There are several noteworthy patterns in these efforts to bolster business confidence. First, representatives of large US corporations were directly involved in administration initiatives: through consultation in formulating tax policy, through the corporate presence on trade delegations and within the State Department, and through the White House’s enlistment of CEOs as consultants and lobbyists for the TPP. These business representatives helped design policy and also performed the crucial role of winning over Congress. Victories like the renewal of the Export-Import Bank and Congress’s approval of foreign trade deals did not result from negotiations between Republicans and Democrats, but from negotiations between corporate leaders and reluctant members of both parties. The deployment of business lobbyists against one’s congressional opponents is a common political strategy utilized by both Democrats and Republicans.
Second, many of the policies initiated after the 2008 economic crash entailed quid pro quos between government and business. The policies were not designed to address the economic roots of disinvestment, nor to directly resolve problems like unemployment and slow growth. Rather, they were part of a bargaining process that traded government actions for corporate investment. This disconnect is particularly visible in the pursuit of trade and investment treaties, which were publicly advertised as ways to “make sure” that corporations would expand domestic production and therefore add jobs. But trade agreements can only produce net job gains if they generate increased production, if the increased production takes place domestically, and if that production involves expanding the workforce. In practice, this has generally not occurred.23 Likewise, as even the business press and most mainstream economists concede, reduced corporate tax rates tend to have “little bearing on economic growth” in industrialized nations. As business analysts would later testify during the 2017 tax cut debate, corporate tax cuts or a tax holiday (designed to allow corporations to repatriate money held in overseas tax shelters at a low tax rate) would not produce significant new investments or jobs.24 Many CEOs frankly admitted in late 2017 that “tax cut proceeds will go to shareholders.” And, as predicted, most of the proceeds of the December 2017 tax cut were indeed used to increase profit levels, stock prices, and shareholder dividends.25
Third, the process also highlights the necessity of trust in the negotiations around capital strikes, since capital investment and government policy can never be fully implemented at the same time. Obama’s actions were intended to “boost and encourage” business confidence in the government as an ally across a range of issues. But someone had to go first. Either corporations would first invest in new hiring and trust that the Obama administration would negotiate favorable policy reforms, or the administration would first secure pro-business reforms and then trust that the corporate beneficiaries would invest in new US jobs. Congressional actions obeyed the same logic, as the Export-Import Bank renewal suggests. This “who goes first” dilemma is common to most policy negotiations between business and government.
Fourth, negotiating relationships were asymmetrical. The Obama administration was constantly trying to persuade business to trust the government, not the other way around. Government overtures to business were a gamble, since pro-business policy changes would not necessarily result in business being confident enough to end disinvestment. As the Wall Street Journal noted in late 2010, “It isn’t clear how far any moves by Mr. Obama or the new Congress would go in encouraging U.S. businesses to unleash the $2 trillion in capital they are holding.”26 The renewal of corporate investment remained agonizingly slow, and hoarded profits remained at gargantuan levels at the end of Obama’s time in office. The structural power of business meant that it was not obliged to negotiate in good faith. Executives could take their tax cuts and then decide to give the money to shareholders instead of investing it. Capital strikes tend to be open-ended, capable of generating a series of pro-business policy initiatives—unless government officials are willing and able to punish business for reneging, which the Obama administration was very reluctant to do.
In the end, Obama was only partly successful in restoring business confidence. While the unemployment rate had significantly declined by 2016, US companies were still hoarding some $2.5 trillion in profits in overseas tax havens. Prominent CEOs were still rehearsing the standard line: threats of continued disinvestment coupled with promises of new investments should government comply with their demands for lower taxes. The CEO of Apple, which held $181 billion overseas, said frankly that “we’re not going to bring it back until there’s a fair rate. There’s no debate about it.” General Electric’s CEO said in early 2017 that the economy “is in what I would call an investment recession. Companies aren’t reinvesting in capital expenditures in the U.S.” Only drastic corporate tax cuts would give business “the ability to repatriate capital from around the world.” The Democratic and Republican nominees to replace Obama agreed that slashing corporate tax rates was the way to “bring private sector dollars off the sidelines and put them to work here.”27 Again, the strategy was to cajole, not coerce. Outlawing tax havens or taking punitive measures were off the table.
The Trump transition in 2017 has not altered any of these basic patterns. There was a gradual recovery in business investment levels starting at the end of the Obama era and continuing in Trump’s first years, owing to a recovery in energy prices and a modest growth in consumer demand (partly fueled by rising consumer debt, it seems). Surveys in 2018 found a significant increase in business “optimism” and plans to hire, and the official unemployment rate dropped to under 4 percent.28 However, corporations continued to keep trillions of dollars out of the real economy, including $2.5 trillion in domestic reserves alone.29 Moreover, they continued to make strategic use of their cash hoards to win policy changes from government. The demands had not changed: more tax cuts, more deregulation, more public subsidies, and more privileges overseas. In return, they promised to invest in the United States.
A preview of the Trump administration’s approach to business came in November 2016, when Trump negotiated an agreement with the Carrier manufacturing company. Carrier and its parent company, United Technologies, had declared that they would transfer over two thousand jobs from Indiana to Mexico. Three weeks after the election, Trump gloated that he had saved over half of those jobs. Carrier’s executives offered a clearer account of the deal, however, explaining that Trump had offered them preferential input in policymaking: “the incoming Trump-Pence administration has emphasized to us its commitment to support the business community and create an improved, more competitive US business climate,” meaning tax cuts and deregulation. Economist Michael Hicks called the negotiation “damned fine deal-making” on Carrier’s part: “The chance for Carrier (and their lawyers) to help craft a huge regulatory relief bill is worth every penny they might save [in exchange for] delaying the closure of this plant for a few years.” The self-styled master of “the deal” had just surrendered to a classic capital strike. He had negotiated a partial postponement of Carrier’s disinvestment and gained a public-relations victory, but only by promising the company future leverage over regulatory policy. Tellingly, the company stressed that the deal had not altered its policy of moving investment overseas: “This agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization