By Zachary A. Goldfarb and Perry Bacon Jr.
Washington Post Staff Writers
Saturday, January 22, 2011; 12:31 AM
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."State of the Union
The appointment of Immelt and the creation by executive order of the new panel - called the Council on Jobs and Competitiveness - comes days before Obama delivers the State of the Union address to a far more hostile Congress than he has encountered in the past.
Administration aides say Obama is expected to focus his remarks on reducing unemployment. With little prospect of new stimulus spending, analysts and economists say Obama may highlight other areas that would improve American competitiveness. These could include reducing corporate taxes and loopholes, investments in energy and transportation, and urging the passage of new trade deals, such as those with South Korea and Panama, that could make it easier for American companies to sell into foreign markets.
Immelt's role as head of the new jobs council will be to reach beyond its membership to develop ideas for "investing in innovation and providing companies with the tools they need to compete" and create jobs, Obama adviser Valerie Jarrett said in an interview.
"We have to be creative," she said. "For example, do we need to do something to our tax structure to make U.S. companies more competitive? That's a conversation the president has already had with Immelt."
The panel replaces a previous group of outsiders who served as economic advisers in the first two years of the administration. This earlier group, led by former Federal Reserve chairman Paul A. Volcker, met rarely with the president, and Volcker at times felt he was being excluded. Still, his vision for Wall Street of limiting speculative trading by banks prevailed in the landmark legislation overhauling financial regulations. Administration officials did not say which other members of the panel would be leaving.
Immelt, a self-described Republican whose company is spending more than $10 million supporting events commemorating the 100th birthday of Ronald Reagan, has grown closer with Obama in the past few years. Immelt appeared with him in November at a summit in India - where GE announced a major new contract to sell steam turbines - and participated in meetings this week during the visit of Chinese President Hu Jintao.
"He understands what it takes for America to compete in the global economy," Obama said Friday.
In a call Immelt held with investors Friday to discuss GE's fourth-quarter results, he said GE remains his "passion."
"I'm focused on the company," he said, "but you know, at the same time, I'm honored to be able to work on something that has importance in a broader economic context."Immelt backlash
Some critics said Immelt, who has led GE for a decade after replacing the company's legendary chief Jack Welch, was the wrong man for the job.
GE, a maker of equipment for jet airplanes, medical technology and many other industrial products, has steadily reduced its domestic work force over the years. When Immelt took over, GE had a global head count of 313,000, with 54 percent in the United States. Now it has a global head count of 304,000, with 134,000 in the United States.
"GE has been run as a globalized enterprise for a generation, and consequently you can't really say what's good for GE is good for the United States," said Damon Silvers, associate general counsel of the AFL-CIO.
Sen. Bernie Sanders (I-Vt.) said he would like to see Immelt's appointment lead him to change GE's focus. "I hope he changes his mind and focuses on rebuilding the manufacturing sector here in the United States, not in China, and in the process creates millions of good-paying jobs," Sanders said in a statement.
A GE spokesman said the reduced job force in the United States reflects the company's sale of some subsidiaries. GE also has touted the recent shift of several thousand jobs to the United States from overseas.
GE has benefited from U.S. government policy in several ways. GE Capital, a corporate subsidiary that lost billions on bad loans during the recession, received taxpayer protection during the financial crisis.
Goldfarb reported from Washington and Bacon from Schenectady. Staff writer Lori Montgomery contributed to this report.