Since Chief Executive published its preivous issue’s cover story on why CEOs are fed up with Washington, President Obama signaled a possible attitudinal shift, with the appointment of GE Chief Executive Jeff Immelt to head the Council on Jobs and Competitiveness. The new group replaces an advisory board headed by Paul Volker that the President established just after he took office.
Cynics argue that the move is less a shift to the center than an adroit maneuver, enlisting a rent-seeking company with which the Obama administration has extensive ties and which benefits from regulations, as well as favored green-energy projects and trade subsidies. GE spends more on lobbying the government than any other company. From 1998 through the middle of 2009, GE spent more than $183 million on lobbying—50 percent more than Exxon or Blue Cross, according the Center for Responsive Politics, which tracks lobby filings. The same source reports that in 2010, GE increased its lobbying expenditure to more than $39 million.
To be fair, Immelt and Obama haven’t always seen eye to eye. Last year the Financial Times reported Immelt’s complaining, in a speech given in Rome, about the administration’s anti-business views. GE says his remarks were taken out of context. Nonetheless, we should take GE’s CEO at his word that he will advocate ways “to revive the economy and create good jobs.” With below-average growth and unemployment stuck at over 9 percent, the economy needs all the allies it can get.
With this in mind, we urge our friend in Fairfield, Conn., to press three basic ideas on his new best friend in Washington:
Cut the corporate income tax. At current levels, it is the second-highest in the world and puts U.S. employers at a disadvantage with other countries and costs Americans’ jobs.
Reduce small-business employers’ uncertainty by making current rates permanent. A majority of small-business profits face taxation at the top rate of 35 percent. These folks, who generate half of all new jobs, need the certainty of steady permanent rates.
Halt all new regulations, or, better yet, eliminate two for every new one imposed. “Regulation is more of a burden for small companies than for large ones,” writes Scott Shane, professor of entrepreneurial studies at Case Western Reserve in The American Magazine. Big companies like GE can spread the fixed cost of compliance across more revenue. Small companies carry a disproportionate burden, which has grown heavier in recent years. The chart above shows what small firms pay per employee to comply with federal rules—an amount that increased more than 21 percent in real terms between 2004 and 2008.
Reg Jones and Jack Welch, two leaders familiar to Immelt, always conveyed the sense that the path to prosperity lay ultimately within our own abilities—when they are allowed to be exercised. Maybe if Jeff throws some of his influence and a bit of GE’s considerable lobbying muscle behind these ideas, we can unleash enough growth and job creation to make a difference. You never know. A little “imagination at work” might do the trick.