No Democratic president since at least Grover Cleveland in the late 19th century has been beloved by American business. But the bleak relationship between Joe Biden and corporate America is remarkable given both the stellar financial market performance during his tenure and the nature of the alternative.
Yes, Donald Trump offers some of what business has always liked about Republicans – vows to lower corporate taxes and reduce regulation – but compared to pre-Trump Republicans, he’s put a lot of distasteful items on the menu. He wants a 60% tariff on all goods imported from China and a 10% tax on imports from elsewhere. Quite apart from any impact on consumer prices, this would crush U.S. exporters who rely on foreign-made intermediate goods and compete with firms in Europe and Asia.
Trump is also vowing cuts to legal immigration and a dramatic increase in the deportation of people already present and working without authorization in the U.S. This kind of posturing is good campaign rhetoric, but in a practical sense, it would be devastating to the interests of thousands of U.S. businesses that rely on all kinds of immigrant labor – skilled and unskilled, legal and illegal. The U.S. unemployment rate is already very low, so the vacancies created by this policy wouldn’t be filled by bringing people back into the labor force. The economy’s productive capacity would contract, risking higher inflation or interest rates, which would make it harder for all businesses to invest.
Speaking of interest rates: Business has always loved the Republican approach to tax policy, but 2025 is not going to be 2017 or 2003 in terms of macroeconomic circumstances. A huge tax cut that increases the deficit would put more upward pressure on inflation and force even higher interest rates. To deal with this, Trump has floated clipping the Fed’s independence to force rates down – a disastrous idea that could cripple the U.S. economy for years to come.
And that’s just the relatively normal policy stuff. The long-tail risks of bombing Mexico or ending NATO while cutting off aid to Ukraine, for example, are gargantuan. And yet corporate America sees 2024 as a “no-win” proposition. Which raises the question: Why doesn’t business like Biden more?
Part of the reason may be sheer pettiness. It’s completely fair for industry to complain about Lina Khan at the Federal Trade Commission or Gary Gensler at the Securities and Exchange Commission, or to take issue with stray bits of political rhetoric about price gouging. But corporate America is doing just fine under Biden.
There is also an oddly asymmetrical assessment of the risks involved in the choice between Biden and Trump. Business can live with what Biden has done so far, but it is paranoid about what he might do in the future – such as taxing unrealized capital gains. Meanwhile, it is blithely confident that Trump won’t follow through on his loopier promises.
I have no idea where this confidence comes from. It’s true that Trump served a full term and the sky didn’t fall. But he also led an insurrectionary mob to try to overthrow the government. And it’s worth pointing out that the sky isn’t falling under Biden, either. Trump, meanwhile, has secured much more control over his party in Congress, whereas it’s all but certain that Biden will be checked by a Republican majority in the House, the Senate or both.
As far as I can figure, the best justification for this business coolness toward Biden is just hurt feelings. And that raises the inverse of my earlier question: Why doesn’t Biden like business more?
Biden does not have a business leader in his Cabinet. Treasury Secretary Janet Yellen is an academic, not a friendly face on Wall Street the way Tim Geithner or Robert Rubin was. He does not really pay homage to the entrepreneurial spirit of American business or do much to court the private sector. He should consider changing direction on that, and find a bone or three to throw business on the regulatory front.
Democrats are currently obsessed with the idea that the American public is insufficiently appreciative of the economy. They’re not necessarily wrong. But telling people that they don’t know how good they’ve got it is not a great message, politically speaking. By contrast, recruiting outside validators from the business world to talk about how healthy recent growth has been, and how risky a bet on Trump would be, could actually improve the “vibes.”
Biden’s former chief of staff, Ron Klain, told an audience of leftist intellectuals last month that the president spends too much time going to ribbon-cutting ceremonies and too little time talking about his vision for the country. Maybe. Or maybe Biden should spend a bit more time schmoozing with business leaders and reassuring them that he’s not a communist and doesn’t see eye-to-eye with Elizabeth Warren on everything.
The White House often seems overly obsessed with preserving Biden’s populist street cred as a way to neutralize Trump. But politicians frequently win by playing against type. Part of Trump’s schtick is being more populist, relative to voters’ baseline expectations, than most Republicans. Biden can appeal to voters by showing them that, relative to their baseline expectations, he is more business-friendly than most Democrats.
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