Editor: In a Letter dated June 21 to Peter Orszag, then Director of Management and Budget at the White House, the Business Roundtable (BRT) and Business Council (BC) urged that restraints on the ability of U.S. businesses to foster growth be reduced. An attached Executive Summary and Report gave examples of issues having a dampening effect on economic growth and job creation. What is the background of the White House Letter?
Milch: The White House Letter was written in response to Director Orszag's specific request for information on policies, legislation and regulation that would inhibit job creation and job growth.
The BRT has maintained an ongoing dialogue with the Administration. Originally this dialogue related to healthcare issues, and the BRT worked with the Administration and Congress on trying to develop a plan that would expand coverage and restrain costs. That initial outreach was later expanded to cover other issues. So the White House Letter was put together as a genuine response to a genuine question.
The length of the list of regulations, policies and legislation attached to the Letter should surprise no one, given how active Congress and the Administration have been in responding to issues highlighted by the recession. And no one should be surprised at the link between burgeoning regulation and a potentially adverse impact on business growth and job creation.
While some regulation clearly is necessary, we are facing a flood of new regulations, layered on top of the many rules that already exist. The extent and complexity of those regulations have reached a point where they can in fact dampen business growth and job creation. The White House Letter was designed to help the Administration understand this.
The passage of massive legislation like that addressing healthcare and financial reform also creates continuing uncertainty, and this in turn dampens business growth and job creation. This uncertainty will take a while to dissipate because it comes in waves: first we find unexpected provisions buried in the bills themselves; next we find surprises unveiled as regulations are written implementing the legislation; finally we learn the real reach of the law as court decisions come down interpreting those regulations.We are only at the beginning of a very lengthy period of figuring out exactly what the day-to-day impact of this year's landmark legislation on our businesses will be.
So it is critical that CEOs and the general counsel assisting CEOs speak out about their concerns and in so doing educate those in Washington about the real-world effects of what they do.
Editor: Why should general counsel thoroughly brief themselves on any impact that the legislation and regulations mentioned in the White House Letter have on their companies?
Milch: It is incumbent on the general counsel to alert the CEO and board of directors about existing or pending laws and regulations that will have a material impact on the operation of the business or its business plans. This includes being sure that the CEO and the board are aware that even if the company is not in the financial or healthcare sectors, some provisions of the comprehensive financial and healthcare legislation may significantly impact their business. Because the general counsel is charged with responsibility to assure that the corporation is complying with the law, the general counsel must be thoroughly informed of any changes in the law that trigger new compliance obligations.
Editor: Is it important for general counsel to let their CEOs know about regulations that dampen their companies' ability to aid recovery by growing their businesses so that their CEOs can take appropriate action?
Milch: It's important for CEOs to be armed with the best information possible about the effect of particular regulations on their companies. Providing the CEO with an analysis of how any particular set of new laws or regulations affects a particular business is the general counsel's job.With appropriate information, CEOs will be in a position to urge changes in regulations by educating regulators about the practical effect of the regulations and the need for changes.
Editor: How can corporations best counter anti-corporate thinking that makes it more difficult to defeat legislation?
Milch: I think first we have to recognize the fact that there is a pervasive anti-corporate bias generated by the financial crisis and most recently by highly publicized cases of both real and alleged corporate wrongdoing.
Countering that bias begins with companies doing right by their customers - by providing them with quality products and services and being responsive to their concerns.
Businesses also should be vocal about the good things they do. American corporations are a well-spring of benefits for our society - from needed jobs and valuable goods and services to local corporate sponsorships and major foundation support. It is important for corporate America to be less bashful about letting the public know the good and responsible things it does. If businesses make mistakes, they have to own up to them, but when they do good things, they should make sure that people know about them, too.
Some executives seem to think that the best way to deal with anti-corporate feeling is to stay below the radar. My own view is that the best way to deal with the current concern is for corporations to be full partners in the communities they serve.