Obama’s postelection ‘reset’ of relations with business iffy

President Obama’s post-“shellacking” bid to reset relations with business is off to an uncertain start.

More than two weeks after his party took a beating at the polls, industry criticism of the White House is as heated as ever, with business advocates warning of the shift to a regulatory battle now that the GOP has thrown a wrench into Democrats’ legislative abilities by retaking control of the House. Meanwhile, the administration failed to deliver on its promise to resolve a trade deal with South Korea, undermining what had been a key showing of good faith to free-market critics.

“I think it’s got to be a lot more than rhetoric,” said Dan Danner, president of the National Federation of Independent Business. “To say, ’I think business is important,’ but at the same time your tax policies, your health care policies, your regulatory policies are all anti-business … it just doesn’t work.”

While business advocates praise the administrations small-bore proposals, such as a tax write-off for capital investments and a proposed lending fund aimed at community banks, to improve the climate for small business, they say they’re not enough to paper over the fundamental objections to Mr. Obama’s marquee overhauls of the nation’s health care and financial industries, along with his now-shelved plan for a “cap and trade” approach to address climate change.

“The concern that the business community has is one of policy, and so no amount of relationship-building will change the policies,” said Johanna Schneider, director of external relations at the Business Roundtable, a consortium of American CEOs. “We’d like to see lower taxes, we’d like to see our companies be more competitive globally, we’d like to see less regulation - particularly in the environmental, financial and health care areas.”

Indeed, Mr. Danner’s small-business trade group considers the expansive health care law so intrusive that it joined a multistate lawsuit challenging the law’s mandate that everyone purchase health insurance. A separate provision of the law that imposes a new reporting requirement on small businesses has become so publicly toxic that even Democrats, including Mr. Obama, are clamoring to repeal it.

Mr. Obama defended his record at a postelection news conference, even as voters handed Republicans control of the House and Democrats a loss of more than five dozen seats. But he conceded that he hasn’t always “managed” his relationship with business as well as he should have.

“There’s no doubt that when you had the financial crisis on Wall Street, the bonus controversies, the battle around health care, the battle around financial reform, and then you had BP - you just had a successive set of issues in which I think business took the message that, well, gosh, it seems like we may be always painted as the bad guy,” Mr. Obama told reporters gathered in the East Room earlier this month.

“And so I’ve got to take responsibility in terms of making sure that I make clear to the business community, as well as to the country, that the most important thing we can do is to boost and encourage our business sector and make sure that they’re hiring.”

In that vein, Mr. Obama punctuated his recent trip to Asia with several overtures to business. He brought a group of American executives with him to India, touting U.S. exports and claiming credit for helping secure nearly $15 billion in new business deals between the two countries. He even refrained from bashing outsourcing.

But the administration suffered a major setback when U.S. trade negotiators were unable to reach an agreement on a trade pact with South Korea that’s been lingering for years. In a nod to Republicans and the business community, Mr. Obama had called for progress on that deal, as well as pending free-trade agreements with Colombia and Panama, in his first State of the Union address back in January.

The rewrite of Wall Street rules was another flash point that had many free-market advocates accusing Democrats of undue government interference, while Mr. Obama and his allies said the measure was necessary to prevent another financial catastrophe. On the regulatory front, the specter of Environmental Protection Agency rules governing greenhouse gases has business advocates taking the agency to court to prevent regulations they say would hurt U.S. competitiveness.

Likewise, businesses are now fighting tooth-and-nail for an extension of all the Bush-era tax cuts, arguing that the breaks for upper-income earners - which Democratic leaders want to let expire - include many small-business owners. The cuts are set to expire at the end of the year if Congress doesn’t act.

The quarrel has been exacerbated by heated language on both sides, with Mr. Obama bashing “fat cat” bankers during the financial-overhaul fight and, more recently, accusing the U.S. Chamber of Commerce of using foreign money to fund its campaign advertising. For their part, critics of Mr. Obama have described him as the most anti-business president ever.

Mr. Obama underscored the dispute a year ago, when he excluded the Chamber of Commerce and the NFIB from a White House “jobs summit.”

But not everyone thinks the business community has it so bad. Eddie Vale, spokesman for the AFL-CIO, pointed to soaring corporate profits as proof that industry concerns are being exaggerated.

“They’re jumping up and down, saying the sky is falling, but a lot of this stuff is common sense,” he said, adding that business groups have long opposed reasonable regulations by arguing they would destroy the business climate. “This is the same stuff that they’ve been saying for hundreds of years.”

On Wednesday, Chamber of Commerce President Thomas J. Donohue warned of a “regulatory tsunami” from the Obama administration in the coming months, yet he downplayed the rift with the White House as “overblown.” Citing an appearance by Treasury Secretary Timothy F. Geithner at the business lobby’s board meeting, Mr. Donohue pledged to work with the administration when the two sides can agree.

Mr. Danner, noting that Mr. Obama earlier this week put out a proclamation recognizing “National Entrepreneurship Week,” has an idea Mr. Obama could pursue as an olive branch.

“Pardon an entrepreneur, and say that he or she will be pardoned from higher health care costs and higher taxes,” he joked.