Top Executives End Opposition to Higher Taxes

Before Tuesday’s about-face, the Business Roundtable had insisted that the White House extend Bush-era tax cuts to taxpayers of all income brackets, but the executives’ resistance crumbled as pressure builds to find a compromise for the fiscal impasse in Washington before the end of the year.

“We recognize that part of the solution has to be tax increases,” David M. Cote, chief executive of Honeywell, said on a conference call with reporters. “That’s the only thing that allows a reasonable compromise to be reached.”

Even as the Fortune 500 leaders announced their shift, the White House continued to work behind the scenes to woo some of Wall Street’s most powerful financiers — a group that had largely abandoned President Obama in his bid for a second term after supporting him in 2008.

After seeking out corporate leaders from industrial companies last month, the White House has intensified outreach to Wall Street in December.

On Wednesday, several hedge fund managers, including Daniel Och, the billionaire founder of Och-Ziff Capital Management, will meet with Valerie Jarrett, a top adviser to the president, and members of the White House economic team.

Last Monday, White House officials sat down with a more than half a dozen top bankers and financiers, including Gary D. Cohn, president of Goldman Sachs, and Greg Fleming, head of wealth management at Morgan Stanley.

The differing strategies — highly public meetings with corporate America and private arm-twisting with Wall Street — both appear to be aimed at winning popular support for higher taxes on the wealthy. The trade-offs being roundly fought over in Washington, like what government programs may be cut and which entitlements may be spared, are less important in this effort to muster highly compensated chieftains whose support for tax increases will provide cover for Congressional Republicans wary of being seen as too quick to compromise on higher tax rates.

What’s more, the political symbolism of some of the wealthiest Americans’ saying they support higher taxes on the rich takes a bit of the sting out of the idea of raising rates, for both Democrats and Republicans. Indeed, by appealing to both camps and enlisting their support, President Obama hopes to neutralize potential critics, according to allies of the president on Wall Street.

President Obama’s supporters cited the example of Frederick W. Smith, the chief executive of FedEx. Last week, Mr. Smith signaled he was not angered by higher tax rates for the wealthiest individuals, a centerpiece of President 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, Mr. Lasry invited the real estate tycoon Barry Sternlicht, a onetime Obama supporter who raised money for Mitt Romney in the last election cycle, to the White House last week. Mr. 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 the president before the election, even as those like Mr. Sternlicht deserted him.

This core group met with President Obama on Nov. 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.

Catherine Rampell contributed reporting.

Article source: http://www.nytimes.com/2012/12/12/business/top-executives-end-opposition-to-higher-taxes.html?partner=rss&emc=rss