A broad swath of the nation's leading chief executives dropped opposition to tax increases on the wealthiest Americans on Tuesday, while the White House quietly pressed Wall Street titans for their support as well.
Before Tuesday's about-face, the Business Roundtable had insisted 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 year-end.
"We recognize that part of the solution has to be tax increases," said David Cote, chief executive of Honeywell. "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 Barack 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 intensified outreach to Wall Street.
Several hedge fund managers, including Daniel Och, the billionaire founder of Och-Ziff Capital Management, will meet today 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 more than half a dozen top bankers and financiers, including Gary 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, such as what government programs might be cut and which entitlements might 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, Obama hopes to neutralize potential critics, according to allies of the president on Wall Street.
Obama's supporters cited the example of Frederick Smith, the chief executive of FedEx. Last week, Smith signaled he was not angered by higher tax rates for the wealthiest individuals, a centerpiece of Obama's plan to reduce the deficit and a key sticking point for Republicans in Congress.