That President Obama bundled up and walked across Pennsylvania Avenue to meet with 20 corporate chief executives a few days ago was a very encouraging sign. I wish he had held such a summit six months ago, with just as much urgency and concern for corporate interests, and with just as much public relations gusto. Had it happened then, the economy might have started inching closer to the growth we all covet (and perhaps this past November’s elections might have turned out differently).
Nonetheless, the truth is that the President has been breaking bread quietly with CEOs for several months. On multiple occasions he has invited two or three of them to the White House for a meal and a meeting to discuss what’s vexing them and what ideas they have for stimulating the economy. Motorola Solutions CEO Greg Brown has had more than one rendezvous with Mr. Obama: Among them, the summit last week, as well as a meeting last March alongside United Continental Holdings chairman Glenn Tilton and McDonald’s Corp. CEO Jim Skinner, and Brown also had a rare one-on-one sit down with the President about a month and a half ago.
I’m told that these meetings are about more than political posturing. The President is genuinely interested in accelerating this country’s sluggish economic momentum. Over the weekend, I spoke with Motorola’s Mr. Brown about the significance of these meetings between corporate leaders and the President.
Of course, the underlying theme of last week’s summit, held at Blair House across the street from the White House, was job creation. With the unemployment rate at nearly 10% and meager job growth, that indeed ought to be the main focus. Brown says Motorola, like several of the other companies, is hiring. But the reality is companies continue to shed some jobs at the same time that they add others. So, net growth is slow at best. The jobs equation is part of a cautious strategy that has helped businesses manage through the recession: They’ve increased inventories, lowered cost structures, improved earnings and generated cash. As a result, “businesses are much stronger than 18 months ago,” Brown says.
Collectively corporations have stockpiled a reported $2 trillion in cash. Now, it’s time for government to introduce policies that stimulate the economy enough for it to make sense for businesses to invest that cash in U.S. expansion and hiring here at home. Businesses want the Obama administration to demonstrate flexibility amid changing times. During the depths of recession, the Obama administration mostly tightened regulations on business. But not every industry needs such oversight. “Some regulation is required and we get that,” Brown told me. “And in some areas more regulation is needed, but it needs to be done with a discerning eye so that regulations are not overly costly and suffocating. That would inadvertently slow the momentum of the economy.”
The key is to move steadfastly. Business leaders reminded the President that despite certain surveys, the $2 trillion on balance sheets today is not guaranteed to be there a few months from now. As Brown says: “The market doesn’t wait for public policy. We in the business community have a choice with our cash. We can invest it in our own business domestically, return it to the shareholders or invest outside the U.S.”
The liquidity that’s on the books today will likely cycle into other areas. It will not necessarily grow to $2.5 trillion in six months. That is why it’s so important for the administration to align its fiscal policies in a way that corporations feel comfortable investing in the U.S. In addition to and perhaps more important than the “Bush Tax” cuts, the CEOs and President Obama discussed deductions for capital expenditures, research and development tax credits, free trade agreements with Korea as well as other countries. All of these are crucial economic stimuli.
Brown said that the President was exceptionally well-prepared, well-versed in economic issues, and listened intently to the concerns of the business leaders before him. He also established that this won’t be an one-and-done meeting. It’s a sign President Obama knows not only that his presidency is at stake, but also that the competitiveness of the country is at stake. “If the incentives are not there to reinvest in the country, businesses would continue to grow and the U.S. wouldn’t,” Brown told me. “You have to get the home team in the game … now.”