Essay: Business and Government Relations

Pages: 7 (2307 words)  ·  Bibliography Sources: 1+  ·  Level: Master's  ·  Topic: Economics  ·  Buy This Paper

¶ … Obama Administration's New Approach to Working with the Business Community

The world continues to be mired in a lingering economic downturn and there are few countries that have fully escaped from its adverse effects in recent years. As one of the primary driving forces behind the global economy, reinvigorating a healthy economy in the United States represents the best opportunity to reverse these economic trends, but the problem is complex and ready solutions remain elusive. Despite these enormous challenges, President Barack Obama has made significant strides in helping the country cope with these serious problems through a number of economic stimulus initiatives, but critics suggest these have been either misguided, too much or even "too little, too late." To determine how the Obama administration's new approach to working with the business community has affected the U.S. And global economies, this paper provides a review of the relevant literature, followed by a summary of the research and important findings in the conclusion.

Review and Discussion

Receiving his Warholian 15 minutes of fame, when "Joe the Plumber" complained to then-candidate Barack Obama in 2008 that his tax proposals would adversely affect the business community, Obama responded, "My attitude is that if the economy's good for folks from the bottom up, it's going to be good for everybody. If you've got a plumbing business, you're going to be better off if you've got a whole bunch of customers who can afford to hire you, and right now everybody's so pinched that business is bad for everybody and I think when you spread the wealth around, it's good for everybody" (quoted in Barron 2010:46). In this "rising tide raises all boats" scenario, critics charged the candidate, and subsequently the president, with advocating a form of socialism for the United States. While this characterization of the president's early remarks remains a matter of interpretation and debate, these early comments did in fact presage President Obama's new approach to working with the business community in general and small businesses in particular. In this regard, Barron adds that, "The overarching principle anticipated Obama's major goals after he was elected, specifically when it comes to smaller businesses" (2010:46).

These goals have become the center point of a national policy that seeks to help the United States weather the ongoing global economic downturn, an event that was not of the president's making but which is now his responsibility as the leader of the Free World. In this regard, Carr emphasizes that, "The world has just experienced one of the greatest eras of economic turmoil ever, maybe second only to the Great Depression. Not surprisingly, it has earned the moniker the 'Great Recession,' as global markets were held hostage for more than 20 months, more than twice as long as the average duration of a normal recession. And the world still isn't out of the woods yet" (2010:41). Likewise, Scaliger stresses the enormity of the problems that President Obama encountered when he assumed office that demanded immediate action on his part: "President Bush left office amid the greatest economic calamity in several generations, perhaps ever. The federal budget deficit is poised to triple last year's record $400 billion, rising to a projected $1.2 trillion. Trillions too have been added to the national debt by a desperate Bush administration and craven Congress, most to bail out America's corporate and financial oligarchs" (2009:19).

In response to these severe conditions, President Obama provided the country -- and the world -- with an economic stimulus package, the American Recovery and Reinvestment Act of 2009 (ARRA), that was intended to jumpstart the economy and help reverse these ugly trends which were the worst in decades (Kolb 2009). According to the editors of the Journal of Property Management, the ARRA stimulus package "includes $787 billion in spending and tax cuts. Commercial real estate is supported through provisions focusing on green building and energy efficiency, as well as business tax incentives. The bill provides significant funds for state energy programs, which could be used to support commercial property owners' investment in energy-efficiency upgrades and alternative energy system" (Economic Stimulus Package - Investment Provisions 2009:20). In addition, the Obama administration has encouraged more U.S. companies, especially smaller enterprises, to become actively involved in international trade in an effort to help fuel the economy and help small businesses in particular grow. As Carr emphasizes, though, "The World Trade Organization (WTO) warned all last year that global trade will be on the decline in 2010. . . . This makes it even more harrowing for small businesses either importing or exporting that are already at a disadvantage by having fewer resources than their large counterparts, let alone lacking the resources on the ground in emerging markets" (2010:41).

Certainly, complex problems require complex solutions and the president's efforts to date have focused on discrete parts of the underlying problems but there is far more involved in economic development than simply throwing money at it. Indeed, business owners, entrepreneurs and investors must all have confidence that things are going to get better sooner than later in order for the wheels of commerce to turn in ways that will fuel the creation of the new jobs that the U.S. economy desperately needs. In this regard, Carr concludes that, "It's not about any one business; it's about the interaction between the businesses. If you think of the economy as a whole, the more confident we are about things, the more money we spend" (2010:41).

To their credit, the president and his team of economic advisors clearly recognized this need for confidence in the economy early on. For example, according to Burke, during the first 3 months of the president's administration, "Reports indicated that Obama and his economic advisors were working to inject confidence into the trembling financial markets" (2009:574). The initial $775 billion-plus stimulus package was intended to "jolt the economy out of a 'vicious cycle affecting both Wall Street and Main Street" (Burke 2009:575). Although various critics have alternately argued that the stimulus package was too little or too great, the president did in fact inherit the problem early on in his administration and his efforts to date indicate that his primary focus is on helping the both the business community and average workers (Anderson 2009).

The president's business philosophy and support for the average American worker has been consistently demonstrated by his actions before and since taking office. With an apparent nod to his previous exchange with "Joe the Plumber," the president has taken steps to ensure job stability for American workers. According to Zucker and Zucker, "On February 17, 2009, as part of the American Recovery and Reinvestment Act, President Obama signed into law the 'Employ American Workers Act' to address the hiring practices of companies receiving stimulus funds. EAWA prevent a company that has received stimulus funds from displacing U.S. workers with foreign workers" (2009:210). By attempting to maintain and eventually increase employment levels, the president was clearly trying to keep the economy as healthy as possible during the ongoing economic crisis, but the magnitude of the problem does not make it amenable to quick fixes or single solutions. Nevertheless, as Kolb emphasizes, "Right now the priority is to create jobs" (2009:34).

Some of the stipulations that have accompanied the stimulus package, though, have been viewed as overly onerous by the business community, particularly for companies seeking to gain access to government contracts through the General Services Administration (GSA). In this regard, Kolb adds that, "While there are opportunities for smaller, less-experienced firms through the GSA, the hassle might overwhelm, firms with limited resources" (2009:35). Moreover, many of the jobs such as those in the construction industry that are being created through the economic stimulus package are transitory and will simply disappear once the work is completed and the money runs out rather than being the product of a healthy economy (Zandi 2009). Nevertheless, besides just construction-related jobs, the president's economic stimulus package has had a natural multiplier effect and has helped to create new jobs in the steel industry, concrete and cement companies, glass, rubber and plastic manufacturers, as well as the information technology and energy sectors (Zandi 2009). In response to the stimulus package provisions, Danforth observed, "Of course, this is great news if anyone in your family works in the construction trades. The added investment in police, energy, and the environment will create thousands of new jobs" (2009:32).

Notwithstanding the mixed effects that the stimulus package has had on the business community, the fact remains that this initiative was taken during a critical period in the nation's history when something had to be done and President Obama had the wherewithal and drive to see it come to fruition. In this regard, Danford also notes that, "While some of the programs and policies of the stimulus package will affect our financial lives for decades, the purpose is to make our economy healthy again in the short-term. That's a noble cause, and the costs and benefits are… [END OF PREVIEW]

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