Intel, Lockheed Tell Obama on Taxes, F-22: Not in This Economy

That’s Intel Corp.’s argument against new taxes on overseas income. It’s Overstock.com Inc.’s objection to making unions easier to form. Ditto Lockheed Martin Corp.’s case against scrapping production of the F-22 jet.

U.S. companies are stepping up their fight against President Barack Obama’s proposals not aimed squarely at reviving the economy. They say Obama is trying to do too much, taking the focus off fixing credit markets and proposing ideas that may hurt rather than help.

“There are so many priorities that there is no priority,” said Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce, the largest business lobbying group. “There is nothing more important than fixing the housing and financial markets.” Obama “is saying we can do it all at once.”

Making an issue of an economy that shrank 6.2 percent last quarter, the steepest plunge in 27 years, is a potent strategy that may derail Obama’s agenda on issues from taxes to climate change, said Jeffrey Berry, a professor of political science who specializes in lobbying at Tufts University in Medford, Massachusetts.

“It’s a strategic argument, well-designed and well- timed,” Berry said. While companies typically say the timing is bad as they try to stall proposals, “it’s much more effective now in the depths of this recession.”

Tackle It All

Obama argued for tackling his entire agenda even amid a crisis in a speech to business executives in Washington on March 12.

“Problems in the financial markets, as acute and urgent as they are, are only a part of what threatens our economy,” Obama said. “We must not use the need to confront them as an excuse to keep ignoring the long-term threats to our prosperity.”

Semiconductor makers including Santa Clara, California- based Intel, the world’s largest chipmaker, sent executives to Washington last week to press Democratic lawmakers and the administration to drop plans to end the deferral of U.S. taxes on overseas earnings. The companies call it a tax hike.

“If you want to decrease our competitiveness, then increasing our tax rate is exactly the right thing to do,” Intel Chairman Craig Barrett told reporters on March 11.

The tax “actually works the opposite of the way the Obama administration is describing,” said John Daane, chief executive officer of Altera Corp., the world’s second-largest maker of programmable chips. “Our profits would go down,” and the company would have to cut jobs, adding to unemployment, he said.

Cost to Companies

The tax on overseas income, proposed in Obama’s budget submission last month, might cost companies such as General Electric Co., Exxon Mobil Corp., Caterpillar Inc. and Ford Motor Co. a total of $362 billion, according to an analysis by Height Analytics, a Washington-based investors’ advisory group.

“This is going to be a very big fight,” said William Reinsch, president of the National Foreign Trade Council, which is leading the lobbying against the tax on behalf of companies.

Wal-Mart Stores Inc., Burger King Holdings Inc., Home Depot Inc. and Overstock.com are trying to stop so-called card check legislation, which would make it easier for employees to approve unions. Labor groups, which spent $100 million in the 2008 campaign to elect Democrats, have made it their top priority this year.

Not the Time

Companies say the plan would increase labor costs.

“Card check is a misguided proposal -- especially right now,” said Jonathan Johnson, president of Salt Lake City-based Overstock.com, the Internet seller of discounted name-brand goods.

Arkansas Senator Mark Pryor, a Democrat who co-sponsored the measure in 2007, expressed reservations about the rule change this year. “It is a different time, and the economy is in a much different situation,” Pryor said in an interview this month in Washington.

Bethesda, Maryland-based Lockheed Martin is trying to continue production of the F-22 fighter jet, the most expensive aircraft in U.S. history, as the Obama administration reviews weapons programs for possible cuts.

During the past three weeks, Lockheed bought daily newspaper advertisements that focused on 1,000 companies and 95,000 workers dependent on the project.

“If you’re looking for stimulus and to stop the bleeding and job losses, step one is to stabilize the current situation,” Larry Lawson, Lockheed’s F-22 program manager, said in an interview. Cutting the F-22 would mean Lockheed and its suppliers “would start laying people off,” he said.

Seeking, Opposing

Drugmakers Eli Lilly & Co. and AstraZeneca Plc said on Feb. 26 they would lose “several hundred million” dollars from Obama’s proposal to mandate deeper discounts for drugs they sell to Medicaid, the health plan for the poor. Health-care stocks, led by Humana Inc., slid after the Obama’s budget plan called for stripping insurers of $175 billion over 10 years by forcing them to compete for Medicare contracts. The shares have since recovered.

Some companies are simultaneously seeking government aid while opposing the administration’s initiatives. General Motors Corp. is trying to get as much as $16.6 billion in U.S. help to avoid bankruptcy as it seeks to persuade Obama to abandon his campaign pledge to let California set stricter auto emissions standards.

Lobbyists for U.S. Steel Corp., the largest U.S. steelmaker by sales, are asking for U.S. help to prevent a surge of imports from China while fighting Obama’s plans to establish new limits on carbon dioxide emissions to slow global warming.