By JW Verret
The 2012 presidential election will focus on jobs and the economy. President Barack Obama will be eager to tout his accomplishments in office, including passage of financial reform and the stimulus bill. The Republican nominee will be called upon to make a forceful and direct case to the American people that Obama’s record has made the economy worse.
It will be a year where competing visions of the economy will be presented to the American people. Obama’s vision is a centrally regulated and planned economy based on stimulus spending. His opponent will need to show that America is a business-focused economic engine anxious for government to get out of the way.
This also will require a discussion about the future of corporations that form the heart of economic innovation and that are heavily regulated by the government.
One of the signature accomplishments of Obama’s tenure is the Dodd-Frank Act. This year, Obama will argue that the new rules he has put in place will prevent a future financial crisis.
Gov. Mitt Romney’s record at Bain Capital and his statements on the campaign trail urging respect for the rights of investors and employees of corporations shows that he is ready for the fight.
In the 2012 debates, Obama will expect voters to accept that companies such as Tyson Foods, MidAmerica Holdings or Farm Bureau, who will waste millions complying with the Dodd-Frank Act, were the cause of the financial crisis.
The president’s second trick will be to try and escape notice that his financial reform law didn’t address Fannie and Freddie at all, despite the fact that they were a prime cause of the financial crisis.
The Republicans will need a nominee who won’t let Obama get away with that. They will need a nominee who can remind voters that in some cases the Obama administration has actually made it easier for Chinese companies to raise capital in the United States than for American companies, which hurts small businesses in Iowa such as Hawkeye Energy LLC, which sells stock in the financial markets to fund ethanol production.
The Dodd-Frank Act focused on companies traded in the stock market, so private companies avoided much of the fire. Not for long.
A bill being considered in the Senate, and one of the few Obama introduced when he was still a senator, is something called the Incorporation Transparency Act. This big-brother law would require local state governments to collect the names of all the owners of all companies, large and small, set up in their state. That list would by law be made publicly available.
Consider the consequences for a company such as Hy-Vee food stores, Iowa’s largest employer. Hy-Vee is an employee-owned company, so under Obama’s proposal the 50,000-plus employees of Hy-Vee would see private financial information about their stock ownership in Hy-Vee (often making up a large part of retirement savings) suddenly appear on a public website that their neighbors or the government could view at any time.
This goal of this law is to make life a little easier for the IRS in performing audits of small businesses, but that comes at far too high a cost. Many employees and business owners are concerned about this approach, not because they have something to hide, but because they don’t want their private family finances to become suddenly open to public scrutiny.
Election 2012 will be about jobs and the economy. It also will be about two competing visions of the government’s relationship with companies: whether those companies are publicly traded or privately held, and whether they have 10 employees or 10,000.
The Republicans will require a nominee who has real economy CEO experience, Romney, to challenge Obama’s record.
JW Verret is a professor of corporate law at Stanford Law School and a Fellow at the Hoover Institution. He was one of the Republican staff’s primary witnesses in testifying about the Dodd-Frank Act. Comments: email@example.com