Business leaders' mixed reaction to Obama

obama_sotu_2011.top.jpg By Fortune editors


FORTUNE -- President Obama struck an optimistic tone on the economy during last night's State of the Union speech, but much of it still focused on efforts to boost employment and help businesses expand and compete. There were no shots at corporate greed as he's made in the past -- instead there was a call for lower corporate taxes. In recent weeks and months, the President has made strides in mending the White House's tarnished relationship with the corporate sector, which has sounded alarms about policies that stifle growth.

So has it worked? The Business Roundtable, which is the leading lobbying group for business interests, issued a mixed response. In a statement, it said it is "heartened by President Obama's focus on American competitiveness" but it cautioned that "American prosperity depends on our ability to simultaneously manage down the debt and deficit as we work to boost competitiveness."

Fortune reached out to business leaders in sectors from technology to finance to healthcare for their responses to the speech. They had a similarly mixed response.

David M. Rubenstein, co-founder and managing director, The Carlyle Group:

When I worked on State of the Union addresses as a young man in the Carter White House, I learned firsthand the inherent difficulty of trying to mention everyone's pet project while also conveying one or two overarching themes. President Obama did a solid job of balancing these

competing pressures by proposing an array of job-creating initiatives while also clearly conveying the critical importance of having a globally competitive U.S. economy in the 21st century. The business community is generally pleased with the President's State of the Union focus and the new economic policies that appear to support that focus. The challenge will be getting the policies adopted and implemented in a city with divided government.

Mort Zuckerman, chairman and CEO of Boston Properties (BXP), chairman and editor in chief of U.S. News and World Report, and publisher, New York Daily News:

The President's speech, in political terms, did what he had to do. He gave the speech with a level of gusto and rhetoric that made him come across in a more forceful way than he has in the past. He also, at various points in review of his own political record, spoke openly about correcting the errors of it in some reasonably open way to the Republicans. So there was also a sense of reaching across the aisle.

The range of programs that he suggested, to my mind at least, was a little bewildering, they were so extensive. And where he failed to really grasp the issue and make it a hallmark was how to deal with the issue of the fiscal crisis facing the country -- the huge national debts that we are accumulating. And I think this is something that will be the main problem in the speech. There was virtually nothing on that, or very little on that, but there was a whole litany of legislative objectives that once again indicated that this is an administration that wants to pass a lot of programs and doesn't really want to focus on how we're going to be paying for them.

Nevertheless, I thought it was a net plus for the President in part because of style and in part because of the fact that he seemed to be more accommodating to the possibility of working across the aisles and working with the Republicans. We shall see how this goes in actual operational terms--that is still to come--but on balance, I thought he did well in this speech.

He also stayed away from some of the previous hostility towards the business community and especially the financial community. And in a sense, he wove together a business narrative and an economic narrative that was more appropriate to gain wider support from both the business and financial worlds and the Republicans to do something about the very weak economy that we are facing.

Aaron Levie, CEO and co-founder, Box.net:

Obama's persistence in improving America's global competitiveness in education - and specifically the sciences - is critically important. In Silicon Valley we have significantly more demand for world-class engineers than there is supply, and this is an even bigger challenge in other regions. Providing higher-quality education and reforming our immigration policies to attract and retain foreign talent will be absolutely essential to ensuring that America continues to be a world leader, especially in major growth areas such as information technology and clean energy. Obama seems to care deeply about this, and he certainly has the power to effect change here.

Further, the importance of building up our infrastructure cannot be overstated. Near-ubiquitous high-speed wireless coverage, increasingly sophisticated connected devices and low-cost cloud computing solutions are already transforming how all individuals and businesses communicate. If we want to be truly competitive as a nation, we need to put the power of next generation technology in everyone's hands. This will only come from deep collaboration between government and private entities, and I'm excited to see this area receive increased attention.

As an aside, I especially liked the State of the Union's interactive web approach. I personally don't own a TV, so watching the address from WhiteHouse.gov and seeing relevant information alongside the video stream was very clever. My Twitter feed was also mostly filled with SOTU tweets, so the social media activity was pretty strong. Seeing the government using the Internet in innovative ways, instead of being laggards in technology adoption, is very exciting.

David Wyss, chief economist S&P:

The State of the Union address was a bit more policy oriented than last year, and focused on the deficit reduction proposals more than might have been expected. The defense of the health-care reform was to be expected, but the President also supported some of the recommendations of the deficit panel report from December, including the proposal to lower corporate tax rates in exchange for eliminating tax incentives (or loopholes, depending on whether you get it or not). He also proposed a freeze on non-defense discretionary spending as a means of reducing the deficit. He also promised to veto any bill containing pork, which may be difficult to enforce if Congress keeps cramming pork into essential bills.

The budget proposals are generally good, although details are lacking (can't cram any more into an already over-long speech). However, they affect only a small part of the budget. Nondefense discretionary spending is only 15% of total spending; balancing the budget requires cutting the big programs -- health care, social security, and defense -- and the President had only general directions rather than specific proposals for these.

Although he adopted the corporate tax proposals from the deficit commission, he didn't explicitly support the personal tax recommendations, which are even more important. The only real health care proposal was tort reform, which is a good idea but doesn't solve that much of the problem. He said that Social Security had to be made secure, but with no real proposal. The proposals are just a start toward cutting the deficit. We could wish they were bolder, but even this start is unlikely to make much progress in Congress. Overall, the speech was not inflammatory, and could conceivably get bipartisan support if the extremes don't shout them down. The Tea Party is getting a separate rebuttal -- I'm sure many liberal Democrats would also like one.

Steve Pagliuca, managing director, Bain Capital:

The President underscored the right priorities -- regaining jobs, balancing the budget, and investing in education. Focusing our efforts in these areas will help capitalize on America's strengths, get people back to work, and lay the foundation for the jobs of the future. We are at a critical juncture, and we need to come together to make America a better place for future generations and to maintain our competitiveness. The bipartisan approach the President laid out is critical to moving forward rapidly to accomplish these goals.

Bill Hawkins, chairman and CEO, Medtronic (MDT, Fortune 500):

It is clear that the President is focused on creating an economic environment that will make America the global leader in innovation. This is a critical and positive step forward.

We must put in place policies to spur innovation, economic development, and job growth. All must include medical innovation as a cornerstone to succeed. A pro-innovation environment encourages life-saving, life-enhancing treatments and cures for patients. It is also a driver of economic growth, jobs and exports.

Medtronic, and the medical device industry, is a true American success story. To successfully write our country's next chapter, we must have an economic environment that allows the world's most innovative companies to enhance the world's most valuable resource: its health.

Tig Gilliam, CEO, Adecco North America:

I'm in the jobs business -- bringing employers and employees together to find meaningful work for all who seek it. Therefore, I was heartened by that fact that the first substantive issue the President addressed was jobs. It was the meatiest part of his speech, by far, which should portend good things for the economy. After listening to the President, there can be no doubt that 2011 will be about job creation. I think the President captured what many are thinking when he said that "we have to make America the best place on Earth to do business." That line set the right tone for the speech, and hopefully will set the tone for 2011. It seemed like a major olive branch to the business community.

I think the President was correct in saying that the tax cuts passed in December will lead to significant job gains in the private sector. I think the most impactful proposal of the night was his call for a simpler tax structure and a lowering of corporate tax rates. It could very well lead to millions of new jobs. The same holds true with his proposal to review some of the more onerous business regulations. The President's proposed investments in biomedical research, information technology and clean energy technology should spur short and long-term job creation, as will investments in our infrastructure.

And I think the President handled the issue of the deficit and entitlement spending responsibly. This year might not be the time to tackle those problems, but we'll need to start focusing on it once the economy is moving again. To top of page

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