After an eight-year slumber, the Environmental Protection Agency is issuing regulations again. Two years after an appalling financial debacle, Congress is finally moving to regulate Wall Street. But to hear our nation’s commercial chieftains tell it, it’s enough to plunge us back into recession. “We have to become an industrial powerhouse again, but you don’t do this when government and entrepreneurs are not in sync,” lamented General Electric CEO Jeff Immelt in a recent speech. On July 12, the U.S. Chamber of Commerce, the Business Roundtable, and the National Federation of Independent Business held a “Jobs for America” summit. While President Obama met with CEOs at the White House, the summiteers called for—wait for it!—cutting taxes for companies, extending tax cuts for the wealthy, and opening up federal areas for resource exploration.
The notion of these guys holding a jobs summit is a little like BP holding a deepwater-drilling safety summit. Between 2001 and 2009, corporate America designed the playing field to its specifications—easy money from the Federal Reserve; lower taxes on capital gains, dividends, and income; an administration that let industry essentially write its own regulations. But the players proceeded to put up goose eggs. In January 2001, there were 111.6 million private-sector payroll jobs in the U.S. In January 2009, when Bush left office, there were 110.9 million. The stock market is basically where it was a decade ago. The lost decade ended with the deepest recession since the Great Depression.
Yet the CEO class exhibits an unseemly combination of myopia and ingratitude. This administration—like the Bush administration before it—continues to be remarkably solicitous of their needs. The White House had recently asked the Business Roundtable “to provide a detailed list of concerns about the administration’s regulatory agenda,” according to The Wall Street Journal. What’s more, many of the policies recently put in place are quite friendly to big business.
Consider Immelt’s General Electric. The conglomerate’s massive financing business, GE Capital, had relied on short-term borrowing in the credit markets for most of its funding—a business model that left it highly vulnerable in the fall of 2008. The Federal Reserve rode to the rescue by guaranteeing the vast commercial paper market, in which GE Capital was a significant participant. Then the Federal Deposit Insurance Corporation said it would guarantee debt issued by financial institutions, a new entitlement that GE embraced wholeheartedly. Today, GE Capital has $59 billion in such guaranteed debt outstanding (about one fifth of the total program as of May 31). Yes, GE Capital is simply using a program made available to many companies, large and small, and it has paid more than $2 billion in fees. But the company is receiving a huge subsidy courtesy of the taxpayers.
Like many other large companies, GE has a portfolio of businesses that benefit from the stimulus packages, new regulations, and taxpayer spending. It continues to call for more spending initiatives that will support its businesses. GE on July 9 appealed to Congress to invest in a smart electricity grid. On June 29, GE Energy and the American Wind Energy Association brought a 131-foot wind turbine they’ve been taking around the country to “the main gate at Nationals Park for the 2010 congressional baseball game.” The message: taxpayers should do more to support the development of wind energy. (GE Financial Services has invested in 58 wind farms.) The company also called on Congress to put into place a “national renewable energy standard” that would boost growth in clean-energy projects.
GE’s Immelt and other CEOs may have ample reason for frustration—but not at the U.S. government. China isn’t panning out as a major market in the way GE had hoped. Immelt was named CEO at an inauspicious time—Sept. 7, 2001. But in the past nine years, an era in which the S&P 500 has been flat, GE’s stock is down 60 percent. Despite a benign regulatory and global environment, big business has failed to provide adequate returns to stakeholders.
The leaders of our largest corporations receive extraordinary assistance and continually clamor for more. They gripe about regulations and rules, but tell us how rules and regulations should be altered to benefit their particular businesses. And they’re the ones who are angry?
Daniel Gross is also the author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation and Pop!: Why Bubbles Are Great For The Economy.