November 07, 2012

In 2012, business lobby groups and the Republican Party made some headway among voters with their argument that the Obama administration was over-regulating the economy and harming the recovery, but it was not enough. By 2016, Dodd-Frank and the administration's energy policies will be well entrenched and the argument may not have so much resonance with the electorate.

So industry leaders will come under intense pressure in the weeks and months ahead to bury the hatchet and take a more conciliatory approach to the administration and Senate Democrats.

Banks and energy companies have spent record amounts on lobbying in Washington in the past four years. Goldman Sachs, for example, spent almost $3.3 million lobbying senators and representatives in the 12 months to September, according to filings with the congressional lobbying database, on issues connected with derivatives reform and tax policy.

But however much money they pour into lobbying efforts, the perception that energy companies, banks and brokerages, as well as most of their employees, are solidly behind the Republican Party will limit their future influence on a range of issues that are vital for both industries.

Pressure to rebuild a constructive relationship with the White House and at least part of the Senate Democratic Caucus will therefore be intense.

In fact there are a variety of issues on which the two sides could reset the relationship. Fiscal reform is one area in which there could be scope for compromise. Business and financial leaders have been signalling for weeks that they are ready to support moderate tax increases as part of an overall tax and spending package to avert the fiscal cliff.

The Keystone XL pipeline is another early decision where the president could reach out to the industry and appear to back the development of fossil fuel resources, albeit with strict safety and environmental safeguards.

But it will take a spirit of compromise on both sides. After a resounding defeat, the energy and financial services industries would be wise to repair relationships.

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