J. Scott Applewhite/AP
President Obama is meeting with a group of corporate executives Wednesday to discuss ways to get the economy growing faster.
J. Scott Applewhite/AP
President Obama has sometimes had rocky relations with the business community, and he is trying to work on that by playing host to a group of corporate executives Wednesday.
They will be talking about ways to get the economy growing faster to help put people back to work. They will also discuss some of the business-friendly measures in the tax-cut deal the president struck with congressional Republicans.
But White House spokesman Robert Gibbs didn't characterize the meeting of high-level executives as a summit.
"Summits generally happen in Iceland and involve trench coats and nice hats," he quipped.
Instead, Gibbs described the session as a "working group," an opportunity for the president to get some feedback on his economic agenda from the heads of PepsiCo, Google and GE, among others.
"The president wants to hear from them about what they see in the road ahead for the economy and ideas that they have on continuing our economic recovery," he said.
Obama hopes the tax-cut deal pending in Congress will accelerate that recovery. One element, which the president has been pushing for months, would allow companies to write off the full value of any business investment on their taxes next year, rather than spreading the deduction over several years the way they usually do.
Economist Nigel Gault of IHS Global Insight said that will give companies a modest incentive to invest now, rather than waiting.
"At the margin, it helps," Gault said. "Is it going to be the prime mover driving business investment next year? Probably not."
The deal includes other business-friendly measures, including a renewed tax credit for research and development, and a $5 billion extension of tax breaks for oil companies to blend ethanol into gasoline, a break that is popular with corn producers in Iowa but not with critics in Congress such as Sen. John McCain (R-AZ).
"Call these ethanol favors the Hawkeye Handouts," McCain said. "That's what this bill is all about. And I say to my colleagues, I'll vote for it. But it's not what the people said they wanted done on Nov. 2."
But despite a few such special favors, polls show the overall tax-cut deal is popular. It extends Bush-era tax cuts for everyone, including the wealthy, and provides a one-year reduction in the payroll tax that workers contribute to Social Security. That payroll tax cut, along with an extension of unemployment benefits, will put an extra $160 billion into people's pockets over the next year. Assuming that money doesn't all stay in their pockets, more consumer spending could result.
That would be welcome news to Dorothy Coleman, vice president of the National Association of Manufacturers.
"Everyone would like demand to increase," she said. "That would be a sign of economic growth. So some of the provisions in there, the lower tax rates, are going to help consumer demand."
Ultimately, it's that stepped-up demand for products and services, more than any tax breaks, that will drive companies to invest in their businesses and hire more workers.
U.S. businesses are sitting on nearly $2 trillion in cash, a historically high amount. Gault expects the president to encourage some of the CEOs he is meeting with Wednesday to put more of their money to work soon.
"What he'd love to see is a surge in business confidence, which will undo those purse strings," Gault said.
There are signs that big business is feeling more confident: 80 percent of big company CEOs surveyed by the Business Roundtable say they expect to increase sales in the next six months, and 45 percent expect to increase hiring. Both figures represent an improvement from three months ago.
Gibbs said all the government can do is try to help.
"We are not going to see a sustained economic recovery until we see that it is sparked and led by the private sector," he said.
So at Wednesday's meeting, Obama, who has sometimes been perceived as a scold for big business, will be serving as cheerleader in chief.