Obama’s olive branch to big business

f any doubt exists about whether President Obama gets the message that the American public wants him to put revitalizing job growth at the top of his priority list, the last two weeks should surely put them to rest.

Even as the White House was forced to turn much of its attention to the crisis in Egypt, the president and his aides unveiled an almost daily array of new initiatives aimed at demonstrating that jobs and the economy are now solidly at the forefront of the president's agenda.

The onslaught started with the State of the Union address, which the president largely devoted to laying a longer-term vision for strengthening the American economy and competitiveness. Since then, he and his advisors have followed up with a series of proposals to flesh out that vision, laying out plans for everything from boosting energy efficiency in commercial buildings and increasing access to high-speed wireless to providing financial and technical support to struggling start-up companies.

The president took another step in his efforts to recalibrate his economic message late Monday morning with a speech to the U.S. Chamber of Commerce — a powerful business lobby with which he has been virtually at war for much of the last two years.

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Obama told business leaders gathered at the chamber's ornate headquarters, a 10-minute walk across Lafayette Square from the White House, that they must do their part to bolster the economy by investing and adding more workers.

"As a government, we will help lay the foundation for you to grow and innovate. We will upgrade our transportation and communications networks so you can move goods and information more quickly and cheaply. We will invest in education so that you can hire the most skilled, talented workers in the world. And we'll knock down barriers that make it harder for you to compete, from the tax code to the regulatory system.

"But I want to be clear: even as we make America the best place on earth to do business, businesses also have a responsibility to America."

The question is how much good all those efforts will actually do to help revive the economy — or the president's political prospects for 2012.

Certainly, they mark a significant change for a president who was punished by voters last November, in part because many felt he has been insufficiently focused on resolving the country's economic woes. "You don't have to look at the polls to know that jobs remain the overwhelming top priority for a majority of Americans," says Norm Ornstein, a political analyst with the American Enterprise Institute, a conservative think tank.

Yet that rarely seemed to be the case for Obama in the last 18 months. Though he repeatedly pledged to make jobs his top priority, he got caught up in the seemingly endless fight over health care reform, an extensive review of Afghanistan strategy and the debate over how to handle the Gulf Coast oil spill.

It's not a mistake Obama intends to make again, however - nor one he can afford to make with the election less than two years away. "The message has got to be: I get it, and I'm working on it every day," says Sarah Rosen Wartell, the executive vice president of the Center for American Progress, a liberal think tank with close ties to the administration. "People need to see there is an effort to fix the problem."

The stakes for Obama couldn't be clearer. As the economy goes, so go presidential elections, and the severity of the recession means Obama is heading into 2012 facing a much deeper hole than have many past presidents.

Just how deep?

Even after a sharp drop in January, unemployment still stands at a troubling 9 percent. With the number nudging down nowhere near fast enough, that's a bad omen for the administration. Since 1960, unemployment has been higher than 7 percent only four times in an election year. In three of those four races, the incumbent lost: Gerry Ford in 1976, Jimmy Carter in 1980, and George H.W. Bush in 1992.

Only Ronald Reagan managed to win re-election in the face of such high unemployment. Unlike the others, he benefitted from a sharply improving trend: though unemployment remained at 7.2 percent in 1984, it had dropped from 8.5 percent in the year prior to the election.

Obama has to hope for a similar phenomenon, as there is virtually no chance that unemployment will be anywhere near that low by the time voters head for the polls. Even getting unemployment down to 8 percent by late 2012 will be tough, argues Taylor Griffin, a presidential campaign aide to Sen. John McCain who is now a partner at Hamilton Place Strategies. To get there, the U.S. economy would have to create roughly 215,000 new jobs every month — a far cry from the 36,000 that were created in January.

"Even if he can get the rate down to 8 percent, there's never been a president in 50 years who's faced re-election with such a high rate," Griffin says. "It's an enormous political challenge."

The problem, of course, is that Obama has few strong options to rev up the economy or put Americans back to work, particularly in the short term. With Republicans now in charge of the House and a much stronger force in the Senate, the administration is very limited in what it can do to further bolster the economy or spur job growth.

Facing strong pressure to trim spending and rein in the deficit, Congress is unwilling to fund any further big stimulus or job creation packages. Michael Cornfield, a professor with the Graduate School of Political Management at George Washington University, points out that the proposals Obama has put forth so far are relatively modest in size. Moreover, it is far from clear that they will win funding given the opposition to any new spending among Republicans in Congress. If domestic spending is frozen at current levels, as looks increasingly likely, Obama would have to take money from other programs to pay for his new initiatives — always a difficult prospect.

"Presidents are always trying to rally the economy through words," Cornfield says. "But the real test of whether they are serious will be in their deeds — what they do when the budget comes out, and whether their numbers match their ambitions."

That's one reason the president's visit to the Chamber of Commerce, his most significant effort yet to repair his frayed relationship with the business community, could prove critical.

Given the limited tools and funding at their disposal, administration officials know that they are unlikely to make big gains in the unemployment rate from small-bore stimulus policies alone. Their best hope for a significant boost in job growth may be that the private sector regains confidence and starts hiring again, argues Greg Valliere, a Washington policy analyst with the Potomac Research Group, an investment advisory firm. Ultimately, that would do far more to lower the unemployment rate and boost the president's re-election prospects than the limited job-growth policies now being hatched out of Washington.

That reality has led the president to offer an olive branch to the business community as part of the shift towards the center he has made since his November electoral drubbing.

What would détente look like?

Business leaders have complained loudly during the past 18 months that the regulatory uncertainties and added costs of the administration's health care and financial services regulation reforms are one reason they've hesitated to add new jobs and invest even as corporate profits have returned to record highs. Many also are frustrated with the lack of progress on stalled trade deals with Panama and Columbia.

Obama already has moved to address some of the regulatory uncertainties, and he told the chamber's members that he will push to get the trade deals completed.

"We recently signed export deals with India and China that will support more than 250,000 jobs here in the United States. And we finalized a trade agreement with South Korea that will support at least 70,000 American jobs — a deal that has unprecedented support from business and labor; Democrats and Republicans. That's the kind of deal I'll be looking for as we pursue trade agreements with Panama and Colombia and work to bring Russia into the international trading system," he said.

If he is sporting a much improved message, however, the long months of intense political battling have left many in the business community wary. "For now, it's a charm offensive," says Bruce Josten, the head of government affairs for the chamber. "But I'm not interested in what they say; I'm interested in what they do." Until he sees "actionable steps" like progress on the stalled trade agreements, he won't be convinced that the administration has done much more than polish up its rhetoric.

But in politics, sometimes a change in rhetoric and tone is what matters most. If Obama can do a better job of convincing a majority of American voters that he's doing all he can on the jobs front — something that has been sorely lacking over the last 18 months — that could go a long way to improving his electoral prospects. And as the economy continues its slow recovery, a bigger hand from the business community in actually creating jobs wouldn't hurt either.