Unlikely corporate backers in battle over US taxes

Dec 13 2012, 03:30 IST
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SummaryA broad swathe of the US’ leading chief executives have dropped its opposition to tax increases on the wealthiest Americans, while the White House quietly pressed Wall Street titans for their support as well.

the example of Frederick W Smith, the chief executive of FedEx. Last week, Smith signalled he was not angered by higher tax rates for the wealthiest individuals, a centrepiece of Obama’s plan to reduce the deficit and a key sticking point for Republicans in Congress.

“If people who didn’t support the president believe the president is acting reasonably, they’re going to put pressure on the other side,” said Marc Lasry, a longtime supporter of the president who runs Avenue Capital. “You need both sides to be reasonable.”

For example, Lasry invited the real estate tycoon Barry Sternlicht, a onetime Obama supporter who raised money for Mitt Romney in the last poll cycle, to the White House last week. Lasry, who has $13 billion under management, including $1.3 billion of his own money, is among a small group of Wall Street figures who stuck with Obama before the election, even as those like Sternlicht deserted him.

This core group met with Obama on November 16, and included Tony James, president of the Blackstone Group, as well as Roger Altman, a Democratic stalwart who is executive chairman of Evercore Partners, and Robert Wolf, a longtime UBS executive who recently began his own firm, 32 Advisors.

Also in attendance were Blair W. Effron, co-founder of Centerview Partners, and Mark T. Gallogly, a Blackstone veteran who founded Centerbridge Partners in 2005.

To be sure, most executives genuinely fear the consequences of the automatic spending cuts and tax increases if a compromise is not found by Jan. 1, but the efforts by big business to press politicians in Washington could also pay large dividends in the future.

While most business leaders now say they are willing to support increases in tax rates for individuals as well as cuts in entitlement spending, their stance in favor of lower corporate tax rates could actually benefit their bottom lines in the long run.

For now, however, the focus is on reaching a deal by end of the year rather than a broad tax overhaul. At the White House, the outreach effort is being led by Ms. Jarrett, and she has been joined in the meetings with executives and bankers by Timothy F. Geithner, the secretary of the Treasury; Jeffrey Zients, the head of the Office of Management and Budget; and Gene Sperling, director of the National Economic Council.

The White House arranged calls on Dec. 3 and on Monday for chief executives who attended the earlier

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