One minute he’s calling them fat cats, the next he says he’s soliciting their advice.
That’s the convoluted economic world of President Obama, who’ll do anything, including use his former big-business enemies, particularly on Wall Street, to achieve his overall goal in the fiscal-cliff talks — namely, raising taxes as much as possible while cutting as little as possible from Uncle Sam’s massive spending.
And Wall Street seems to have no problem playing along. Its top guns want a quick resolution to the fiscal mess, and will happily throw small business under the bus to get it.
These guys (and a few gals) predict massive market upheaval if no deal’s reached, and both higher across-the-board taxes and deep budgets cuts go ahead. It’s easy to see a stock-market crash, and a sharp economic decline if Washington takes us over the cliff.
But the tax hikes Obama envisions as part of his “balanced approach” to the cliff aren’t so economically friendly either. Sure, he preserves the Bush tax rates for anyone making under $250,001 a year, but small businesses that do much of the hiring get crushed because they usually earn more than that. Nor is he willing to call off the ObamaCare tax hikes that are also set to take effect Jan. 1.
So why would the alleged epicenter of capitalism play along?
First, Wall Street is frantically trying to mend fences with a guy who bankers did everything to defeat in the past election. Now that Obama’s won a second term, the banking chiefs are worried about their bottom line. After all, the Wall Street business model is now more about crony capitalism than the Adam Smith variety — even more so with the president re-elected. With Obama in for another four years, it makes sense to kiss up to the man who controls all those new government subsidies and regulations.
The bankers also know they’re largely inoculated from even a one-sided “compromise” along the lines of what the president is offering; what’s a few more dollars in taxes on base pay of $10 million?
Yes, small businesses might get crushed, but Wall Street banks are hardly small businesses, and neither are their customers. The multinationals they do business with are more concerned with keeping many of the loopholes the Republicans want to close to meet revenue targets than with protecting some guy who owns a couple of restaurants.
So the same fat cats the president pilloried for the last four years are meekly pretending that his radical ideas about running an economy are somehow moderate.
One of those leading the charge is Lloyd Blankfein, the CEO of Goldman Sachs. Not too long ago, he was the poster boy for the administration’s class-warfare propaganda, but you wouldn’t know that based on some of the interviews Blankfein gave after his White House visit last week.
Blankfein isn’t one for the TV cameras, but if you could get past his nervously twitching eyes, he sounded like a true believer in Obamanomics as he reiterated Corporate America’s talking points on the “cliff”: the need to compromise on a deal that addresses spending on entitlements, even if that means raising income tax rates on the “rich.”
But what is the compromise Blankfein had in mind? After a bunch of hemming and hawing, it sounded awfully similar to Obama’s opening “balanced approach” offer of $1.6 trillion in a slew of new taxes, along with scattered and unspecified budget cuts — which the Goldman chief described as “very credible.”
Also pushing “compromise” is Morgan Stanley chief James Gorman. He hasn’t gone to the White House (yet), but did recently urge his brokerage sales force to call people in Congress and prod them to do a deal quickly. He even borrowed a line from Obama, telling his employees to above all demand a “balanced solution” to avoid the cliff.
Funny, Gorman didn’t call on anyone to push the president to compromise, let alone back off his laughable opening offer.
I’m told Obama surrogates have also been privately canvassing Wall Street to drum up support. Last week, Tom Nides, now a deputy secretary of state, was in New York for some fat-cat dinners. Speculation is running high in the Wall Street-Washington orbit that Nides, a former senior exec at Morgan Stanley, will be Obama’s next chief of staff if the current one, Jack Lew, gets Tim Geithner’s job at Treasury.
Which makes Nides a pretty important person to have dinner with; both Larry Fink, the chief executive at money-management powerhouse BlackRock, and Gorman took time out of their busy schedules to meet with him.
Wall Street fat cats have lots of reasons to mend fences with the administration; I just wish they didn’t feel obliged to lead the country down the road to ruination while doing it.
Charles Gasparino is a Fox Business Network senior correspondent.