The stakes are high in the midterm election for Obama and the Democrats. The party risks losing control of the Senate, but strategists say the inversion battle is not likely to resonate with voters.
"They're using economic patriotism and Benedict Arnold and all that, and it's not registering in any of the polls we're seeing. It's a shot they're going to try, and they're going to try to move the needle on it," said Dan Clifton, head of policy research at Strategas. He said the Senate Finance Committee should bring up inversions next week.
Clifton said a case is being made that closing the loophole on inversions would generate a $20 billion savings to the Treasury over 10 years, but that's a small sum when considering corporate tax revenues of $4 trillion over the same period.
"You get the political messaging but at the same time what the administration is trying to do is prevent a Walgreens or Monsanto from doing this before Congress gets to act. There's a lot of rumors about other companies doing this," he said. A bipartisan effort was announced to curb inversions in 2002, and that brought a halt to activity, Clifton said. But the legislation didn't pass for two more years, and it then resulted in a rule requiring a change in ownership of 20 percent of the acquirer.
Clifton said that just resulted in bigger deals. The biggest so far in 2014 is AbbVie's $55 billion deal for Ireland-based Shire. Eliminating the ability to do inversions, Clifton said, could put a target instead on U.S. companies for foreign takeovers.
Obama also spoke in the CNBC interview about improvements in the economy, including a reduction in the deficit and the dramatic increase in U.S. energy production. He also said the Federal Reserve was doing the right thing in focusing on improving the employment situation. He also acknowledged that the record-high stock market was driven there in part by low interest rates, leading investors to look for higher-yielding assets.
"You've got a lot of savvy investors out there. You've got people who recognize that what goes up can come down as well," Obama said. "I'll leave it up to them to make determinations about whether valuations and stock prices are too high."
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