Analysis: Will BP foul Obama’s relations with business?

By Patricia Zengerle

WASHINGTON (BestGrowthStock) – President Barack Obama was credited by supporters with thrashing a corporate giant when BP Plc agreed to his demand to commit $20 billion to help those affected by the Gulf of Mexico oil spill.

But now he has to convince business he is on its side, as he struggles to boost the economy and foster job growth while his fellow Democrats fight to keep control of Congress in the November election.

Executives have become increasingly disenchanted with Obama since he swept to the White House in 2008 with more support from business leaders than most Democrats usually enjoy.

Passage of Obama’s healthcare reforms, his bid to tighten regulation of big financial firms, his reference to Wall Street executives as “fat cats” and his angry rhetoric about BP worry executives.

They increasingly view Obama as hostile and his platform as an expensive expansion of government at the expense of the private sector.

“It (the friction with BP) cements the administration’s reputation as being fundamentally anti-business,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office.

“What have they done that is not in the category of making it harder for businesses to operate?” asked Holtz-Eakin, who was an economic policy adviser to Republican John McCain during his losing 2008 presidential campaign against Obama.

Time magazine ran an article this week asking if Obama can regain the backing of big business. Wall Street Journal columnist Daniel Henninger said: “The beating Mr. Obama is giving BP isn’t the exception. It’s the rule when this president finds himself in tension with the private sector. I can’t recall any previous president with this depth of visceral, anti-business animosity.”

Some experts say many in the business world who supported Obama and other Democrats in 2008 may not only turn from the party, but actively work to eliminate Democratic majorities in the House of Representatives and Senate this year and try to remove Obama from the White House in 2012.

Campaign funding from big companies may drop, leaving the Democrats with an ever harder task at the polls in November, they say.

‘WHAT PLANET’?

Obama aides retort that the president is only doing what he has to do to fix the damaged U.S. economy he inherited from Republican President George W. Bush and address fundamental problems that hurt the general public, even as they enriched a few individuals.

“It’s hard to tell what planet these people live on,” Obama’s press secretary, Robert Gibbs, said when asked about labeling of the BP escrow deal as an example of Obama’s socialist intervention in the private sector.

“It’s hard to understand their viewpoint, but it may explain their votes on financial regulation. It explains how they view whether or not the banks ought to be able to write their own rules and play the game the way they played it several years ago that caused our economy to crash,” he said.

Analysts say the White House’s problems with business are real, and have consumed political capital that Obama will need as he pushes Congress to pass his energy overhaul.

“From a political standpoint I totally disagree with the president of the Unites States telling a company that they have to put up money in the event that it isn’t necessary. I don’t like that. I think it interferes too much with free enterprise,” said Christopher Zook, chairman and chief investment officer, CAZ Investments in Houston

However, Obama’s robust treatment of BP is unlikely to send his relationship with business into a nose dive.

“Not only is it a one-off, but I think a lot of American business is pretty horrified by what happened, and a lot of businesses have been adversely affected by the oil spill… They’re not going to be sympathetic with BP,” said Robert Litan, an expert on regulation.

Beyond the political noise, the Obama administration is still working closely with large corporations.

“Business generally is not a fan of Obama’s tax and regulatory policies,” said Allan Lichtman, a political history professor at American University. “However, business has generally tried to work with Obama, who they do not believe is an ideologue.”

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(Additional reporting by Chuck Mikolajczak in New York, Editing by Alistair Bell and David Storey)

Analysis: Will BP foul Obama’s relations with business?