The enormous victory won by Sen. Barack Obama in the presidential race came from the backing of voters desperately unhappy with the state of the economy and eager for new direction from the top.
Many in business, though, still view the president-elect with a wary eye. (Perhaps the markets do as well: The Dow dropped more than 400 points the day after Obama's election.) Indeed, if a recent survey by Chief Executive magazine is any indication, Obama has his work cut out for him in wooing America's executives. In a survey of 751 CEOs published in October, the magazine found that 74 percent feared the consequences of an Obama presidency versus just 19 percent who worried about John McCain assuming the Oval Office. The surveyed executives feared that Obama's emphasis on big government and his plans to hike capital-gains taxes on big earners would stifle growth and job creation. They also worried he doesn't understand the links between trade and growth well and that he will not be aggressive enough in solving America's immediate energy crisis.
Obama's backers counter that he has garnered far more support from nationally known business leaders than any previous Democratic presidential contender — not least of whom is Warren Buffett, the most respected executive in the country, along with Google CEO Eric Schmidt. Penny Pritzker, the Hyatt heiress who was the national finance chair of Obama's campaign, has used her own extensive contacts in the business world to secure C-suite support for Obama. Aides say the strategy, put together with the same meticulous planning as the rest of the campaign, has yielded a network of several hundred business leaders that Obama has increasingly tapped for advice in addition to fundraising. The CEOs he meets are impressed. "Obama fully understands the importance of investing in people and the ideas and technology they create," says Google's Schmidt.
Business executives and lobbying groups around Washington say that whatever questions or disagreements they might have over the policies Obama is likely to pursue, they are gearing up to work closely with his administration. Even the staunchly conservative U.S. Chamber of Commerce, which threw its weight heavily behind numerous Republican congressional candidates in the hopes they could help keep the Democratic majorities in check, is sounding a conciliatory note these days. "We're always concerned when a new president comes in, but the business community is a uniquely practical constituency," says R. Bruce Josten, the Chamber's top lobbyist. "We may lose some more battles than we would have gotten in recent years," he adds. "But they're in charge now."
In charge for sure. But now the country — indeed, the world — turns to a new set of questions. Obama takes office facing the most difficult economic challenges since Franklin D. Roosevelt stepped into the White House in the midst of the Great Depression. The Illinois senator campaigned on an ambitious agenda of middle-class tax cuts and a wave of public investment in everything from America's aging infrastructure to the cutting-edge alternative energy research that could someday lessen dependence on foreign oil. At the same time, he has pledged to spend billions fixing the health care system and making better education available to all.
Yet even as the economy tanked and the financial sector bailout sent the deficit hurtling toward $1 trillion, Obama has offered little insight into how he will accomplish all of those ambitious goals. What are Obama's top economic priorities, and what will he tackle first? How might they change in light of the ever-worsening budget? Will there really be money available to plow into education, health care, and infrastructure — and if so, when will it come?
For American business leaders, answers to those questions aren't just the stuff of idle speculation. How the president-elect and his advisers shift course on the Treasury rescue plan, for example, and how far they go in imposing more stringent regulation on finance and other sectors will play a big role in determining which companies thrive and which struggle in the coming years.
In many ways, the longer-term agenda of business corresponds with what Obama has laid out. They would like him to focus on the things only government can do to improve competitiveness, train workers, and help U.S.-based companies survive in an increasingly global world — and then get out of the way so that companies can create jobs and flourish. Daniel R. DiMicco, the CEO of Nucor, echoes many executives when he calls for an effort "akin to the Apollo space programs" in those areas that would "change our weaknesses into strengths." That means, above all, a massive effort to rebuild the infrastructure, develop new sources of energy, and train the engineers and skilled laborers who can do that work at home.
But to begin tackling any of the broader issues, Obama must start with the immediate crisis. "The first thing he has to focus on is the economy; it fuels all the social policies that make life as an American great," says Richard H. Anderson, the chief executive officer of Delta Air Lines. Many CEOs think Obama should name a Treasury Secretary and other key economic officials almost immediately, then start work on stimulus measures and other key policy areas. That way he can hit the ground running in January or even earlier.
Obama should also be ready to play cheerleader-in-chief, especially since inspirational leadership has been sorely lacking out of Washington. "Whatever he can do to restore confidence in the consumer would be phenomenal," says Ron Conway, the managing partner of Angel Investors, an early investor in Google, PayPal, and other tech companies. "A lot of [the problem] is state of mind."
Still, if many business leaders broadly back much of Obama's agenda, concern is also brewing in executive suites. In part, that's fueled by fears of runaway spending by the congressional Democrats that could send the budget even deeper into a hole. "We have got to be mindful of the deficit," warns John J. Castellani, president of the Business Roundtable.
What worries business especially is Obama's populist campaign rhetoric, which often became stridently anti-corporate in tone. Given the Democrats' resounding victory, the business lobby can easily imagine a scenario in which a Democratic Congress lets its zeal for reform go too far. "The first piece of advice I would offer to our next president is to stop using 'business' as a dirty word," says Staples CEO Ronald L. Sargent. Also weighing on many minds is the fear that the need for more regulation in financial services and other sectors could turn into a dense new layer of rules. "No question we are in for some reregulation," says James Turley, CEO of Ernst & Young. "But I hope that we are very thoughtful in how we do it so that we do not squeeze out innovation."
Moreover, despite Obama's shift to a more nuanced stance on trade after winning the primaries, many executives worry that the country could move toward a more protectionist direction. They say that the push for more free-trade pacts will be vital to renewed growth. "The next president has to realize that global trade has been a primary driver — if not the primary driver — of our economic progress, and we cannot get caught in a protectionist web," says Nasdaq boss Robert Greifeld.
One notable irony about CEOs and Obama: When the bosses talk of the president-elect, they often invoke Roosevelt. "We need a very, very strong leader, almost like FDR," says Garo H. Armen, CEO of New York-based Antigenics, a biotech startup. "He needs to put in place an FDR effect," says Dow Chemical Chief Executive Andrew N. Liveris. FDR often antagonized business, but he electrified the nation with his decisiveness. Business executives, like many other Americans, are waiting anxiously to see what FDR effect Barack Obama can produce.