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On CNBC Thursday, former General Electric CEO Jack Welch discussed the threat facing corporate America: the Obama administration's persistent "anti-business" bias. Welch cited Obama's early attacks on corporate junkets to Las Vegas, policies that have "stuck the gears" of business, the shoddy treatment of bondholders in the Chrysler and General Motors bailouts, and the vilification of BP. In the recently passed health care reform, he said, the insurance industry "gets killed." And so on.
Related Video Former General Electric CEO Jack Welch discussed the Obama's administration's economic policies and the state of recovery on CNBC Thursday.
The Obama administration's perceived anti-business attitude has been a staple of critiques almost since day one. The blaring op-ed in the Wall Street Journal by former Bush adviser Michael Boskin in March 2009, when the Dow Jones Industrial Average stood at a sickening 6,600, was headlined: "Obama's Radicalism is Killing the Dow." (Of course, the Dow (^DJI - News) is up about 60 percent since then. But don't expect to see an op-ed by Boskin asserting that Obama's radicalism has helped the Dow.)
There's a sense afoot that this administration is somehow committed to the destruction of American capitalism, never mind that Obama's top economic adviser worked at a hedge fund, his Treasury Secretary ran the New York Fed, and his administration's ranks are filled by veterans of McKinsey, Wall Street and corporate law firms.
This critique doesn't jibe with reality, or with the policies we've seen. Did some professional investors who waded into the morass of the Chrysler bankruptcy get a smaller return than they had hoped? Yes. Was BP "vilified" without reason or cause? Absolutely not. Does the insurance industry "get killed" in health reform? No.
This line of attack ignores the fact that many large companies benefitted — and continue to benefit — hugely from policies forged in the crisis by the Bush and Obama administrations.
General Electric, for example, issued tens of billions of dollars in debt that was guaranteed by the Federal Deposit Insurance Corporation, allowing it to save hundreds of millions of dollars in interest costs. (As of this summer, GE Capital had $59 billion in such debt outstanding). GE's infrastructure and alternative energy units have been enthusiastic supporters — and huge beneficiaries — of the stimulus programs. The company has been pleading for more taxpayer funding of wind farms and has petitioned Congress to enact new regulations that would require greater use of renewable energy.
The "Obama is anti-capitalism" meme also ignores the fact that, time and again, when circumstances and the left wing of the Democratic party may have called for radical action, the Obama administration responded by pursuing a relatively moderate course. Consider:
Banking: Instead of nationalizing failed banks, it continued the policy of offering them capital on easy terms. And given what they put the country through, big banks got off relatively easy in the financial reform bill that just passed.
Health Care: On health care, instead of pursuing a public option that would have killed insurance companies, the administration signed into a law a reform that was essentially a knock-off of the plan that Republican governor and uber-businessman Mitt Romney enacted in Massachusetts.
Labor: The UAW received what some observers viewed as preferential treatment during the restructurings of Chrysler and General Motors. But more broadly, the Obama administration has not pushed hard for the "card check" legislation long cherished by the labor movement, which would make it easier for unions organize.
The Blame Game
Some of what's going on here is a classic case of political name-calling: Republican attacks that Obama is "anti-business" echo the same critiques of FDR back in the 1930s. Similarly, Sarah Palin is subject to much of the same ridicule from Democrats today as Ronald Reagan endured in the 1980s.
But there's a larger issue: a presumption that CEOs have some great insight as to which policies work best for their companies, the markets, and for the economy as a whole. Where's the evidence for that?
Between 2001 and 2008, the playing field was set up almost exactly as CEOs wanted it — reduced taxes on high incomes, capital gains and dividends; a business-friendly White House and Congress that let industry write its own regulation; a "CEO president" surrounded by MBAs; no new mandates and lots of subsidies. But the result was a disaster — a lost decade in employment and the markets ended with a crash.
Take a long-term look at the stock of the company Jack Welch left in 2001: GE stock (NYSE: GE - News) is basically where it was in January 1997. Between 2001 and 2008, a period of strong global growth and favorable policy that should have been a golden era for the company, the stock stagnated. Whom should we blame for that?
Daniel Gross is economics editor and columnist at Yahoo! Finance.
Follow him on Twitter: @grossdm. Email him at grossdaniel11@yahoo.com.
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