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Obama hopeful businesses are ready to help stimulate economy

John Dimsdale Dec 15, 2010
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Obama hopeful businesses are ready to help stimulate economy

John Dimsdale Dec 15, 2010
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Kai Ryssdal: I’m just going to take an educated guess for a second and say that for five hours today, President Obama was probably the worst paid guy in the room. He invited 20 CEOs over for lunch, and a discussion of what private industry can do to help get the economy going again.

With the Fed and the $600 billion it’s putting into the economy, and the $800 billion stimulus from the tax cut deal, the president was looking for ideas from business leaders about how to seize what he called the promise of this economic moment.

Marketplace’s John Dimsdale reports.


John Dimsdale: As he walked back to the White House after today’s meeting, President Obama said he’s optimistic businesses are ready to start spending some of their reserves.

Barack Obama: By working together, we can get some of that cash off the sidelines.

Businesses are hoarding a record $2 trillion in profits. To help pry more of that cash loose, the tax deal in Congress would let companies write off all of the investments they make next year in new plant and equipment. Economic forecaster Richard DeKaser at Woodley Park Research says with demand looking up, businesses are ready to spend.

Richard DeKaser: For example, if large corporation were to make large outlays for transportation equipment or information technology in 2011, which they now will have every incentive to do, the increased economic activity in those industries will create more jobs, more incomes, which will help stimulate economic activity more generally.

But some wonder if there are enough incentives. Matthew Slaughter is a former economic adviser to President George Bush. He says businesses are anxious about what happens after the equipment tax breaks phase out at the end of 2012.

Matthew Slaughter: That won’t permanently, magically increase capital investment by companies in part because it’s temporary. But also in the out years, companies, what they give up are the tax loss write-offs they would have had in later years.

Slaughter says businesses are looking for more permanent job-creating incentives, like overall tax reform that lowers rates and allows corporations to bring home profits earned overseas, tax-free.

In Washington, I’m John Dimsdale for Marketplace.

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