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Corporate Shrill

Is Obama a stooge for big business?

Last week, Ivan Seidenberg, chairman of the Business Roundtable, delivered a speech denouncing the economic policies of the Obama administration. Seidenberg attacked the administration for heavy-handed regulation of business, excessive deficits and—most of all—too much taxation of corporations and capital owners.

You’re not surprised to hear that the business lobby is denouncing a Democratic administration for excessive liberalism, are you? You might be, if you subscribe to the persistent critique of the Obama administration as a lackey of big business. The more familiar version of this critique castigates Obama from the left for compromising the liberal agenda in order to curry favor with the titans of industry. Eric Alterman of The Nation laments “the administration’s minimalist approach to reregulating the banking sector, its refusal to consider any kind of single-payer healthcare plan and its polluter-friendly cap-and-trade approach to reducing climate change.” On the right, libertarians like Timothy Carney of The Washington Examiner lambaste Obama’s “robust corporate-government collusion.”

Both wings of the anti-corporate critique have more than a grain of truth to them. The Democrats have devoted considerable attention to wooing the business lobby. The business lobby, in turn, has exercised significant influence over policy. And Obama and Democrats have watered down nearly every element of the administration’s agenda at the business lobby’s behest. Yet the conclusion that the agenda is a sop to business at the expense of the public interest is false.

The left-wing version takes the form of crushing disappointment. One mistaken premise is the belief that there is a zero-sum relationship between good public policy and the interests of corporate America. Take, for instance, longstanding left-wing hostility toward cap-and-trade as a mechanism to control pollution. Corporations prefer capand- trade—where the government sets an overall level of emissions and allows high-emitting businesses to pay lowemitting businesses—over blunt regulation that forces all business to meet a fixed target. That’s because cap-andtrade allows the same emissions reduc tions as regulation, but at a much lower cost. To assume that corporations’ preference for cap-and-trade damns the policy is to assume that imposing costs upon corporations is an end in itself.

Likewise, Obama drew a great deal of ire for championing a health care reform that preserved private insurance. It is true that the interests of insurers lie at cross-purposes with those of the public as a whole, but they are not diametrical. Compared to a system of private insurance where tens of millions of people lack any coverage at all, a system of universal, subsidized private insurance is both more humane and more profitable for insurers. (Where the public is concerned, a system of government-provided insurance would be superior to either, but no single-payer advocate has made a serious case that such a plan had even a remote prospect of winning 60 Senate votes.)

The left critique maintains that progress comes only when the president wages a climactic, Manichean struggle against the business lobby. “It’s naive to think you’re going to change American policy by compromising on a lot of stuff,” complains Rolling Stone editor Jann Wenner. That happens to be a nearly perfect inversion of historical reality. Presidents change policy almost exclusively through compromise. Seen through the prism of ideological purity, the history of American liberalism from emancipation (which left millions of former slaves in slave-like conditions) to Social Security (a piddling pension initially denied to 40 percent of the workforce) to the Clean Air Act (weak and loophole-ridden) is a history of sell-outs. Only with the perspective of history, and often a series of incremental improvements, do such things acquire the sheen of progress.

The right-wing critique, of course, invokes a spirit not of deflation but of populist outrage. Here is Obama fusing big government and big business into one frightening whole. It is worth noting that conservatism is starkly divided between those terrified of Obama’s coziness with big business and those terrified of his hostility to big business. For an example of the former, consider Manhattan Institute fellow Steven Malanga, who has compared Obama’s “corporatism” to the economic policies of fascist Italy and Nazi Germany. (Glenn Beck and Jonah Goldberg have struck similar themes—not calling Obama a fascist, but calling him a corporatist while identifying corporatism as Hitlernomics.) For an example of the latter, take Thomas Sowell’s recent column comparing Obama’s pressure on BP to establish an escrow fund for victims of its spill to a Hitlerian law “for the relief of the German people.” The column has drawn favorable citations from Sarah Palin and other leading Republicans.

In the former analogy, American business is Volkswagen, a grubby handmaiden to power. In the latter analogy, it is the Jews, being demonized and stripped of their rights while a nation cheers. In both stories, obviously, Obama plays the role of Hitler. Of course, most right-wingers stop well short of the Third Reich metaphor. Yet the striking thing is that few leading conservatives can be found who consider Obama’s relationship to business neither frighteningly close nor frighteningly hostile.

The central fallacy of all the critiques of Obama’s “corporatism,” both right and left, is that they mistake negotiation for collaboration. There is a difference between businesses jostling to minimize the damage of a reform they can’t stop and businesses crafting legislation they desperately want to enact. Since German metaphors seem to be in vogue, consider the difference between the Treaty of Versailles and the Hitler-Stalin pact. Both involved negotiations over territorial adjustments, but the dynamic could hardly have been more different.

Finally, the corporatist critique is simply at odds with reality. Some individual businesses may stand to gain from elements of Obama’s agenda. Others can accept the broad goals of the agenda in return for the chance to shape the details in the least damaging way. But the general disposition of the business lobby has been one of opposition. The U.S. Chamber of Commerce has consistently opposed Obama’s proposals. The Business Roundtable, after initial conciliation, is now sounding similar notes. Even Obama’s financial regulatory bill, supposedly a corporate handout, draws the Roundtable’s ire. “The bigger the business,” warns Goldberg, “the more reliable the partner for big government.” That still turns out to be not so reliable. 

Jonathan Chait is a senior editor of The New Republic.

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