are the big guys—big business, big labor, and big government. Corporate profits have reached record levels. The influence of the biggest labor unions has surged in Washington, where it matters most. The federal government has grown in size and reach.
Meanwhile, the weak economy has hurt small business, the country’s number one job creator. Temporary tax breaks haven’t helped, and the threat of new taxes and a fresh barrage of regulations have put a crimp in expansion and hiring. Big business isn’t expanding or
hiring much either. A headline in Slate reflected this: “More Profits, Fewer Jobs.”
Labor leaders have entrée at the White House and federal departments and agencies as never before. The most frequent visitor to the White House in Obama’s first year was Andy Stern of the Service Employees International Union. The president delayed trade treaties with South Korea, Panama, and Colombia until they were altered to satisfy labor officials. If Obama understands that higher levels of unionization are associated with greater joblessness, he’s never let on.
Big government is a cliché that’s all the more true in the Obama era. Federal employment grew by 140,800 in Obama’s first two years, and the clout of federal officialdom has increased substantially. The Environmental Protection Agency has mounted a regulatory offensive the business community and Republicans have challenged but failed to halt. Obamacare, scheduled to go fully into effect in 2014, would give Washington control over the way health care is dispensed, financed, and regulated—not a takeover, but close to it.
“If you are big in today’s Washington, you lead a charmed life,” Washington consultant David Smick says.
In Obama’s case, there’s more to the gap between what he professes and what his administration has produced than meets the eye. Yes, his hypocrisy is breathtaking. But it represents the way he prefers to govern. Dealing with a few big institutions, even if they are dinosaurs, is easier than consulting more widely. So is relying on government to remedy every national ill, rather than letting markets, private groups, and individuals play pivotal roles.
“What an irony for an administration that claims populist roots,” Smick says. “Policy prescriptions for the most part use the top-down approach. Bring out the GE guy and various big labor bosses to deal with the jobless nightmare when the bulk of the solution involves fostering small business start-ups.”
Jeffrey Immelt, General Electric’s CEO, happens to be chairman of Obama’s Council on Jobs and Competitiveness. GE is famous for having paid no corporate income taxes in 2009 and 2010 and shipping thousands of jobs overseas. The council’s membership consists of 23 corporate chiefs, two labor leaders, one economist, one biologist, and zero representatives of small business.
For contributions to his reelection campaign, Obama has tapped the segment of big business he’s referred to as “fat cat bankers”: Wall Street. According to the Washington Post, he has raised more from financiers and bankers than all of the Republican presidential candidates combined. He’s raised more at Bain Capital than Mitt Romney, who cofounded the firm.
Wall Street has reason to be grateful. “During Obama’s tenure, Wall Street has roared back, even as the broader economy has struggled,” Zachary Goldfarb of the Washington Post wrote last week. “Wall Street firms . . . earned more in the first two and a half years of the Obama administration than they did during the eight years of the George W. Bush administration.”
Smaller community banks haven’t fared as well. Wall Street banks have the manpower to comply with new restrictions endorsed by Obama and passed by Congress. Small banks don’t. Big banks are thriving while interest rates are near zero. The loan business of small banks suffers because of these rates.
At the same time, corporations are sitting on nearly $2 trillion amassed during the Obama era. If invested, the money would surely stir economic growth and job creation. But Obama has refused to remove impediments to investment, chiefly future tax hikes and regulations.
