One segment of the economy has done indisputably well since President Obama took office—big business.
Since January 2009, the S&P 500 stock index has surged by 68 percent. Corporate profits, one of the few bright spots in a weak economy, have risen consistently since 2009. Bailouts saved the banking industry, which helped keep most other industries intact. And the super-low interest rates engineered by the Federal Reserve have made cheap financing readily available to big business—one reason the corporate sector is sitting on $1.7 trillion of cash.
You'd think corporate America would be grateful. But instead, business executives are turning on Obama, with many big donors who supported him in 2008 now backing his Republican opponent, Mitt Romney.
A new analysis of corporate political donations by Bloomberg found that a surprising number of employees at several big companies have switched their donations since 2008 from Democrat to Republican. Corporate donors tend to consistently support one party or the other, so it's unusual there would be a big swing from one election cycle to the next. Yet corporate donors clearly seem to be abandoning the incumbent.
At Goldman Sachs, for instance, 75 percent of employee donations went to Democrats in 2008. But through June of this year, 70 percent of contributions had gone to Republicans, according to Bloomberg, which analyzed data gathered by the Center for Responsive Politics. At AT&T, the percentage of funds contributed to Republicans has risen from about 50 percent in 2008 to 65 percent so far this year.
Even General Electric—whose CEO, Jeff Immelt, chairs President Obama's Jobs Council—has flipped to the Republican side, after a majority of employee donations went to Democrats in 2008. Overall, Bloomberg found that just four out of 25 big companies favored Democrats over Republicans in their employee giving.
It's not hard to understand why. Obama campaigned as a centrist in 2008, with no actual record of policymaking toward big business. But as president, he championed a healthcare reform bill that may raise costs for some businesses. He also signed the Dodd-Frank financial reform bill meant to rein in Wall Street, and established a new Consumer Financial Protection Agency that will further police corporate activities that affect consumers.
Obama's words may have cost him even more support than his deeds. He has vilified Wall Streeters as "fat-cat bankers" and pushed hard for tax increases on the wealthy, which obviously includes a lot of people in the executive suite. Many businesspeople took Obama's recent remark about business owners—"you didn't build that"—as a personal insult.
Romney, by contrast, seems like big business's best friend. He says he wants to slash regulation, starting with his first day in the White House, and lower taxes on the wealthy. As a former banker himself, Romney learned the inner workings of many businesses. His famous insistence that "corporations are people" may have landed flat with working-class voters, but it endeared him to a lot of corporate people who write checks to political campaigns.
The irony, however, is that a Romney win in November wouldn't necessarily be better for business. It's well-known among stock-pickers, for example, that the stock market historically has fared much better under Democrats than Republicans. That doesn't mean stocks will automatically gain if Obama wins a second term, but it does suggest that the conventional wisdom about Republicans being more friendly toward business doesn't play out in the real world.
It may not play out if Romney wins, either. His pledges to cut taxes, kill onerous regulations, and toughen up on China's trade practices might make good campaign sound bites, but all of that could go precisely nowhere if Romney were to land in Washington and face the same politically divided Congress that Obama does. It's worth recalling that the administration of George W. Bush was considered one of the most business-friendly in decades, yet Bush's administration ended with a financial wipeout that could have decimated corporate America if not for all those loathesome bailouts.
If Obama wins, he certainly won't have a love-in with corporate America, either. But tough regulation isn't as ruinous as many companies think, especially if it boosts overall confidence in the fairness and transparency of the markets. As a second-term president ineligible for re-election, Obama would also be in a better position to push for action on debt reduction and entitlement reform, which would probably be unpopular but better for the economy and the overall business climate in the long term than continuing to push mounting burdens into the future.
Whatever the case, that corporate cash is welcome to any candidate who can get his hands on it. Romney has reversed an early Obama lead in fund-raising, and the new corporate support could give him a vital edge in the campaign's home stretch. Obama may wish he had been a bit kinder toward his former corporate pals.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.