Treasury Secretary Tim Geithner on Thursday waived off complaints by business leaders that President Obama’s health care and financial regulation laws are creating uncertainty and freezing job creation, arguing that the administration has actually provided “a lot of clarity” for the private sector.
“Businesses always want their taxes lower and always want to live with low regulation,” Geithner said. “There is nothing remarkable, or particularly interesting frankly, that we’re in the midst of another debate, which you hear in almost any administration, with people looking for ways to help affect the outcome on the basic path of regulation and taxes.”
“Every business in America today is in a much better position than they were, not just 18 months ago, but than I think many of them expected to be at this point,” Geithner said at a breakfast with reporters hosted by the Christian Science Monitor.
Geithner acknowledged that there is some uncertainty in the private sector for business, but said it is caused mainly by “deep scars” still left over from the financial crisis of late 2008.
“The big uncertainty that the world is still in … is that people, again, scarred by the trauma induced by the crisis are still looking to see how strong is growth going to be,” he said.
Pressed by The Daily Caller as to whether he was rejecting out of hand a 54-page memo sent to Obama by the Business Roundtable, a consortium of businesses with $6 trillion in annual revenues, Geithner tried to evade the question by focusing only on Wall Street and the financial regulation bill signed into law on Wednesday.
But when asked a third time by TheDC to address the BRT memo, Geithner said it was “a long, diffuse list of familiar concerns, again reflecting nothing remarkable … in the fact that business would like to operate with fewer restrictions.”
A BRT spokesman declined to comment.
It was a speech by BRT Chairman Ivan Seidenberg, the CEO of Verizon, in late June that poured gasoline on a growing wildfire of sentiment that Obama has shown himself to be anti-business.
“By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses,” said Seidenberg, who had been one of Obama’s strongest allies in the business world up to that point.
General Electric CEO Jeffrey Immelt said around the same time that “government and entrepreneurs are not in synch,” and said the Obama White House and business leaders were not getting along.
By early July, the charge that Obama is anti-business had become a mainstream idea, with everyone from Newsweek to speakers at the Aspen Ideas Festival voicing doubts about whether the president understands markets and their interaction with government policy.
The basic argument by business leaders is that Obama’s health care and financial regulation bills have given so much discretion to federal government rule-makers – who have yet to draft hundreds of new regulations in the two bills – that businesses have little idea of the scope and shape of the impact on them, and fear that the effect could be severely punitive.
The financial regulation bill, said Sen. Richard Shelby, ranking Republican from Alabama on the Senate Finance Committee, “will determine how credit and money flows through the economy.”
“Until businesses know precisely what the new rules will require, they will likely delay any expansion and hiring decisions,” Shelby said in an e-mail.
In addition, Obama supports letting the Bush tax cuts expire at the end of this year for those making more than $250,000, and Congress has tried to pass a number of taxes on investments in recent weeks. And the prospect of a price on carbon emissions, which has been discussed but has begun to look more unlikely to happen this year, is also making businesses jittery.
An estimated $2 trillion in private capital is sitting on the sidelines, as many say businesses are afraid to commit resources to expansion and job creation in such an environment. Others say the reason that businesses aren’t spending and banks aren’t lending is that there is a shortage of consumer demand.
Geithner contested the idea that the health and financial regulation bills have made it more difficult for businesses to plan for the future.
“The basic framework is set. And that should help again give people a lot of clarity about what the basic rules they’re going to operate under is,” he said. “But of course there’s a lot of rule-writing design, and there should be. A lot of the existing set of rules, muck of rules, were not any good. And so you want people to go back and revise and reform.”
Shelby, however, saw the bill quite differently.
“Despite our repeated warnings, the Democrats neglected to determine the exact causes of the crisis so that they could make clear choices in the best interests of the economy. Instead, they gave failed regulators more power and created new bureaucracies to whom they delegated much of the critical decision making,” he said.
But Federal Reserve Chairman Ben Bernanke on Wednesday said in congressional testimony that “the economic outlook remains unusually uncertain,” which sent the stock market reeling.
“Firms making long-term commitments, whether it’s to employment or capacity expansion or new business lines, obviously are concerned about the environment and about uncertainty,” Bernanke said. “Firms are holding a lot of cash. That’s true. It’s also true they’re not hiring very much. On the other hand, their investment in equipment and software has been pretty robust. So there are some mixed signals there … I’m sure there’s some effect there, and I think it’s important. We don’t need to measure the effects to take the lesson that whatever we can do to reduce uncertainty would be productive.”
Ted Truman, a senior fellow at the Peterson Institute for International Economics who advised Geithner at Treasury for a few months after Obama took office, called Bernanke’s comments “remarkable.”
“There’s always uncertainty,” Truman said in an interview. “Are they more uncertain today than they were six months ago or 12 months ago? Things are more certain today.”
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