By Peter Schroeder and Bernie Becker - 07/25/11 10:00 AM EDT
The Obama administration’s push to mend its relationship with business has gone cold only six months into the effort.
Complaints abound about the regulations pouring out of federal agencies to implement the federal healthcare and financial regulation laws.
“With the Obama administration, it just seems to be relentless,” said David Rhoa, owner of a bulk-mailing facility based in Kalamazoo, Mich. “I’ve become accustomed to the fact that this pummeling keeps coming.”
Since the thumping of Democrats in November’s midterm elections, Obama has added business-friendly veterans like his chief of staff, William Daley, and economic adviser Gene Sperling to his inner circle.
He’s crossed Lafayette Square to meet with adversaries at the U.S. Chamber of Commerce and embraced pro-business policies that have cost him political capital with the left.
Obama agreed to extend Bush-era tax rates in December, and is pushing trade deals with South Korea, Colombia and Panama that are vehemently opposed by labor unions.
Administration officials argue they’ve worked relentlessly to improve the economic environment for small businesses that make up the heart of the U.S. economy.
“Senior administration officials have been regularly meeting with small businesses to hear how the government can not only help them grow, but additionally how to reduce their burdens and remove barriers to their growth,” said Hayley Meadvin, press secretary for the Small Business Administration.
Yet business still isn’t feeling the love, and suggests there’s more show than substance to Obama’s efforts.
“They’re not even aware that the administration says they’re focusing on small business, because they don’t feel the changes,” said Cynthia Magnuson, a spokeswoman for the National Federation of Independent Business.
Casino mogul Steve Wynn became an unlikely symbol of the private sector’s frustration last week when, in a call with stock analysts, he said the industry fears Obama and his administration is “the greatest wet blanket to business and progress and job creation in my lifetime.”
A few days later, Bernie Marcus, the co-founder of Home Depot, told Investor’s Business Daily that the federal government was the largest impediment to job growth.
“As he speaks about cutting out regulations, they are now producing thousands of pages of new ones,” Marcos said.
Critics accused Wynn of hyperbole, but there’s no doubt business groups have been worried about a web of regulations approved last year with the healthcare and Wall Street reform laws. That the economy added only 18,000 net jobs in June underlined their concerns.
To be sure, there are other brakes on the economy. The Wall Street Journal earlier this month found that, by more than a 2-to-1 margin, economists felt hiring was sluggish due to scant demand rather than to uncertainty over government policies.
Banks remain tight with credit, making it hard for businesses to secure loans.
“Small businesses still can’t get access to capital — everybody’s just sort of trying to keep their heads above water,” said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce.
But even when it comes to banks, blame shifts back to the administration, underscoring the challenge for Obama. Banks point to regulations emanating from the Wall Street reform bill.
“The banking regulatory pendulum swung way too far in the direction of overregulation — onerous regulation, really,” said Paul Merski, chief economist for the Independent Community Bankers of America.
To head off criticism, Obama in January launched a review by agencies to trim outdated rules, followed by an executive order in July calling on them to streamline their regulatory operations.
A report to be published today by the conservative Heritage Foundation, however, argues regulations are still on the rise under Obama.
The report found that the administration issued 15 major regulations with an annual cost of more than $5.8 billion during the first half of the fiscal year, while only six major deregulatory actions worth $1.5 billion in savings have been enacted during Obama’s term.
It also found that between spring 2010 and spring 2011, the number of “economically significant” regulations in the pipeline increased by 15.2 percent.
The White House disputes suggestions that it is behind a regulatory explosion.
“The notion that there has been a wave of new regulations with this administration is simply false,” said Meg Reilly, a spokeswoman for the Office of Management and Budget. “In fact, 2007 had the highest regulatory costs, and the total costs of rules actually fell in the first two fiscal years of the Obama administration. ... Our record demonstrates that we can protect the public and support economic growth.”
Businesses do seem to recognize that broader forces are also at work in holding back the economy, and they acknowledge some White House efforts — such as the $30 billion Small Business Lending Fund the Treasury Department recently got off the ground — have been helpful.
“The problems we’re dealing with now are not always made better by the administration, but in the same vein, they also were not created solely by this administration,” said Molly Brogan, vice president of public affairs for the National Small Business Association.
“This whole crisis developed not under President Obama, so we’ve got to put the responsibility where it rests. He has tried,” said Knapp, of the South Carolina Small Business Chamber of Commerce.
Rhoa, the Michigan businessman, said he doesn’t think the White House is trying to hold back business, but he accused the administration of not always understanding the effects of its policies.
“I don’t believe there’s an evilness inside Congress or inside the White House,” he said. “I think they’re making these decisions in a vacuum or without respect to how this really gets implemented.”