Obama brings industry to table
Saturday, January 22, 2011
President Obama on Friday tapped one of the country's top corporate executives as his chief adviser on how to help American companies create more jobs at a time when Washington's options for bolstering employment through public spending have narrowed.
By naming General Electric chief executive Jeffrey Immelt to lead a new White House panel, Obama sent another signal that he wants to work more closely with big business, in part to reduce the high unemployment rate by increasing U.S. exports. He made the announcement while visiting a GE plant planning to build turbines for India in the company's birth city of Schenectady, N.Y.
"Our success in these efforts will be determined not only by what we build in Schenectady but also what we can sell in Shanghai," Obama said. "For America to compete around the world, we need to export more goods around the world. That's where the customers are. It's that simple."
The massive federal deficit and increased Republican power in Congress are limiting what the administration can do with the public purse to invigorate the economy and spur job growth.
While boosting exports and making American companies more competitive are likely to generate more jobs in the long run, economists say the strategy will make only a modest dent in the 9.4 percent unemployment rate in the near term.
"It's definitely effective, but it's no magic wand," said Matthew Slaughter, a business professor at Dartmouth and a former George W. Bush administration economist.
Exports make up only 11.2 percent of the economy, and the federal government has little control over two factors that largely determine whether foreigners will buy American products: the value of the dollar vs. other currencies and the economic growth rates of other countries.
Economists say the main driver of jobs will come when American companies start hiring more because they believe consumers and other businesses in the United States will be spending more.
"We stemmed the collapse. Now it's really up to the private sector to generate the jobs," said Martin Baily, a fellow at the Brookings Institution and a senior economics adviser in the Clinton administration. "We have to let the economy heal."
Immelt's appointment is part of a recent effort by Obama to reach out to the business community, and that could serve him well politically as he battles the new Republican majority in the House over deficit reduction, jobs programs, the health-care law and financial regulation.
Obama has named William M. Daley, a former J.P. Morgan banker, to serve as chief of staff. The president plans to give a speech to the U.S. Chamber of Commerce, which fought his health-care legislation and other signature domestic policies, early next month. In addition, he has ordered a review of regulations to see which ones might hurt business.
"Every president produces these sorts of panels and advisory groups," said Douglas Holtz-Eakin, a Bush administration economic official. "They get different names, and you can't tell when they're announced if they're going to be substantive and engaged or whether they're going to be window dressing."