Sunday, August 5, 2012

UK: Contrasting business messages

The Financial Times

US politics: Corporates and candidates

With contenders presenting starkly different visions ahead of the election, much is at stake for the country’s biggest businesses 
The Republican candidate attacked Mr Obama last month for saying: “If you’ve got a business, you didn’t build that, somebody else made that happen.” Although the president argued the remarks highlighted the importance of government-funded education and infrastructure to growth, his rival said they were “insulting to every ent­repreneur and innovator in America”.

In fact, Mr Obama’s backing of infrastructure investment draws support from many in corporate America. Should Mr Romney win, some are likely to object to sharp cuts in spending set aside to upgrade roads and airports proposed by Republicans in Congress.

Reducing the soaring deficit is the “most important” issue facing the next president, says Roger Altman, the chairman of investment bank Evercore who served as deputy Treasury secretary under Bill Clinton. Mr Obama’s plan – a mix of tax rises and spending cuts – “is vastly more realistic than the one Romney has put on the table,” he says. But most sectors favour the Republican platform of lower taxes and less regulation.

Mr Romney’s backers see the election as a chance to usher in an era of co-operation with government, not least in regulatory terms. “There is a sense among directors I talk to that there is a pent-up demand, desire by companies for a lot of spending and investment if everyone thought the signals were clear – and that if you put capital at risk, the game is not going to be changed on you a year in,” says Mr Engler.

Mr Romney’s “trickle-down deregulatory agenda might have some short-term benefits,” says Jared Bernstein, former chief economist to vice-president Joe Biden, “but historically that has been a recipe for bubble and bust as well as significantly weakening the middle class.” For his part, Mr Obama argues that the kind of low-tax, light-regulation policies proposed by Mr Romney are “what caused the [financial] mess in the first place”.
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