U.S. President Obama is taking a pro-business bow every day. On Friday he named General Electric chairman Jeffrey R. Immelt to be his chief outside economic adviser, replacing Wall Street enforcer Paul Volcker. Days before he came out against unneeded regulation, appointed a banker to be his chief of staff, and toured a General Electric plant benefiting from $750 million in orders from his India trip.
The pro business public relations drive looks unrelenting. On Tuesday, the President will give his annual State of the Union Address. It is expected to cite more business friendly ideas, especially help for funding innovation and U.S. investment.
What’s doubly surprising about this is that the new business friendly President opened the way for China’s leader Hu Jintao to enjoy one of the smoothest visits of a Chinese leader ever. Hu was supposed to get roughed up by the President, his aides and the newly elected U.S. Congress, many of whom ran against China as a jobs killer.
It never happened.
After shrugging off a few pointed questions about human rights Hu told the U.S. press corps China was neither an economic superpower nor a military threat to the world and everyone seemed okay with that. President Obama backed him up, declaring that China’s “peaceful rise is good for the world, and that it’s good for America”. Two weeks of tension and debate about the undervalued yuan, China’s giant trade surplus and the surprise disclosure of its stealth fighter jet just seemed to fade into the mist.
In a roundabout way, you might say all those orders from the India trip smoothed the way for Hu and let both the Chinese leader and Obama off the hook. It certainly didn’t hurt that the President could point to GE jobs coming from India, especially since there were no new jobs or concessions offered by the Chinese leader. Hu’s concession was to remind the President of a previous order for Boeing aircraft, and maintain a big grin.
The orders from India’s Reliance Power Systems sure helped. But real credit for America’s new era of good feeling should go to Federal Reserve Chairman Ben Bernanke.
A few months ago, Bernanke set out to prove that if you print enough money and boost the U.S. stock market, people won’t care how you do it as long as they feel wealthier. At least that’s the impression China’s Hu might take home with him.
When we last visited Bernanke, he was launching the QE II, the big $600 billion money printing gamble to drive interest rates to zero, forcing investors to see the stock market as the only way to earn a return. Blunter Wall Streeters called it the Bernanke Put, meaning a guarantee for stocks.
Inflation hawks screamed, but the person in very bad shape was the President.
He’d just lost a major Congressional election on November 2 – taking “shellacking” as he described it. He then departed on a 10-day Asian trip, starting with India, and with plans to bring back a South Korean market opening deal. He returned with a bag full of orders for US companies from India, but empty handed from Korea. Angry members of the opposing Republican Party were heading to Washington to embarrass the President and tie him up in knots for two years. They’re now dug in. But the President is hardly in knots.
Wow. What happened? First stocks started moving up right after the November election and Bernanke’s pledge. U.S. stocks are now at July 2008 levels, not boom tme peaks but at levels before the sub-prime crisis devastated American portfolios house values.
Then the President did an instant wardrobe-change. One day he was wearing the garb of a tax and spend liberal who created a $1.5 trillion deficit. The next day he emerged in a pro business suit asking America’s executives what he could do to help them grow their companies faster. Their answer: Less taxes and regulation, what business leaders always say.
The President hasn’t cut business taxes yet, but maybe he did the bosses one better by extending their personal tax cuts across the board for two more years. On January 18 he helped again, publishing a commentary in the Wall Street Journal, the paper most critical of his Administration, calling for the elimination of all “unreasonable” government regulations. Ok, words are cheap. But former supporters said Obama was selling out.
He’d already infuriated them by naming William Daley, a business advocate, lobbyist and leading member of the Chicago Daley political dynasty as his chief of staff. Daley had fought Obama over bank regulation and health care reforms and as an executive of J.P. Morgan Chase walked into the White House as as strongly pro business. Knowing that the chief of staff directs the President’s agenda, deciding who the President sees, who he does not see, and what papers go across his desk Wall Street let out a whoop. The S&P 500 index has been up seven weeks in a row.
How much of this President Hu absorbed during his visit isn’t clear. Like all Americans, he knows the President is up for reelection and needs strong business support. He probably was well briefed on that before he left Beijing.
But now he also has seen with his own eyes how a Wall Street rally seems to erase all sins. “Why Obama May Be Wall Street’s New Best Friend ” declared the financial broadcaster CNBC, also owned by General Electric.
Yes, the U.S. is in a housing depression and unemployment is stuck at 9.4%. Americans might also be a little cynical about the President’s motives, since he’s already sent key aides out to start his next presidential campaign. Less than half of Americans have any stake in the stock market–the big rally is benefiting wealthy investors, the people Obama used to excoriate But right now ordinary folks don’t seem to care. Obama’s approval rating in a new poll is now at 53%, up from 45% in December.
So you might say thanks to India’s orders, a money-printing Fed and a President cross-dressing in any way that brings him corporate support, China’s President Hu flew back to Beijing in the afterglow of “A Visit Of Good Feelings”. He might want to drop a thank you note to the Indians for all of those orders, and surely one to Mr. Bernanke for printing all of that new money.
You might say Hu went home scott-free.
Bob Dowling is Editorial Advisor to Gateway House.
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