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The Roundtable’s Great Awakening

June 25, 2010

Among the ironies of President Obama’s style is that he regularly denounces big business even as big business has been one of his closest allies. But that may change, at least judging by the Business Roundtable’s high-profile second thoughts on Tuesday.

“We see a host of laws, regulations and other policies being enacted that impose a government prescription of how individual industries ought to be structured,” said Verizon CEO Ivan Seidenberg, also chairman of the Roundtable, the association of chief executives of the largest U.S. companies. In a remarkable speech at the Economic Club of Washington, he even added that this agenda is creating “an increasingly hostile environment for investment and job creation here in this country.”

Over the last year under president John Castellani, the Roundtable has largely supported the White House-Democratic program of advancing the power of the state over business. BRT favored the stimulus, ObamaCare, cap and trade and other Washington Inc. programs. Mr. Seidenberg semi-recanted Tuesday, saying that “By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.”

All’s fair in love and lobbying, and many Roundtable members thought they could best advance their own business goals by cooperating with Capitol Hill. Some tried to buy political protection from this or that regulatory agency, others hoped that the fellow behind the tree would be taxed, not them. Still others were bluntly engaged in rent-seeking—ObamaCare dispensations for Pfizer, sweetheart cap-and-tax deals for Exelon, whatever General Electric is looking for this week, etc.

Yet this is a mug’s game, and always has been. Whatever short-term advantages an individual company earns are always at political risk, while the politicians play divide and conquer as they increase their control over business more broadly. An old Washington hand like Mr. Castellani ought to have known better.

A notable recent example is when Roundtable companies came under sustained political assault for obeying federal accounting laws because their ObamaCare-induced writedowns embarrassed Democrats. Another is the Roundtable priority of retaining the current tax deferral on corporate profits earned overseas. Democrats said they’d reconsidered this tax hike, only to have it return with a vengeance in Mr. Obama’s 2011 budget and the current tax extenders bill.

Mr. Seidenberg took a longer view on Tuesday, citing everything from current and future tax increases that are “doing long-term damage to growth,” to free trade, to new FCC rules that would “impose old utility-style regulation on the Internet,” to financial re-regulation that will convert Washington into the new master of the universe. For more detail we recommend the Roundtable’s report to the White House, which is a 54-page indictment.

Speaking under the BRT’s auspices, Mr. Seidenberg said that “In our judgment, we have reached a point where the negative effects of these policies are simply too significant to ignore.” This is progress. America needs capitalists willing to defend capitalism, rather than merely their own special privileges.