Business groups wary of Obama's populist campaign rhetoric hope to make common cause with the Illinois senator and other congressional Democrats by pushing for an economic-stimulus package, possibly as early as this year.
WASHINGTON — Barack Obama rode a wave of economic discontent to the White House and now faces the daunting task of turning the weakening economy around.
Business groups wary of Obama’s populist campaign rhetoric hope to make common cause with the Illinois senator and other congressional Democrats by pushing for an economic-stimulus package, possibly as early as this year.
Groups such as the U.S. Chamber of Commerce hope to include corporate tax breaks in the stimulus, along with the spending on roads and bridges intended to create jobs that is likely to be the cornerstone of his plan.
“We start off with a shared and very strong and mutual interest,” said Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce. “The No. 1 issue today is … the economy.”
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Still, Obama has promised tougher government regulation for a range of industries, including financial services, energy and health care, and he is likely to be a strong ally for labor unions.
Wall Street “will be surprised by the speed and degree to which the corporatist agenda is replaced by 1970s-style economic populism,” wrote Andrew Parmentier, an analyst at FBR Capital Markets, in a note to clients.
Concerns about the budget deficit, which could approach $1 trillion in the budget year that began Oct. 1, will likely take a back seat in the short term, economists said.
“It’s going to be ‘damn the deficit and full speed ahead on the stimulus,’ ” said Stuart Hoffman, chief economist at PNC Financial Services. Hoffman expects the package to include an extension of unemployment benefits and new spending on roads, bridges and other infrastructure.
Obama supported a $50 billion stimulus during the campaign that included funds for infrastructure spending and grants to state and local governments.
House Speaker Nancy Pelosi, D-Calif., on Wednesday called for Congress to approve a new stimulus bill in a lame-duck session before the end of the year. House Democratic Leader Steny Hoyer said in a television interview the package would likely be in the “neighborhood” of $100 billion.
Whatever the amount, Josten said the Chamber will push to include tax breaks for business investment, which has slowed in the face of tight credit.
The economy, which many analysts say is already in a recession, was foremost on most voters’ minds Tuesday. Six in 10 voters said it was the most important issue facing the country.
The country’s gross domestic product — a measure of the overall economy — shrank by 0.3 percent in the July-September quarter, the government said last week.
More bad economic news is likely this week. Wall Street economists expect the Labor Department to report Friday that companies cut 200,000 jobs in October, sending the unemployment rate to 6.3 percent. Unemployment stood at 4.9 percent at the beginning of this year.
The stock markets, after rallying on election day, fell Wednesday. The Dow Jones industrial average dropped 486 points, or 5.1 percent, to 9,139.27, while the broader S&P 500 fell 5.3 percent.
Economists are urging Obama to quickly put a team in place to oversee the $700 billion financial-system rescue approved by Congress last month.
But any honeymoon between the Obama administration and Wall Street and the rest of corporate America could be short-lived.
Obama and Congress could toughen oversight of banks and other financial-services companies, enforce environmental rules more strictly, and impose new surcharges on electric utilities and other companies that emit greenhouse gases, Parmentier wrote.
Unregulated corners of the financial industry, such as hedge funds, credit-ratings agencies and the derivative instruments known as credit default swaps will likely come under government oversight as part of a broader overhaul of the financial regulatory system, analysts have said.
That overhaul could also place insurers such as Allstate and MetLife, which are now regulated at the state level, under federal supervision.
Obama also promised to take a more pro-consumer focus toward the housing and credit-card industries. He supports a controversial measure that would allow bankruptcy judges to alter mortgages, which was strongly opposed by the financial industry, as well as a measure to limit the ability of credit-card issuers to unilaterally impose new fees and other terms.
Obama’s reputation as a conciliator, meanwhile, will be sorely tested by the labor-backed Employee Free Choice Act, which would allow workers to form unions by getting a majority of employees to sign a card in support of a union, rather than through a secret-ballot election.
Business groups such as the Chamber of Commerce fiercely oppose the bill because they say the elimination of the secret ballot would open up workers to intimidation and harassment.
The measure, supported by Obama and most Democrats in Congress, was approved in the House last year but stalled in the Senate. Josten said the Chamber hopes to continue to block the proposal in the Senate, where Democrats appear to have fallen short of the 60 votes that would allow them to force votes on controversial bills.
Oil and gas companies such as Exxon Mobil and Chevron, meanwhile, could face a windfall-profits tax, which Obama has promised to impose to pay for a $1,000 “emergency energy rebate” for families.
Also on energy, Obama proposes spending $150 billion over 10 years to speed the development of plug-in hybrid cars and “commercial-scale” renewables, such as wind and solar.
Obama’s election could mean tougher terms under the Medicare drug-benefit program for pharmaceutical companies such as Pfizer and Merck. Obama has promised to negotiate prices directly with the companies, which could save between $10 billion and $30 billion, under one estimate. Industry groups have long opposed such a move.