Published November 14, 2012
President Obama met Wednesday with 20 of the nation's top CEO's, looking to tap into their nearly $2 trillion in cash reserves to help stimulate job creation.
But the looming fiscal cliff, financial uncertainty in the Eurozone and the ongoing implementation of ObamaCare have businesses fearful of expansion. On Monday, Hostess Brands announced it is closing three bakeries and laying off 627 employees. The company joins Boeing Company, Groupon Inc, Applebee's international, Papa John's and Murray Energy, which have all announced layoffs or other job cuts since the election.
Zane Tankel, CEO of Apple-Metro, which oversees Applebee's Restaurant franchises across the country, expressed a common concern about the costs of the federal health care overhaul.
"We've calculated it would be some millions of dollars across our system. So what does that say? That says we won't build more restaurants. We don't hire more people. It's exactly the opposite effect," Tankel said.
That pessimistic assessment of the economy was also evident at another CEO conference in Washington on Tuesday -- The Wall Street Journal CEO Council's annual meeting.
"All the people who've come in to give us all the advice are pretty gloomy," Sir Martin Sorell, CEO of WPP, the world's largest advertiser, told Fox Business Network. "I came away quite gloomy. They don't believe there will be some agreement before December 31st on the fiscal cliff."
The fiscal cliff is the combination of spending cuts and tax hikes that will take effect in January unless lawmakers find a way to avert it.
The glum forecast may stem from the outcome of the last budget negotiations conducted by the so-called "super committee" -- that failure triggered the fiscal cliff.
Sen. Rob Portman, R-Ohio, who was a member of that committee, told CEO's at the Wall Street Journal gathering that the failure of the super committee to reach a budget compromise was largely the fault of the president.
"The president did not weigh in. He issued a veto threat immediately upon our first meeting. He gave Democrats no cover. He showed no leadership, didn't help us on tax reform, or entitlement reform. He needs to be part of this process. That would make a huge difference," Portman said.
But the Obama administration suggested that, going forward, avoiding the fiscal cliff is contingent on Republicans budging from their no-new-taxes stance from last year. Treasury Secretary Tim Geithner told the CEO's he's encouraged that the House GOP leadership is open to increasing revenues. "You've seen the leadership just in these last couple of days recognize that we're going to have to generate a modest amount of additional revenues from high-income Americans," he said.
But both parties may be under greater pressure to compromise this time, given recent signals from the private sector.
One thing that business leaders agree would ease business pessimism would be an administration agreement to streamline regulations. In the past 90 days the Obama administration has posted nearly 6,000 regulations and notices on its regulations.gov website -- an average of 68 a day.