Biden’s anti-business White House will push us into recession
America’s CEOs are in the dumps. According to a new Conference Board survey, CEO sentiment has plunged to 34, down from 42 in the second quarter and 57 in the first three months of the year.
Early in Joe Biden’s presidency, when businesses were still celebrating the exit of the unpredictable Donald Trump, COVID-19 seemed to be waning and before Democrats’ spending spree unleashed widespread inflation, the index hit an all-time high of 82.
The recent reading is approaching the extreme pessimism that characterized the Great Recession in 2008-2009, when Barack Obama was in the White House.
Who can blame our business leaders? The economy is weakening, the Federal Reserve is raising interest rates and ideologues in the Biden White House are pummeling our nation’s industries, changing the rules and picking winners and losers. Oh — and also raising taxes.
As our country hovers on the brink of recession, the last thing we need is a White House undermining business confidence, but that’s what we have.
The White House is not only punishing ventures that stand in the way of its green new world, like oil and gas companies. The Biden administration is also in thrall to Big Labor; the National Labor Relations Board (NLRB) is pushing unionization across the nation, even if it means bending the rules.
In addition, the Federal Trade Commission (FTC) is aggressively blocking mergers and acquisitions, key to some firms’ futures, while the Securities and Exchange Commission (SEC) is muscling investment capital to favored sectors, supercharging workplace diversity mandates and demanding public disclosures from private corporations.
When Biden issued executive orders mandating an “all of government approach” to solving climate change or racial inequity, few imagined the degree to which federal agencies would be enlisted to pursue those ambitions.
Biden’s advisers, mainly academics and activists without much real-world experience, think they know better how to manage the country’s investments and businesses than the people who created them. The laughably titled Inflation Reduction Act included a 1 percent tax on stock buybacks because Democrats needed revenues to fund their climate fantasies, but also because progressives such as Sen. Elizabeth Warren (D-Mass.) dislike that particular use of excess capital, even if it rewards shareholders.
The White House is abusing friends and foes alike.
When Starbucks, a famously liberal firm, accuses the NLRB of illegally interfering in union votes, something is very wrong. Starbucks’s management and employees have been generous donors to Democratic causes and candidates. But here they are, reporting that NLRB agents manipulated the voting process to help Workers United win elections and then collaborated to hide the misdeeds.
Starbucks is not the only left-leaning firm complaining about Biden’s kowtowing to Big Labor. Following a successful union drive at a Staten Island facility, Jeff Bezos’s Amazon accused the NLRB of “inappropriate and undue influence” in the voting process. That followed President Biden personally encouraging a unionization effort at an Amazon facility in Alabama; that drive failed, so the NLRB ordered a second vote.
It isn’t just the NLRB that appears out of control. The FTC is prohibiting business combinations, and not just by Big Tech. Just recently, the FTC stunned industry observers by suing to prohibit Meta’s acquisition of a small virtual reality company. Venture capitalists registered concern that the FTC would, through such actions, undermine a key growth strategy for Big Tech firms such as Meta.
This follows the FTC blocking chipmaker Nvidia from buying Arm, which licenses chip technology used in most smartphones, and Lockheed Martin’s attempt to purchase rocket manufacturer Aerodyne.
Elsewhere, the SEC is mounting a rearguard action to direct investment funds away from fossil fuels and towards green energy.
These super-charged agencies are delivering on Biden’s priorities — combatting climate change, boosting organized labor and reining in what the president describes as the monopoly power of concentrated industries, which he disingenuously blames for inflation. It is the small number of firms in the shipping and meatpacking industries, Biden claims, that is driving prices higher, not his party’s reckless spending.
Of course, Democrats are also raising taxes on big corporations, which do not, according to Biden, pay their “fair share.” In reality, America’s businesses pay the taxes designed by Congress and take advantage of deductions created to spur investment and to promote other priorities. No wonder the C-suite is feeling dismal.
Why should you care? Because the hiring and investment decisions made by company leaders will determine whether we fall into recession and how severe the downturn is. Right now, the prospects are getting gloomier.
Some 93 percent of CEOs in the Conference Board’s survey think we will be in either a shallow recession (81 percent) in the next 12-18 months or a deep downturn (12 percent).
In response, only half the CEOs expect to hire more workers over the next year, down from 63 percent last quarter. In addition, a hefty 82 percent of CEOs expect their capital budgets to increase or remain the same over the twelve months, but that was down from 93 percent just three months ago.
All of this reminds us of the Obama presidency, which clobbered businesses big and small with reams of new regulations, only to see CEO confidence wane and economic growth slow. It’s not rocket science. Investment and hiring boosts growth; when you create roadblocks to prosperity, the people responsible for taking risks and making those decisions will hesitate, and the economy will stumble.
America’s rebound from the Great Recession was the slowest on record. Many of us at the time blamed the interfering Obama White House for impeding our snap-back. Joe Biden looks to be following the same path.
No wonder our CEOs are in the dumps.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.