Humbled Obama Offers Compromise

A chastened President Barack Obama said he wouldn’t wish this day on others.

“I’m not recommending for every future president to take the shellacking that I did last night,” he said. But that shellacking may have been just the smack in the jaw the president needed to get him working with Republicans on a host of hugely important issues to business. And it may have been the shot in the arm the GOP needed to compromise with him on some of them.

That, at least was the spin Obama put on midterm elections in which his party lost at least 60 seats and control of the U.S. House of Representatives and had its hold on power in the Senate eroded. As a practical matter, what the president and Republicans in Congress will need to do in the coming two years will be something they haven’t done much in the past two—compromise on key issues to get the economy rolling again and build for the future.

“People are frustrated. They’re deeply frustrated with the pace of economic recovery,” Obama said. “Can Democrats and Republicans sit down together and come up with a list of solutions to common problems? I think that we will be able to. I’m doing a whole lot of reflecting, and I think there’s going to be some areas where we need to do a better job.”

There are some disagreements that won’t be put aside, Obama said. But there are a number of issues upon which Obama and Republicans in Congress could try to find common ground, among them some key issues for small businesses.

Here are a few:

• Taxes: Obama made clear during the campaign season that he wanted the Bush tax cuts extended for Americans who made less than $250,000 a year, but wanted tax cuts passed in the beginning of the Bush administration set to expire at the end of the year to expire. Republicans want all the tax cuts extended. Extending tax cuts before the end of the year would be something that would have to be done during a lame-duck session of Congress, while Democrats still have majorities in both Houses of Congress. But given the dose of reality delivered by voters, Obama signaled he might be willing to compromise on the issue, but didn’t draw a line as to where. “My goal is to make sure we don’t have a huge spike in taxes for middle-class families,” he said, adding that he would sit down with John Boehner, the leader of House Republicans expected to become Speaker of the House, Senate Minority Leader Mitch McConnell, Senate Majority Leader Harry Reid, and outgoing Speaker Nancy Pelosi to come up with a tax solution that “does no harm.”
• Deficits: One of the messages Obama said he heard loud and clear from the public in this election is that Americans want government to live within its means, and Republicans campaigned hard on that issue. He said he was open to ideas for deficit reduction from the GOP. That won’t be easy, though, and neither party has a great record. In the past 40 years, the only period the government operated in the green was from 1998 to 2001.
• Business incentives: Obama said he believed that without the glare of the election, he and Republicans would be able to reach agreement on tax credits for businesses that invest in creating American jobs. He added that his idea floated before the election that businesses be allowed to write off the cost of capital equipment on an accelerated scale would likely get a better hearing now than during the election. “That’s actually an idea that business groups and Republicans have supported for a very long time,” he said.
• Health care reform: Republicans were vehemently opposed to health care reform passed by the Democratic Congress and want to repeal it. That’s a non-starter, Obama said. But he is open to specific ideas to improve upon the legislation, he said, especially closing a requirement that small businesses have protested that increases their tax paperwork.
• Infrastructure and education: Obama said he remained committed to education improvements, research and development that could lead to whole new areas of entrepreneurship, and improvements to key infrastructure such as high-speed rail. He believes he can find areas of agreement with Republicans on those issues. “The question that I think that my Republican friends and I are going to have to answer is: What are our priorities? What do we care about? And that’s not going to be easy.” But, he added, infrastructure investment has traditionally been popular on a bipartisan basis and, “It makes no sense for China to have better rail systems than we do.”
• Energy: The bill passed by the Democratic House of Representatives to impose a cap on greenhouse-gas emissions and allow companies the right to set prices by trading the rights to emissions is dead. It never passed the Democratic-dominated Senate, and it wouldn’t pass either chamber now. Obama, an advocate of that plan, acknowledged that fact. But, he said, there were other areas where he could find agreement with Republicans, such as development of electric cars in the U.S.; further developing the country’s vast natural-gas resources (natural gas is the cleanest-burning fossil fuel, and the U.S. has some of the largest reserves in the world); and development of nuclear power.

If he can get real work done on those issues and do that work with a Republican House and a stronger Republican presence in the Senate, the shellacking Obama took will have been worth it. But he said the message of the election to him was that he had to try.

“We are not moving in the way we need to to make sure folks have jobs, have opportunities, and that’s going to mean having Republicans and Democrats come together,” Obama said. “It’s not going to be easy. These issues are hard.”

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Kent Bernhard Jr. is News Editor of Portfolio.com