Corporate profits soar as executives attack Obama policy
Tom Donohue, the president of the U.S. Chamber of Commerce, last week said higher taxes and a "flood of new regulations" will damage an already subpar economy. "In many ways, we're going backwards," he said.
Such complaints, echoed by corporate executives throughout President Barack Obama's first term, obscure one fact: American business has never had it so good.
U.S. corporations' after-tax profits have grown by 171 percent under Obama, more than under any president since World War II, and are now at their highest level relative to the size of the economy since the government began keeping records in 1947, according to data compiled by Bloomberg.
Profits are more than twice as high as their peak during President Ronald Reagan's administration and more than 50 percent greater than during the late-1990s Internet boom, measured by the size of the economy.
Business leaders cite low labor costs in an era of high unemployment, the Federal Reserve's easy-money policies, and their own management savvy for the profit boom. Prosperity has come in spite of the president, not because of him, they say.
"I don't think he deserves any credit," John Engler, president of the Business Roundtable, a Washington-based association of chief executive officers, said in an interview.
Economists disagree. In a February 2012 survey, 80 percent of senior economics professors said unemployment was lower at the end of 2010 than it would have been without Obama's stimulus spending. A July 2010 study by Alan Blinder, former Federal Reserve vice chairman, and Mark Zandi of Moody's Analytics, said the stimulus, bank rescues and Fed policy "probably averted what could have been called Great Depression 2.0."
Extending the climb in corporate profits this year is expected to grow more challenging as labor costs rise with increased hiring. CEOs say they also face uncertainty over new health-care rules and taxes. Washington's repetitive political confrontations threaten to further lengthen their odds.
For four years, American business has seen the Democratic president as a tax-and-spend advocate of big government who was intent on imposing red tape. Some criticized him for a lack of experience in business.
In the presidential campaign, business groups spent millions of dollars on Republican candidates in a bid to unseat Obama. Former General Electric Co. CEO Jack Welch even accused the White House of manipulating unemployment data for political advantage.