Corporate America Is Inadvertently Helping Obama

If you were a CEO who wanted to influence the presidential election, how would you do it? You could donate money and crank up your firm's political action committee. Or hold fundraisers and lobby your well-heeled friends for support. You might even publicly endorse your favorite candidate—assuming that wouldn't drive your employees to the other guy.

But here's a more effective way for business leaders to influence Election Day results: Announce major corporate cutbacks that scare the stuffing out of voters.

That, in effect, is what many big companies have been doing in the final days of the campaign. It's a fluke of timing, of course, that third-quarter earnings are coming due just as voters are preparing to go to the polls. It's even more of a coincidence that this particular earnings season, instead of being the usual corporate-health checkup, is more like a trip to the emergency-room, followed by a scary diagnosis.

Here are some of the major corporate layoffs announced over the past two weeks:

• Chrysler: About 5,000, mostly in the United States
• Goldman Sachs (GS): About 3,300 worldwide
• Merck (MRK): 7,200 worldwide
• Motorola (MOT): Unspecified, but could be thousands, according to press reports
• Tenneco: 1,100 worldwide
• Time Inc. (TEN): More than 600, mostly in the United States
• Whirlpool (WHR): 1,000 in the United States, 1,900 overseas
• Xerox (XRX): 3,000 worldwide
• Yahoo (YHOO): About 1,500, mostly in the United States

The job situation is worse than those numbers alone suggest. At some of those companies, the latest cutbacks are the second or third round of layoffs this year. Other companies that haven't announced layoffs yet probably will, given that the economic outlook for the next year is getting worse by the day. Many economists think the unemployment rate—6.1 percent now—could hit 7.5 or even 8 percent in 2009.

Obviously, CEOs aren't timing their announcements to influence the election. If they were, they'd probably wait until after November 4. CEOs support John McCain over Barack Obama by a ratio of about 4 to 1, according to a survey by Chief Executive magazine, and bad economic news almost always works against the incumbent president and his party. So the gloom emanating from America's boardrooms effectively helps Obama.

Whatever the timing, workers saw it coming. The latest consumer confidence reading from the Conference Board, which sank to an all-time low, showed that only 8.9 percent of Americans think jobs are plentiful; a year ago, nearly three times as many felt that way. And hardly anybody thinks the job market will improve anytime soon. Only 7.4 percent of people expect there to be more jobs in six months, while 41.5 percent think there will be fewer. That makes Obama a rarity in this economy: An American with relatively good near-term job prospects.

Disclosure: no positions.

Comments

[axelrod608:]

Corporate America is CONSCIOUSLY supporting Obama. They are giving him campaign contributions in record numbers. Because they see that the "Grand old party" is over. Since the great society, it has been the Republican administrations that have grown government the most and spent lavishly beyond their means. The days of "small governent" by Republicans are over. Based on recent history the Republican party is the party of government growth, massive governmen spending and the explosion of the national debt.

RIP GOP.

2008 Oct 30 09:37 AM

[James Wilson:]

NAH HE IS GREEDY AND BLINDED BY IT !!!!!!!

WITHOUT A STRONG COUNTRY THE U.S. ECONOMY IS TRASH.

THE GOVERNMENT CAN NOT KEEP USING THE MONEY OF WORKING PEOPLE WHO PAID INTO THE SOCIAL SECURITY TRUST FUND TO OFF SET TAX CUTS FOR GUYS WHO WRITE STORYS LIKE THIS AND PRODUCE NOTHING OF VALUE TO ANYONE. LET HIM TRY EATING HIS WORDS SEE IF THAT FILLS HIS EMPTY STOMACH.

WE INVEST IN COMPANYS THAT PROVIDE A SERVICE TO HELP OTHER PRODUCE THINGS LIKE FOOD,

THIS FOOL ONLY SEES MONEY AS WEALTH NOT THE TOOL IT IS TO GET THINGS DONE.

2008 Oct 30 10:02 AM

[James Wilson:]

if he does not know that like everything else Bush has ben lieing about the Unemployment Rate then he is truley a fool.

The ACTUAL Unemployment Rate is almost 15 %.

2008 Oct 30 10:04 AM

[hilo:]

YES OBAMA SHOULD WIN EASILY.
GOOD NEWS FOR THE MIDDLE CLASS AND THE ECONOMY.
we really like Obama out here in middle America...Cooperations and CEOs should start paying their fair share of the tax burden...It is time Fat Cats stop belly aching.

2008 Oct 30 10:45 AM

[sumosama:]

interesting point!!! (You might want to write an article on the various powers of the branches of govt since the previous posters don't understand who passes legislation...)

2008 Oct 30 11:19 AM

[sumosama:]

I see a similie here to the massive airline layoffs immediately after 9/11...in the heightened state of affairs I believe that airline CEO's had America over a barrel and wanted to use that time to break unions and conduct layoffs under the guise of 9/11 that were coming anyway.

2008 Oct 30 11:21 AM

[sumosama:]

at the risk of stalking...

biz.yahoo.com/ap/08103...

2008 Oct 30 11:29 AM

[kebu77:]

According to Allan Lichtman's "13 Keys to the Presidency", the fix has been in for a dem in the WH since October '07. His model based on the current 2-party system elections from 1860-1980, has successfully predicted every election since. (This is really good political science, folks.)

The only issue at this point is how long the coat tails are. With the avalanche of bad econ news, helped by a conviction here and a scandal there, the tails could be surprisingly long.

Boone was on CNBC this a.m., you could tell he was looking forward to a new energy deal. Robini was testifying on the Hill this a.m., sticking to his view of an 18-24 month deep L recession and long jobless recovery...

2008 Oct 30 12:34 PM

[kebu77:]

Notes on the 13 Keys - -

1. They predict a popular vote "win" - - not the deciding electoral vote count. This time around, so many keys are flipped, that a "split decision" like 2000 is a black swan.

2. The model is very robust, surviving civil war, world wars, and the depression. The EEO identity of a candidate is such a small blip (Bradley effect to the contrary notwithstanding) as to be irrelevant (model makers would probably say, the dynamic of the keys has already discounted for this, e.g., the protracted primary season).

3. The model is based on a political system that is based on our Constitution and the "meme" of economic growth that have co-existed since the founding. Theoretically the model could be upset on one of three ways - -

a. Most improbable, a radical change in the 148-yr old two-party system, without a radical change in the Constitution or economy;

b. Less improbable, but still unlikely, by constitutional amendment, such as elimination of the "natural-born citizen" requirement or repeal of two-term limit.

c. Possible: An energy crash drives a prolonged period of economic contraction, giving the two keys based on economic conditions a new interpretation... If the peakists are right, 2012 may be the last election we can play this parlor trick. ;-(

2008 Oct 30 12:59 PM

[jackooo:]

Americans are 98% stupid. Obama is in. Never mind his preacher hates America. Never mind his wife is FINALLY proud of America. Never mind he was privy to a terrorist group.
What good is it to have a job and the country is under attack? If your dead it doesn't matter.
It all goes back to my first sentence...

2008 Oct 30 01:11 PM

[jackooo:]

James Wilson

"Bush has been lieing about unemployment rates".

You are a 98%er James. Bush does not work on the statictics regarding unemployment. Duhhh. He mouths what others say are the rates of unemployment.

Please don't vote. Like Obama's wife, I would not be proud of the U.S.A. if you do!!

2008 Oct 30 01:23 PM

[jackooo:]

sumosama

I worked for the airlines for 34 yrs. The union was worthless. (IAM) They had their day but it isn't now. Break them if we could. That's my thoughts.

2008 Oct 30 01:26 PM

[Fremon:]

The Republicons have sold themselves as the party of the economy expertise. Yet, under the Democrats the economy has fared better. Reagan, Bush 1&2 increased the debt of the country more than the balance of the presidents combined. Some say it was planned so that we would be come so over indebted that we would have to starve programs like medicare and social security. I don't see it that way, I see it as incompetence and bankruptcy of an ideology based on trickle down economics and getting the rich richer at the expense of the balance of the citizens. They could not do it alone and had fellow travellers like Greenspan who ignored human frailties like greed and believed in markets and management that were self correcting and would work for the benefit of their companies. Lehman Bros with Fultz put an end to that notion. Of course, Greenspan was hoodwinked by the bankrupt philosophy of Ayn Rand who thought that acting in one's self interest would be tantamount to acting well.

2008 Oct 30 06:35 PM

[PeakOiler:]

Obama will be more popular than Jesus, maybe even more popular than the Beatles. His legacy will be that the anti-science, anti-evolution, anti-atheist, anti-gay, anti-peace, anti-education, anti-woman, pro-war pro-wacko-religion Repugnants will be relegated to minority souther-white-redneck status until they understand that America doesn't represent their comical party anymore. Bring on progressive taxation, bring on universal health care, bring on peace in our time, bring on first class education, bring on openess, bring on science, bring on protection of minorities. That's what Obama will do for this country.

2008 Oct 30 09:50 PM

[Mowog:]

It's fun to play pretend that the DNC is better for the economy than the GOP, but it really depends on who controls Congress. If it's the GOP, much more economic growth:
www.cato.org/pub_displ...

2008 Oct 30 09:55 PM

[richard_nog...:]

Hoover was a bad president. It took 16 years for the republicans to regain the presidency and 20 years for them to regain control of congress. The GOP can expect to be in the minority for an extended time again, since Bush was a worse president than Hoover. The churches and the south that bolted from being conservative democrats really need to look at re-establishing the conservative wing of the democrat party, if they still want their voices heard.

2008 Oct 31 12:56 AM

[JOSEPH FOSTER:]

THE REPUBLICAN PARTY HAS BEEN DESTROYED. AS TO MCCAIN HIS CHOICE OF PALIN WAS HIS DIASTER HE COULD HAVE PICKED UP A NATIONAL REPUBLICAN PERSON TO BOOST HIS IMAGE, INSTAED A PICKED UP A SEX SYMBOL FROM ALASKA. THE PARTY HAD TO TEACH HER HOW TO DREES AND LOOK DIGNIFIED BUT THAT WILL NOT CHANGE HER IMAGE.
OBAMA WILL WIN AND HAS A TOUGH JOB IN CLEANING THE MESS OF BUSH BORROW AND SPEND.
THE WORST FOREIGN POLICY IN AMERICAN HISTORY TWO USELESS NO WIN WARS.
THE CIA COVERT OPERATION COULD HAVE HANDLED IRAQ AND AFGHAN LESS COSTLY WITH A GOOD CHANCE MORE EFFECTIVE IN GETTING RID OF SADAM AND BIN LADEN.

2008 Oct 31 06:11 AM