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<div class="">December 11, 2012</div>
<h1>Unlikely Backers in a Battle Over Taxes</h1>
<h6 class="">By
<span>
<a href="http://topics.nytimes.com/top/reference/timestopics/people/s/nelson_d_schwartz/index.html" rel="author" title="More Articles by NELSON D. SCHWARTZ"><span>NELSON D. SCHWARTZ</span></a></span> and <span>
<a href="http://topics.nytimes.com/top/reference/timestopics/people/w/jonathan_weisman/index.html" rel="author" title="More Articles by JONATHAN WEISMAN"><span>JONATHAN WEISMAN</span></a></span></h6>
<div id="articleBody">
<p>
A broad swath of the nation’s leading chief executives dropped its
opposition to tax increases on the wealthiest Americans on Tuesday,
while the White House quietly pressed Wall Street titans for their
support as well. </p>
<p>
Before Tuesday’s about-face, the Business Roundtable had insisted that the White House extend <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier" title="More articles about Bush Tax Cuts." class="">Bush-era tax cuts</a>
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 the end of the year. </p>
<p>
“We recognize that part of the solution has to be tax increases,” David
M. Cote, chief executive of Honeywell, said on a conference call with
reporters. “That’s the only thing that allows a reasonable compromise to
be reached.” </p>
<p>
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 Obama
in his bid for a second term after supporting him in 2008. </p>
<p>
After seeking out corporate leaders from industrial companies last
month, the White House has intensified outreach to Wall Street in
December. </p>
<p>
On Wednesday, several hedge fund managers, including Daniel Och, the
billionaire founder of Och-Ziff Capital Management, will meet with
Valerie Jarrett, a top adviser to the president, and members of the
White House economic team. </p>
<p>
Last Monday, White House officials sat down with a more than half a
dozen top bankers and financiers, including Gary D. Cohn, president of
Goldman Sachs, and Greg Fleming, head of wealth management at Morgan
Stanley. </p>
<p>
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, like what government programs
may be cut and which entitlements may 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. </p>
<p>
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, President Obama hopes to neutralize potential critics,
according to allies of the president on Wall Street. </p>
<p>
President Obama’s supporters cited the example of Frederick W. Smith,
the chief executive of FedEx. Last week, Mr. Smith signaled he was not
angered by higher tax rates for the wealthiest individuals, a
centerpiece of President Obama’s plan to reduce the deficit and a key
sticking point for Republicans in Congress. </p>
<p>
“If people who didn’t support the president believe the president is
acting reasonably, they’re going to put pressure on the other side,”
said Marc Lasry, a longtime supporter of the president who runs Avenue
Capital. “You need both sides to be reasonable.” </p>
<p>
For example, Mr. Lasry invited the real estate tycoon Barry Sternlicht, a
onetime Obama supporter who raised money for Mitt Romney in the last
election cycle, to the White House last week. Mr. Lasry, who has $13
billion under management, including $1.3 billion of his own money, is
among a small group of Wall Street figures who stuck with the president
before the election, even as those like Mr. Sternlicht deserted him.
</p>
<p>
This core group met with President Obama on Nov. 16, and included Tony
James, president of the Blackstone Group, as well as Roger Altman, a
Democratic stalwart who is executive chairman of Evercore Partners, and
Robert Wolf, a longtime UBS executive who recently began his own firm,
32 Advisors. </p>
<p>
Also in attendance were Blair W. Effron, co-founder of Centerview
Partners, and Mark T. Gallogly, a Blackstone veteran who founded
Centerbridge Partners in 2005. </p>
<p>
To be sure, most executives genuinely fear the consequences of the
automatic spending cuts and tax increases if a compromise is not found
by Jan. 1, but the efforts by big business to press politicians in
Washington could also pay large dividends in the future. </p>
<p>
While most business leaders now say they are willing to support
increases in tax rates for individuals as well as cuts in entitlement
spending, their stance in favor of lower corporate tax rates could
actually benefit their bottom lines in the long run. </p>
<p>
For now, however, the focus is on reaching a deal by end of the year
rather than a broad tax overhaul. At the White House, the outreach
effort is being led by Ms. Jarrett, and she has been joined in the
meetings with executives and bankers by Timothy F. Geithner, the
secretary of the Treasury; Jeffrey Zients, the head of the Office of
Management and Budget; and Gene Sperling, director of the National
Economic Council. </p>
<p>
The White House arranged calls on Dec. 3 and on Monday for chief
executives who attended the earlier sessions with the president,
updating them on the negotiations and reiterating the need for their
support. Among the participants were <a href="http://topics.nytimes.com/top/reference/timestopics/people/b/lloyd_c_blankfein/index.html?inline=nyt-per" title="More articles about Lloyd C. Blankfein." class="">Lloyd C. Blankfein</a>,
the chief executive of Goldman Sachs; Randall Stephenson, the chief
executive of AT&T, and Marriott’s chief executive, Arne Sorenson.
</p>
<p>
Some chief executives, like Mr. Blankfein, who have been relatively
outspoken in recent weeks about the need for tax increases, are viewed
as relative liberals in the business community. </p>
<p>
But others who reversed course Tuesday, like Doug Oberhelman of
Caterpillar, are seen as more conservative politically and suggest an
important shift in the political landscape in terms of tax policy.
</p>
<p>
Another more conservative executive who signed a letter to Congress and the president from the Business Roundtable was <a href="http://topics.nytimes.com/top/reference/timestopics/people/t/rex_w_tillerson/index.html?inline=nyt-per" title="More articles about Rex W. Tillerson." class="">Rex W. Tillerson</a>, the chief executive of Exxon. </p>
<p>
“Compromise will require Congress to agree on more revenue — whether by
increasing rates, eliminating deductions, or some combination thereof —
and the administration to agree to larger, meaningful structural and
benefit entitlement reforms and spending reductions that are a fiscally
responsible multiple of increased revenues,” said the letter, signed by
more than 100 chief executives. </p>
<p>
Besides Mr. Cote, several other prominent chiefs joined the call with reporters organized by the Business Roundtable, including <a href="http://topics.nytimes.com/top/reference/timestopics/people/l/andrew_n_liveris/index.html?inline=nyt-per" title="More articles about Andrew N. Liveris." class="">Andrew N. Liveris</a> of Dow Chemical, <a href="http://topics.nytimes.com/top/reference/timestopics/people/i/jeffrey_r_immelt/index.html?inline=nyt-per" title="More articles about Jeffrey R. Immelt." class="">Jeffrey R. Immelt</a> of G.E. and Alexander Cutler of Eaton. </p>
<p>
Small businesses also appear anxious about the fiscal impasse. On
Tuesday, the National Federation of Independent Business reported that
its Small Business Optimism Index had one of its steepest declines ever
in November. </p>
<p>
The net percentage of business owners who said they expected better
economic conditions in six months — that is, the share that expected
improvement minus the share that expected deterioration — was negative
35 percent. That is the worst outlook since the federation began
collecting this data on a monthly basis in 1986. </p>
<p>
Bill Dunkelberg, the chief economist at the federation, attributed the
pessimism to the stalemate in Washington, higher health care costs and
“the endless onslaught of new regulations.” </p>
<div class="">
<p>Catherine Rampell contributed reporting.</p> </div>
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