Feeling scorned, big business turns its back on President Obama
PRESIDENT OBAMA'S 2008 campaign raised roughly $40 million from the financial sector, 50 percent more than did Republican John McCain. But now, it seems, Wall Street is suffering a massive case of buyer's remorse. Irked by the president's anti-business rhetoric and by financial regulations he and a Democratic Congress have imposed, many erstwhile pro-Obama financiers -- as well as other business people -- blame him for destroying the investor confidence without which growth cannot resume. They are shifting their campaign cash to Republicans.
One recent manifestation was a letter from Daniel S. Loeb, founder of the hedge fund Third Point, to his investors, in which Mr. Loeb blasted the Obama administration for allegedly undermining free-market capitalism itself and even "the rule of law." Mr. Loeb is no Tea Partyer but a college classmate of Mr. Obama's and lifelong Democrat who raised money for Mr. Obama's campaign. For that reason alone, Mr. Loeb's words pack a punch.
But how valid is his critique? Many serious students of the economy agree with him that too much unpredictability about the future costs of government policy can retard investment. Justified as it may have been, Mr. Obama's far-reaching policy agenda -- not only financial regulation but also the health-care bill, the fiscal stimulus package and some tax proposals -- has unsettled a lot of expectations all at once. This week, Richard Fisher, president of the Federal Reserve Bank of Dallas, accused the government of acting "in a capricious manner that makes long-term planning, including expanding payrolls, difficult, if not impossible."
The problem is quantifying such an intangible effect. In his recent speech to the annual Fed conference at Jackson Hole, Wyo., Federal Reserve Chairman Ben S. Bernanke attributed most of the economy's recent woes to weak consumer spending and the ongoing shakeout in housing. Business confidence didn't rate a mention.
Mr. Loeb exaggerates, a lot, when he labels a Democratic proposal for higher taxes on hedge funds and other private partnerships as an "arguably unconstitutional bill of attainder." Nor is it clear, as he suggested, that the government's since-settled fraud lawsuit against Goldman Sachs was the "turning point" not only for investor but also for consumer confidence.
Any president who took office after one of the greatest financial crises in history would have had to tackle the financiers -- both in word and deed. In that sense, Mr. Obama's occasional shots at "shameful" bonuses and the like should have come as no surprise to any of the businessmen and women who helped elect him. Our impression is that, given the mood of the country and the ideology of his party, the president has engaged in the minimum amount of business-bashing he could get away with politically, rather than the maximum.
That does not necessarily mean it was the right amount. Yes, business executives' protests about Mr. Obama seem, at times, to reflect a certain cluelessness about the ways of Washington. But Mr. Obama's own personal lack of business experience, and the paucity of businessmen and women among his advisers, make it harder for him to comprehend -- much less inspire -- the private sector. No less a Keynesian than John Maynard Keynes emphasized the importance of "animal spirits" to a robust economy. In that sense, a better relationship between the private sector and the Obama administration is in both sides' interest -- and the country's.