Obama meets with CEOs to urge them to start hiring

Nearly five hours of top-level talks between the leader of the free world and the leaders of the corporate world Wednesday produced agreement on

two fronts: They're making slow, steady progress toward a growing economy. And they've got a long way to grow.

At a meeting across Pennsylvania Avenue from the White House, 20 corporate leaders told President Obama that more consumer demand and

less-burdensome government regulations still are needed before businesses can create millions of new jobs and reduce the 9.8% jobless rate.
In what both sides described as a cooperative session, the leaders of companies ranging from General Electric to Google applauded two moves the

administration has made since what Obama has called a "shellacking" for Democrats at the polls Nov. 2: the compromise tax cuts package

nearing passage in Congress and the free trade agreement nearly completed with South Korea that could boost U.S. exports by $11 billion a year.

Still missing was any commitment by the business leaders to launch new hiring initiatives while demand remains weak and the economic future

remains uncertain. Obama asked the CEOs to spend some of the cash sitting on the sidelines — more than $900 billion by some of the largest

U.S. companies. They didn't bite — yet.

"We focused on jobs and investments," Obama said as he walked back from the government's Blair House in below-freezing temperatures. "They

feel optimistic that by working together, we can get some of that cash off the sidelines."

Some of the CEOs said they're already hiring. Others said further action by consumers and the government are needed to spur increased

investment.

"It was a broad-ranging discussion with the president, covering everything from innovation to job creation, tax reform and education," said Mark

Gallogly, managing partner and co-founder of Centerbridge Partners, a private investment firm, who attended the meeting. "One of the focuses was

driving a greater level of investment in the U.S. in order to create jobs."

The session was the largest yet among many Obama has held with business leaders since coming to the White House 23 months ago. Yet for all

the handshakes and back slaps, his relationship with business at times has been as icy as Washington's latest cold snap. He has railed against

corporate salaries and imposed new regulations on Wall Street.

The history of more meetings than solutions hasn't been lost on lobbyists.

"That's what he's been doing for two years," said Bruce Josten of the U.S. Chamber of Commerce, which spent more than $32 million in the

midterm elections, virtually all of it to oppose Democrats running for Congress. This time, he said, the group's members "are hoping that it's a little

bit more than a charm offensive."

Valerie Jarrett, one of Obama's closest aides and his liaison to the business community, tried to assure them it was. "There was a lot of

cooperation and a lot of energy and enthusiasm about working together" during the closed-door meeting, she said on CNBC. "I think it was a win-

win-win for everyone."

Nary a negative word was heard from either side as they emerged — and possibly for good reason. A mile away, the Senate was passing a two-

year extension of the tax cuts enacted under President Bush in 2001. While the meeting was underway, U.S. and South Korean negotiators

announced they would meet this weekend to fine-tune the agreement worked out this month on automobile trade practices.

"The president clearly wants to get the economy moving, and he's willing to listen to a broad range of views," said Lew Hay, CEO of NextEra

Energy, in an e-mail after the meeting. "He recognizes that jobs are created by the businesses of America and that we need to ensure that

businesses have the right incentives in place to invest in the economy and create jobs."

Cash on the sidelines

Still dogging the economy three years after the official start of the recession is companies' caution about investing in hiring and bringing new

capacity online.

"There is a lot of cash on the sidelines right now, but it's because of uncertainty in demand," said David Cote, CEO of Honeywell International.

"That's what's got everybody concerned."

The largest U.S. companies, excluding financial firms, had stockpiled a record $902.4 billion in cash through Sept. 30, according to Standard &

Poor's. That amount of cash is up 10% from a year ago and is expected to hit another record at the end of the year, said S&P's Howard Silverblatt.

Companies are reluctant to expand production capacity because demand has been increasing so slowly, and there's no indication that's about to

change, he said. "Companies want to expand, they want to make more money, but the problem with a lot of uncertainty is that many still don't

have a high comfort level that if they produced more, they could sell it," Silverblatt said. "If I'm selling 100 widgets now, I won't make 110 unless I

think I can sell the extra 10."

A new survey by human resources consultants Towers Watson shows that 25% of North American companies have reduced staff and will continue

to do so as a way to cut costs. An additional 8% of firms say they have not cut staff but plan to do so.

Ravin Jesuthasan, managing director at Towers Watson, said one major element continues to hold back many firms from hiring: fear of an unstable

future.

"There is uncertainty about how the global economy is going to do and how the U.S. economic and regulatory environment is going to be

changing," he said.

Some companies say they're spending and hiring. Boeing plans to hire up to 5,000 workers next year in Seattle and South Carolina because of

projected export growth, CEO Jim McNerney told Bloomberg Television. He said business leaders urged Obama to sign additional trade deals with

countries such as China and India.

Scott Davis, CEO of UPS, said the company added more than 50,000 employees for the holiday season. "We're doing our part to help out," he

said on CNBC after the session.

General Electric is deploying its cash in ways to boost U.S. jobs and manufacturing as well as reward shareholders, said company spokeswoman

Anne Eisele. Last week, GE said it would invest $50 million in a joint venture to build high-speed rail systems, a move that may create 250 new

jobs in the U.S. and preserve 3,500 more.

Otis Baskin, a management professor at Pepperdine University's Graziadio School of Business and Management, said many CEOs have tabled

hiring because they don't want to repeat layoffs if another slowdown comes.

"Going forward, they don't want to go through the painful experiences they have gone through in the past," Baskin said.

'My greatest fear'

The fear that companies might permanently make do with less has haunted Obama since he took office.

He told USA TODAY in an interview last December that some of the more than 8 million jobs lost during the recession might not return without a

series of new government initiatives to jump-start private-sector hiring.

"You've got essentially a 7 million to 8 million gap between where jobs should be for relatively full employment and where we are," the president

said then. "That is my greatest fear, is we don't close that gap."

To do his part in closing the gap, Obama has relied largely on the $814 billion economic stimulus law signed in February 2009 and a series of

smaller tax breaks and subsidies intended to jump-start hiring. He's also called for doubling U.S. exports in five years.

On Wednesday, Obama laid out his philosophy.

"I believe that the primary engine of America's economic success is not government," he said. "It's the ingenuity of America's entrepreneurs. It's the

dynamism of our markets. And, for me, the most important question about an economic idea is not whether it's good short-term politics or meets

somebody's litmus test. It's whether it will help spur businesses, jobs and growth."

Despite the lofty talk, Republicans and small-business groups said they doubt Obama's meeting will change anything.

House Republican leader John Boehner, who's in line to become speaker next year when the GOP assumes control of the House, said the health

care law remains a burden on small businesses, and the pending trade deal with South Korea still leaves others previously negotiated with

Colombia and Panama languishing.

Stephanie Cathcart of the National Federation of Independent Business said the president needs to shift his focus. "If you really want to talk about

creating jobs, then you should be meeting with small businesses," she said.

Still, many of the business leaders leaving Wednesday's session were pleased with the results.

Greg Brown, co-CEO of Motorola, said the new tax-cut deal and South Korean free trade agreement are steps in the right direction.

"We now need to build on that momentum," he said.