Lectura 4:00 min
Fat Cats Win
He who underestimates the power of the business sector, or the corporate world if you prefer, or the fat cats , as President Obama would have it, is either naïve, or ignorant, or both.
In Mexico, witness the sad but true case of childrens obesity. A heroic but obscure legislator decided that obesity is caused by the junk food children eat at school. So, a bill was forthcoming to ban potato chips, cookies, soft drinks and scores of other types of junk foods and replace them with nutritious fruits and vegetables and other stuff children hate.
At some point, everybody was in favor of the noble gesture, including Health Secretary José Angel Córdova and Education Secretary Alfonso Lujambio. But they underestimated the lobbying power of the fat cats, namely the players of the US$25 billion junk food industry.
Ultimately, Dr. Córdova backtracked, and so did Lujambio and the lawmakers, in exchange for a promise from the junk food makers to reduce fats and other harmful ingredients from their yummies, since, you know, childrens health is a paramount consideration. So, the fat cats won.
Keeping in mind that local fat cats are often the same as fat cats in the United States, it develops that fresh from big election gains, Republicans who are now in control of the House in Washington pledge less government involvement in the private sector and more scrutiny of new regulations. Timidly, Obama promises a change in approach.
Soon after this months election, Obama appeared to get the message of the infinite power of fat cats, promising to change his approach on business issues after his party took what he called a shellacking by voters.
The president acknowledged hes ready to compromise on a temporary extension of the Bush-era tax cuts a major concern for many businesses. And he pretty much admitted that he has not found the right balance between increasing regulation to protect consumers and setting the right tone publicly to encourage businesses to expand.
In the third quarter, the U.S. business world reached unprecedented profitability, up 29 per cent from last years third quarter, despite a stubbornly high jobless rate.
There's no doubt that when you had the financial crisis on Wall Street, the bonus controversies, the battle around healthcare, battle around financial reform, and then you had BP, you just had a successive set of issues in which business took the message that well, gosh, it seems like we may be always painted as the bad guy, Obama told the media.
And so Ive got to take responsibility in terms of making sure that I make clear to the business community, as well as to the country, that the most important thing we can do is to boost and encourage our business sector and make sure that they're hiring.
Changing the rhetoric, as Mexicos obesity saga exemplifies so well, will be easier than passing legislation. Although Republicans took the majority in the House, Democrats still control the Senate and the White House.
Business desperately wants the tax cut extension and approval of foreign trade agreements, but a legislative stalemate on other issues wouldnt be all bad, said Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce in Washington.
Sometimes no is a good answer, said Josten, whose organization spent US$75 million this year to elect more business-friendly candidates. Gridlock has always proven to be more effective at reducing government spending and deficit than anything else .
Wall Street has been pounded by Democrats for its role in the financial crisis. Obama derided executives as fat-cat bankers last year and proposed a new tax on the 50 largest financial institutions to recoup projected losses in the US$700-billion bailout fund. The financial overhaul enacted the most sweeping tightening of regulations on the industry since the Great Depression.
Obama says he wants to meet with Republican and Democratic congressional leaders before the Christmas break, to reach an agreement that extends those tax cuts that are very important for middle-class families, and also extends those provisions that are important to encourage businesses to invest, and provide businesses some certainty over the next year or two.
Congressman John A. Boehner of Ohio, who is expected to become House speaker when Republicans formally take control in January, wants to repeal the financial reform. Although its unlikely hell accomplish that since Democrats hold the Senate, hes sure to soften the regulatory blow to the financial sector.
So, no matter how you slice it, the fats cats win again.
