Obama's CEO meeting: 'Uncertainty' an excuse for hoarding profits?
After the fleet of corporate jets landed in Washington, carrying the 20 CEOs summoned by the president as he attempts to counter the image that he is anti-business, one word likely came up often in their meeting today: "Uncertainty." CEOs are increasingly saying that it is uncertainty over the economy and regulations that is prompting them not to spend, or invest toward hiring, the nearly $2 trillion in cash on their books--the highest amount in half a century.
Increasingly, the word is being used to explain why business is wary of doing more. In a speech in June, Ivan Seidenberg, the Business Roundtable's chairman and CEO of Verizon Communications, said that "government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses." He sounded a similar note Tuesday, when the Business Roundtable announced a survey showing that despite all that unpredictability, CEOs are now more optimistic than they have been since 2006.
What I find perplexing about this rationale is the implication that there was a time when there was so much definitiveness in our economy that it was much easier to make decisions. It seems to indicate that under past presidents, there was enough certitude about what would happen next, what the economy would do next or what impact the next election would have, that deciding whether to spend or invest was as easy as pulling out a crystal ball. In fact, one of the fundamental jobs of any leader is to make the best decisions they can in any environment, all of which are inherently uncertain.
Perhaps what they mean is that things are not as certain as they would be if a more conservative president was in office. One did not hear many complaints about George W. Bush creating uncertainty while he was in power, despite extraordinarily unpredictable events that marked his presidency, from Sept. 11 and the economic fallout that ensued to the housing bust and massive financial crisis that came toward the end of his second term.
There may not be many certainties, but there are facts. Industrial production and manufacturing are improving, sending stocks to around their highest levels in more than two years. Corporate profits were higher in the third quarter than ever recorded. Yes, ever. And 80 percent of CEOs--up from 66 percent in the third quarter--say they expect sales to increase over the next six months, according to the Business Roundtable's survey. All of those may not mean the environment for business is certainly good, but it's certainly not all bad either.
I understand that business leaders are concerned about some of the regulations in the health-care and financial-reform laws, and that they question some of the far-reaching measures Obama deployed to fight the historic economic crisis he inherited. And I can see how a two-year extension of tax cuts, versus a permanent one, would make things a little more difficult. The fact is it is extremely challenging to manage during uncertain times, and to make good decisions based on incomplete information. But that is what we pay leaders--quite handsomely, I might add--to do.
December 15, 2010; 4:05 PM ET |
Federal government leadership
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