Biden battles CEOs in inflation blame game

NEW YORK — Wall Street is in chaos, with the plunge in stocks vaporizing trillions in investor wealth this year. Gas prices are surging. Economic confidence is dropping.

President Joe Biden is trying to calm Americans this week with a new focus on the economy, including an inflation plan rolled out in a Wall Street Journal op-ed, a meeting with Federal Reserve Chair Jerome Powell and a pile of senior officials hitting cable TV to tout the White House’s achievements.

But the messaging push may not be enough to overcome a vicious blame game on the economy emerging between corporate leaders and the White House. Biden and Democrats say some of the fault rests with greedy companies artificially hiking prices, skimping on new domestic investments and paying too little in taxes.

Corporate executives and business groups blame Biden for — among other things — pumping too much stimulus into the system at the wrong time, not moving fast enough on supply chain fixes or eliminating more Trump-era tariffs.

The finger pointing will only grow more intense as the midterm elections get closer, financial markets continue to gyrate on every bit of news on inflation and consumers continue to spend down their Covid-era savings to keep up with higher prices.

And some top executives, especially in the banking sector, are now complaining that while Biden pays lip service to caring about their views on how to fix things, he doesn’t actually listen to them or solicit their input. The finance industry is especially alarmed at the moment given the big losses in stocks and the impact of changing interest rates on their businesses.

“They said everything was going to be different under Biden and they would be more engaged with us, and they weren't,” said the CEO of one of the country’s largest banks. “Now they are going to get slaughtered in the midterms. And they deserve to get slaughtered because they haven't really accomplished anything except maybe increasing inflation.” This CEO, like nine other executives and business group officials interviewed for this story, spoke on condition they not be named in order to not anger the White House.

White House officials reject the corporate complaints and say the administration has strong working relationships with the business world in areas including supply chain fixes, fighting Covid and developing infrastructure projects. They’ve also cooperated significantly on Russia sanctions and cybersecurity threats — something the CEOs themselves readily say is the case.

“On our biggest legislative efforts we are working constantly and quite significantly with the private sector,” said a senior White House economic official who did not want to be identified by name.

But the complaints — coming in the wake of Biden’s open clash with Amazon founder Jeff Bezos on the causes of inflation and Tesla CEO Elon Musk’s criticism of the administration — suggest that the president’s relations with many corporate titans are strained at a time when public confidence in his ability to dig out of the economic morass is sinking.

A Conference Board survey shows CEO confidence dropping into negative territory at levels not seen since the start of the Covid pandemic. The latest National Federation of Independent Business survey showed small business owner confidence remaining near a 50-year low. At least some of that stems from drops in confidence that anyone involved — including the Fed, the White House and Congress — has a plan to tame inflation that will work and won’t trigger recession.

White House officials mostly agree that Biden, with his union-friendly persona — he met earlier this month at the White House with the leader of an Amazon unionization drive — is no corporate glad-hander. In his op-ed, Biden wrote of his own humble upbringing. “I grew up in a family where it mattered when the price of gas or groceries rose,” he wrote. “We felt it around the kitchen table.”

And he’s not one to sit around the Oval Office watching cable business news or speed-dialing mogul friends the way former President Donald Trump did. “But if there is something he needs to know, we make sure he knows it,” the senior White House official said.

Still, top financial executives and industry trade groups say they have weak lines of communication with the White House to discuss ways to calm the inflation-induced market turmoil. And they fear the situation is getting worse, with Biden stepping up his calls for corporations to pay their “fair share” in taxes and many Democrats targeting “corporate greed” as a source of the price spikes.

A Business Roundtable official noted unhappiness among the group’s executives who resent getting stuck with the blame for inflation. The official instead suggested the White House look inwardly. “We have this uncompetitive tax and regulatory environment, a slew of new rulemakings,” the official said. “And now he’s talking about deficit reduction to slow inflation? It doesn’t make any sense. There is no plan.”

The new plan from Biden in the op-ed did not thrill the business world either.

In a tweet on Tuesday, Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, welcomed Biden’s new focus on inflation but suggested his plan was lacking in key areas.

“@USChamber applauds the Biden Administration’s renewed focus on combating inflation. If they want to use every tool they have, though, here are three more things to add to the to-do list,” Bradley wrote. He cited tariffs, energy, and immigration policy as areas that needed more White House focus and different policies.

Executives and business group officials who spoke to POLITICO say they could offer Biden much more real-time information on what’s happening in global markets and the economy. And they want the administration to consider measures to combat inflation: easing more trade tariffs, backing off proposed tax hikes, opening up more land for energy exploration and speeding up the permitting process for businesses. But they’re making little headway.

What they really want is for Biden to drop corporate “profiteering” as a reason for inflation. Congressional Democrats led by Sen. Elizabeth Warren (D-Mass.) are leading the charge on this front despite what business groups say is zero evidence companies are artificially jacking up prices rather than simply reacting to rising costs, worker shortages and heavy demand leaning on limited supply.

“We try to agree where we can agree and disagree where we disagree,” said an official at a large D.C. business lobby group. “We’ve been pretty outspoken that the government shouldn’t be blaming business for inflation because it’s just not fair.”

So far, the executives say they can get meetings with White House and Treasury officials, just not any movement. “There is some access but no movement on the policy side,” said an executive at a large asset management firm. “You could talk to them for hours straight and absolutely nothing would change.”

Corporate America, especially Wall Street, remains a juicy target for Democrats given the progressive trend in the party and dim public views on things like massive CEO pay packages and stock buy-back programs. So it’s unlikely Biden is eager to be too close to too many titans of industry, something that some of those titans realize.

“I mean what do they expect, this is a Democratic administration. And one that maybe doesn’t want to be that close to corporate America given the politics,” said a former C-Suite executive at a giant Wall Street bank. “If you can fault them it’s for not having more people around who have actually been in the business world for more than five seconds.”

In addition to not liking taking the blame for inflation, top executives instead insist Biden’s nearly $2 trillion American Rescue Plan, which passed with no GOP votes, is much more at fault.

They complain that the assistance, with its generous extension of jobless benefits and direct cash payments, has fueled inflation by providing too much cash to too many people while discouraging more of them from returning to the workforce more quickly.

The president’s Twitter fight with Bezos annoyed people in the corporate world as did the Biden tweet that started it: “You want to bring down inflation? Let’s make sure the wealthiest corporations pay their fair share.”

Executives counter that raising corporate taxes would do nothing to fight inflation but some of their ideas could. “It’s still like moving a tanker on any policy,” said a senior executive at another large global bank.