GWEN IFILL: The nation’s chief executive called in major corporate CEOs today, the subject, how to start creating more jobs at a time when business balance sheets are improving.
President Obama spent more than four hours behind closed doors with 20 corporate CEOs today, appealing to them to help jump-start the economy.
U.S. PRESIDENT BARACK OBAMA: You know, we focused on jobs and investment. And they feel optimistic that, by working together, we can get some of that cash off the sidelines.
GWEN IFILL: The cash the president was referring to amounts to $1.9 trillion now on corporate balance sheets.
Before the meeting began, the president said he would ask the private sector to join government in a shared mission.
BARACK OBAMA: This morning, I hope to elicit ideas from these business leaders that will help us not only climb out of recession, but seize the promise of this moment — ideas about tax reform, ideas about a balanced approach to regulation that will promote, rather than undermine, growth.
GWEN IFILL: The economy has sent mixed messages in recent months. A strong start to the holiday retail season spurred growth by nearly 2.5 percent in the last quarter. But, at the same time, the unemployment rate rose last month to 9.8 percent.
That disconnect is apparently driving public opinion. A new Washington Post/ABC News poll today found that nearly six in 10 Americans, 57 percent, say that, in personal terms, the recession has not ended, no matter what economists say. More than a third say that someone in their household lost a job in the past year. And nearly three-quarters now say they have friends or immediate family members who have been hit with a job loss.
Government officials are asking for more business investment. Business leaders are worried about excessive government regulation. Today’s closed-door meeting was the president’s latest attempt to get the private sector on board. That has included a tax cut compromise that cheered Wall Street, but angered liberals, and a long-awaited trade deal with South Korea.
Those steps may be working. According to a new survey of business executives, nearly half say they plan to hire in the next six months.
Shortly after that meeting ended at the White House this afternoon, I spoke with two of the CEOs who participated, David Cote of Honeywell and Greg Brown of Motorola.
Gentlemen, thank you for joining us.
We understand you spent about four hours this afternoon with the president. And the first question he had for you is why so much cash is being left on the table at a time when business seems to be rebounding.
What was your answer, Mr. Cote?
DAVID COTE, CEO, Honeywell: Well, I don’t know that that was the first question that was asked.
But I would say, when you take a look at the cash that is on the sidelines, it’s the same issue that we have had from the beginning, is uncertainty of demand.
If you’re a CEO, you’re going to be cautious about investing money in plants or hiring employees, unless you can be certain of demand. And I would say that is the thing that is holding us up. We have gone through a very tough time. It really strained relationships around the board, like it always does when you go through something like this.
We avoided a depression, largely because of the president’s actions and his direction. That being said, we ended up with the great recession, a good result given where we were, but maybe not perceived that way. And where we have ended up with is an opportunity to really change the dialogue now.
And having government and business start talking together gives us the opportunity to start creating that certainty, developing that certainty of demand, and causing people like me and Greg to invest.
GWEN IFILL: Mr. Brown, we hear so much about tensions between the business community and this White House. Was that evident today at this meeting, and were you able to say, yes, we’re going start hiring right away?
GREG BROWN, CEO, Motorola: So, I don’t think there was any tension in the room. I think that’s been far overblown. I thought the tone of the meeting was constructive, collaborative and very substantive.
As David mentioned, we had a wide-ranging discussion over several hours on a lot of different topics. If I were to capture the themes, they were around job creation and economic growth. The good news is, things are a lot better than they were a year ago or 18 months ago.
The stock market is up. Corporate earnings are stronger. The cash on balance sheets is more substantial. So, the opportunities for us to grow and invest are right there. So now we talked about, how do we rally on the momentum with the extended — the extension of the Bush tax credits, hopefully the approval of the Korean free trade agreement. Free trade agreements create jobs.
So, given some of that early momentum, it’s a critical juncture. We’re in it together. Where do we go from here?
GWEN IFILL: Well, let’s talk about some of the uncertainties. We will go back to you, Mr. Cote, because we have heard that the START — the Bush tax cut extension, which Mr. Brown just talked about, hasn’t been done yet. The ratification of that trade deal hasn’t been done yet.
Do those uncertainties in Washington make life more uncertain for you as well?
DAVID COTE: Well, it certainly never helps.
Uncertainty is not one of the things that causes people to want to invest. And things like the free trade agreement should happen and should be the first of many. And I don’t know why, but it seems like, for millennia now, since the Phoenicians, we have been arguing about whether free trade is good or not.
Every free-trading society does better. Yet, here we sit 3,000 years from the Phoenicians having the same argument again. When it comes to the tax deal that was cut, I think it’s very important for the short term. It needs to get done, because we have a fragile recovery.
But we need to recognize that the compromise that we arrived at is not the sort of compromise that we’re going to be needing two and three years from now. The national debt that — I was on the fiscal commission, as you know — is going to grow from $9 trillion this year to $20 trillion in 2020, even with 4.5 percent GDP growth.
This is the worst kind of compromise to fix that problem, because we’re reducing taxes and increasing spending. And at some point in the next two or three years, we need to shift. It needs to be more taxes and less spending if we’re going to solve that problem.
GWEN IFILL: Well, Mr. Brown, first, I want to know if you agree with what Mr. Cote just said. But, also, what should governments, in your opinion, be doing to help jump-start the economy, and what should business be doing?
GREG BROWN: So, I do agree with what David just said.
The good news is, it appears the Bush tax credits will go through. The good news is beginning free trade agreement with Korea, with, hopefully, Panama and Colombia and the transpacific partnership to follow.
What we’re saying is, that’s good, and that takes uncertainty, some of it, off the table. But in the meantime, we still have a spending problem. And things like entitlement reform and reining in our government spending is absolutely fundamental. And I think that we’re involved in those discussions.
You just saw the deficit commission give a set of recommendations. I think the business community will have every opportunity to weigh in on that. I completely agree that, over the next year or two, that will be front and center and high-priority.
GWEN IFILL: Well, explain to me how you extend these tax cuts, these tax credits, and at the same time try to approach the goal that you both laid out of reducing the deficit for the future.
GREG BROWN: Because I think that we’re in the early stages of the economic recovery. And so we don’t want to — and I completely support it. I think we’re unified here.
DAVID COTE: Yes.
GREG BROWN: You want to maintain that level of growth. And while the economy’s growing again, it’s not growing at a rate it needs to. It’s 2.4 percent or 2.5 percent. We’d like it north of 3 percent or 3.5 percent.
So, any unintended consequence that could dislocate or disrupt that kind of growth trajectory is a risk that’s not worth taking. I think that was the collaborative judgment that was made toward the extensions.
GWEN IFILL: Mr. Cote, what — about what role does regulatory uncertainty play in what you see as the long- and the short-term goals that comes out of a meeting like this?
DAVID COTE: Well, you want certainty in everything, of course.
And when there’s concerns about, whether it’s regulation, tax policy, free trade agreements, any kind of uncertainty is not good and just needs to get sorted out. So, yes, we talked about that also and the need to make sure that there’s a good cost/benefit rationale for any regulation that’s promulgated, and at the same time making sure we understand exactly what we’re doing and that we provide certainty.
So, I thought it was a — I agree with Greg. I thought it was a very good conversation.
GWEN IFILL: Cost/benefit rationale, does that mean more regulation or less?
DAVID COTE: I would say make sure that you have smart regulation.
GREG BROWN: Right.
DAVID COTE: It’s not a case where all regulation is bad or all regulation is good, which some people like to polarize into.
You need smart regulation in a sophisticated, complex society to be able to operate and create the right kind of foundation. So, it’s really a question of making sure that you have to right regulations to ensure that you have American competitiveness globally.
GWEN IFILL: David Cote from Honeywell and Greg Brown from Motorola, thank you both so much for joining us.
GREG BROWN: Thank you.
DAVID COTE: It’s a pleasure.