Five Tech Companies That Milked The Stimulus4:15 PM EST Fri. Jan. 18, 2013
With President Barack Obama set to be sworn in for his second term on Jan. 21, it is a good time to look at just how he handled what was one of the biggest crisis in his first term in office: the greatest economic downturn since the Great Depression.
President Obama urged Congress to pass a sweeping federal stimulus bill and signed the $840 billion American Recovery and Reinvestment Act into law on Feb. 17, 2009, promising that the legislation would create or save 3.5 million jobs over two years.
A six-month CRN investigation into the job creation impact of ARRA found a big discrepancy between the claims from President Obama and his administration and the actual job creation tied to the government spending.
Here we present a look at the top five companies that milked the stimulus during the president's first term, an exclusive report that originally ran on the CRN Tech News App for the iPad.
Even before President Barack Obama signed the landmark $840 billion American Recovery and Reinvestment Act into law on Feb. 17, 2009, a feeding frenzy for government dollars was in full swing.
Technology companies already prospering from billions of dollars in federal government contracts lobbied hard for information technology stimulus spending, claiming it would lead to a new jobs bonanza.
"I can't tell you how excited we are about the president's commitment to lead us to the future," said then-IBM CEO Sam Palmisano in a press conference in the White House East Room on Jan. 28, 2009, standing side by side with the president urging Congress to pass the legislation. "And the support for health IT, the support in the area of smart grids, the support in the area of education and broadband, all those things are essential. They're essential in the short term because in the research we've done, working with the transition team, we know that $30 billion could create a million jobs in the next 12 months."
President Obama, for his part, claimed that "most of the money that we're investing as part of this plan will get out the door immediately and go directly to job creation, generating or saving 3 [million] to 4 million new jobs."
Almost four years later, politically connected companies such as IBM, which has been awarded $180.85 million in ARRA funds while shedding thousands of U.S. jobs, certainly have prospered. But just how many jobs were created from the stimulus windfall in the technology sector is in question. The Council of Economic Advisers claimed that as of the first quarter of 2011, "ARRA has raised employment relative to what it otherwise would have been by between 2.4 [million] and 3.6 million."
NEXT: Forecasts From The Obama Administration
Economists contacted by CRN, including former director of the Congressional Budget Office Douglas Holtz-Eakin, and Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University who testified before Congress on the effects of the stimulus, have questioned the overall job creation claims of the administration.
"It is hard to throw three-quarters of a trillion dollars at the economy and not have some impact, but we didn't get our money's worth," said Holtz-Eakin, who helped chart economic policies under President George W. Bush. "We could have done better. It could have been better designed. We are going to find out years from now about all the waste in it. We know it had more than stimulus as part of its design. There was a lot of Obama domestic policy agenda in there in disguise. That was really mixing purposes and undercut the efficiency. And we got as a result what we got, which is a substandard recovery."
The problem with forecasts from the Obama administration is the administration used an economic model that, in effect, predicted how many jobs would be created by the government spending and never seriously attempted to measure the actual job creation impact, said de Rugy.
"After the fact, they didn't try to go and measure to see what the economy had actually done compared to what they predicted the stimulus would accomplish," de Rugy said. "They just assumed what their model predicted actually happened. It would be exactly like the weatherman saying, 'Tomorrow it is going to be sunny with chances of rain in the afternoon. And then the next day, even if it has been raining all day, they said, 'Today it was sunny and it rained in the afternoon.'"
Several attempts by CRN to get comments from the White House were unsuccessful.
CRN has spent the past six months looking specifically at where the ARRA funds were spent on technology projects, trying to determine how many jobs were created. CRN also spoke with dozens of executives and examined government documents including Recovery Act reports from the General Accounting Office, Congressional Budget Office and the Executive Office of the Council of Economic Advisers. It was a difficult task given the arcane job-reporting requirements from the federal government that allowed recipients to double- and even triple-report jobs under a "Full Time Equivalent" (FTE) formula.
What's more, every one of the companies contacted by CRN refused to discuss job creation from the funds they received or the impact on the overall economy.
The five top companies profiled by CRN for this report received a total of $745.82 million in ARRA awards and slashed their U.S. workforces collectively by an estimated 50,000 employees. CRN reviewed select prime recipient awards totaling $122.29 million received by these top five companies and found they resulted in 709.5 jobs reported to the Recovery.gov website. That amounts to a cost of $172,489 per job.
NEXT: Other CRN Findings
For 12 prime recipient awards in which it received $57.93 million in ARRA funds, IBM reported 130.1 jobs to the federal government. That amounts to -- even given the possibility of double and triple reporting -- about $445,291 per job paid by the American taxpayer. The funding came with IBM spending $18.98 million on lobbying expenditures during President Obama's first term, with Palmisano listed with 11 entries on the White House visitor's log during the Obama administration. And even with its stimulus funds, IBM has reduced its U.S. employee population by an estimated 20 percent, from 115,000 in 2008 to an estimated 92,000 employees today.
Honeywell International, meanwhile, walked away with $238 million in stimulus funds as it spent $23.88 million in lobbying expenditures from 2009 to 2012. CEO David Cote racked up 21 entries on the White House visitor's log, including a Feb. 7, 2010, Super Bowl party. For a single $745,000 award, Honeywell reported just four jobs. That amounts to $186,250 per job paid for by taxpayers. Honeywell's U.S. employee population dropped by 5,000 in the three-year period ended Dec. 31, 2011.
General Electric, whose CEO Jeffrey Immelt chaired President Obama's Council on Jobs and Competitiveness, was awarded $241 million in ARRA funds on 158 awards. For $45.68 million as a prime recipient on 25 awards with $34.60 million in funds received so far, GE has reported job funding of 567.95 jobs. The funding came with GE spending $103.21 million on lobbying during the Obama years, including 16 specific lobbying reports related to the ARRA legislation. Immelt, meanwhile, is listed on the White House visitor's log with 27 entries, including a White House dinner with the president and other business leaders.
NEXT: The Stimulus Windfall
Peter Schweizer, a William Casey Fellow at Stanford University, was the first to document the stimulus windfalls for companies in his 2011 book, "Throw Them All Out: How Politicians And Their Friends Get Rich Off Insider Stock Tips, Land Deals And Cronyism That Would Send The Rest Of Us To Prison." He said the financial crisis created a perfect storm for rewarding supporters of the administration.
"My view is that Barack Obama simply has engaged in cronyism on a massive scale," said Schweizer. "With the stimulus you really had, for the first time in American history, an American president and his administration that had the opportunity to literally hand out hundreds of billions of dollars to companies whether it was related to infrastructure, whether it was related to high-speed Internet in rural areas or whether it was related to clean energy. So this was an unprecedented level of cronyism." One executive for a top federal integrator, who has 30 years of experience working on government IT projects, said ARRA was inevitably going to flow to politically connected companies with strong lobbying efforts. "It was totally out of control," said the executive, who did not want to be identified. "It was like a river of money and everyone had their hand out. And with a river you can divert the flow to wherever you want it to go without anyone being the wiser. I guess they can say they saved some jobs, but a lot of it went to program expenses for bureaucrats. A lot of it was money not well spent."
Insiders from some of the companies that were awarded ARRA funds said claims of cronyism with regard to the ARRA funding are unfounded. Those insiders, who refuse to go on the record, claim the ARRA funds saved the country from an economic collapse and that the cronyism charges are a vicious partisan attack by Republicans determined to see President Obama thrown out of office. They say that in many cases the applications for government funding that kicked in with ARRA were in the works under the Bush administration and were filed by states, cities, universities and third parties. What's more, they maintain, a large part of the funds that made their way to companies were the result of a rigorous government vetting process that had nothing to do with lobbying expenditures, White House visits, fundraising or support of President Obama and the administration.
Several attempts by CRN to get someone in the administration for comment were unsuccessful.
"The Republican National Committee has ignored factual information as it relates to the Recovery Act, insinuating payback for support of the president," said one source close to one of the companies that benefited from ARRA funding."Nobody in the private sector wants to go up against the RNC, which has a much bigger budget. When we have spoken up, we have gotten shouted down in public and bashed over the head. We don't think it's a good time to pick that fight so close to the election. We'd rather keep our head down and let the facts speak for themselves. With seven weeks before the election we'd rather stay out of it and let the two candidates' ideas and records speak for themselves."
Taking into account funding and jobs data from the Recovery.gov database, lobbying expenditures and campaign contribution data from the Center for Responsive Politics, entries from the White House visitor’s log, and interviews with economists and government watchdogs, CRN ranked the top five companies benefiting from ARRA.
Following is the first installment of CRN's three-part series on the impact of the $840 billion ARRA.
No. 5: MICROSOFT CORP.
|Steve Ballmer, CEO|
Microsoft CEO Steve Ballmer certainly made sure members of Congress knew where he stood with regard to the passage of ARRA.
"Microsoft strongly supports passage of the conference agreement announced today between the House and Senate on the American Recovery and Reinvestment Act of 2009 (H.R. 1), and I urge Congress to act now," wrote Ballmer in a letter to every member of Congress on Feb. 11, 2009. "We believe the final conference agreement will help families during this difficult economic time, create and save jobs, and begin to put our country back on the path toward long-term economic growth."
Microsoft, which announced plans to lay off 5,000 employees just two days after President Obama took office, was one of the first to benefit from the stimulus with $11 million in funds awarded to the state of Washington and City of Redmond. Those funds were used to build a bridge connecting Microsoft's East Campus to its West Campus at its Redmond, Wash., corporate headquarters.
The spending raised eyebrows in conservative circles, with a blogger on the website "Below The Beltway" calling it "Microsoft's Bridge To Nowhere." A Microsoft spokesman in an email to CRN emphasized there were no ARRA funds provided directly to Microsoft for the bridge project, which he called a "roadway designed to reduce congestion in an urban center with more than 600 businesses and 5,000 residences." That roadway includes a bike path and sidewalks and for the first time connected the East and West Microsoft campuses. Microsoft said it provided roughly $17.5 million in funding, or about 50 percent of monies for the public works project, which had been a priority for more than a decade. The Microsoft spokesman said the bridge has improved traffic mobility by 4 percent, which he called a "significant number among experts who study traffic issues."
The Microsoft spokesman stressed that the company "did not lobby the White House or Congress for earmarks under ARRA. Your characterization that somehow Microsoft was included in these projects as a result of lobbying efforts is just flat-out wrong." An "average monthly number of 44 full time equivalent jobs" were supported by the Microsoft bridge project, according to the Washington State Department of Transportation, with a monthly peak reporting of 105 FTEs in October 2009. Washington State Secretary of Transportation Paula Hammond said that overall the stimulus saved or created 6,027 jobs on $555 million in ARRA funds for the state Department of Transportation. "When I hear people say ARRA didn't work, I say, 'Yes it did. It worked in transportation.’ " She said the legislation came as "contractors were scrambling to find something to keep their workers and their businesses moving."
The Microsoft bridge project was one of many "shovel-ready" projects that already were in the works before the stimulus package was approved, said George Mason University’s de Rugy.
"In order to spend that much money that quickly, the government had to use channels of spending that existed," said de Rugy. "A lot of the money went to companies that submitted plans before there was even a stimulus," she said. "There was not a committee to vet and assess the projects. The idea was to spend money quickly. You can't spend money quickly and do a real good job at assessing how the money would be best spent."
NEXT: Microsoft Continued
Microsoft was awarded $8.78 million in ARRA funds from 46 awards, including a $1.1 million project related to a University of Washington health-care IT project that funded 17.44 jobs in the most recent quarter. The Microsoft spokesman noted that, of course, Microsoft "benefited from ARRA, but only because third parties like the University of Washington applied for funding for projects that included IT. Given our large product portfolio and footprint in the IT industry, there's a pretty good chance that any IT project will include some Microsoft software."
Microsoft has spent $24.75 million on lobbying expenditures so far during the Obama administration, according to the Center for Responsive Politics. In addition, the company filed 16 lobbying reports related to the stimulus bill in 2009, according to the Center for Responsive Politics. Those lobbying reports cite, among other things, protection of critical infrastructure and cybersecurity, health IT issues, passage of free trade agreements, and R&D tax credit. A Microsoft spokesman said in an email the "wide range of potential issues in economic stimulus legislation was one of the issues that Microsoft was watching in 2009. As I stated before, we did not lobby Congress or the White House for earmarks under ARRA."
Microsoft employees have been big contributors to Obama, with employees and their families contributing $544,445 to President Obama's 2012 re-election campaign, the No. 2 overall company or university contributor in the form of employee contributions to the 2012 Obama campaign, according to the Center for Responsive Politics. Microsoft employees have contributed $107,840 to the campaign of Republican presidential candidate Mitt Romney, according to the Center for Responsive Politics. During the Obama administration, Ballmer is listed on the White House visitor's log in 19 entries, including June 3, 2009, and Jan. 14, 2010, meetings with the former Assistant to the President For Economic Policy Lawrence Summers. In addition, Ballmer was the guest of the White House for a China state dinner on Jan. 19, 2011. The Microsoft spokesman pointed out that the company’s review of the White House visitor's log shows 17 visits over seven dates with all of those visits taking place after the ARRA legislation was passed.
Microsoft's U.S. employee population has declined by 1,000 during the Obama years. In 2008, Microsoft said it employed 55,000 people in the U.S. At the end of 2011, the latest data available, the company employed 54,000 people in the U.S.
One footnote: the Microsoft unit that received at least $1.1 million in health-care IT funding related to the University of Washington project is now part of a 50-50 joint venture Microsoft has formed with another stimulus beneficiary: General Electric. The new GE-Microsoft joint venture, called Caradigm, is aimed at providing realtime business intelligence to improve "health-care quality and the patient experience."
NEXT: Computer Sciences Corp.
No. 4: COMPUTER SCIENCES CORP.
|Michael Laphen, Chairman President and CEO|
CSC said in a press release on May 14, 2010, detailing the award that the $30.13 million was actually part of an estimated $317 million four-year "indefinite-delivery/indefinite-quantity" (IDIQ) contract with the first year of the deal being funded with $49.3 million "using funds" from ARRA.
CSC said the contract had a "four-year base period, one four-year option and one one-year transition option, bringing the estimated contract value to $317 million if all options are exercised. The first year will be funded at $49.3 million by NOAA using funds from the American Recovery and Reinvestment Act of 2009."
"We are proud to work with NOAA in helping the nation better understand how the Earth's climate is changing, which will aid in the development of adaptation and mitigation strategies," said Mike Gaffney, president of the CSC Civil and Health Services Group, in the CSC press release announcing the deal. "CSC is confident that with the new high-performance computing facility, NOAA will be able to produce more accurate and agile models and share computing resources across the agency and its research partners."
The NOAA contract came with CSC's lobbying expenditures nearly doubling from $980,000 in 2008 to $1.82 million in 2010, according to the Center for Responsive Politics. Overall, CSC spent $5.88 million in lobbying expenditures during the Obama administration, according to the Center for Responsive Politics.
As for total ARRA funds, CSC received a total of $77.19 million on 34 awards, according to the Recovery.gov website. For $48.52 million on seven prime recipient awards, CSC reported 127.04 jobs, according to the Recovery.gov website.
CSC refused to comment on how much in ARRA funds it received, how many jobs were created as a result of those funds or on its U.S. headcount.
Former CSC Chairman President and CEO Michael Laphen, who headed the services giant for most of the Obama administration years and retired in 2012,
NEXT: General Electric
No. 3: GENERAL ELECTRIC
|Jeffery Immelt, Chairman and CEO|
The world economy was in a free fall and attendees were looking for some guidance from the head of one of the world’s largest corporations. Immelt's message: The economic downturn represented a fundamental "reset" that, for better or worse, was going to result in greater government involvement in the economy and business. Those that get that will prosper, he told attendees, and those that don't get it will not.
GE has been awarded $241 million in ARRA funds on 158 awards. As a job creation measure, for $45.68 million as a prime recipient on 25 awards with $34.60 million in funds received so far, GE has reported job funding of 567.95 jobs. That amounts to $60,920 per job. The awards came with GE spending $103.21 million in lobbying expenditures during the Obama administration, according to the Center for Responsive Politics.
A GE spokesman in an email response pointed out that the ARRA funds awarded to GE were for "research grants, direct contract and subcontract awards from third parties, including state and local governments, and tax credits to incentivize community bank loans. To put this in context, if these funds were received in one year (instead of spread out over several years), it would be less than one-tenth-of-one-percent (0.01%) of company revenues."
Among the GE awards according to the Recovery.org website, are energy-related funds including a $15 million award from the Department of the Navy to "demonstrate technologies to reduce specific fuel consumption" in F/A-18E/F and E/A-18G aircraft engines; a $2 million award with the Department of Defense for "Smart Micro-Grid Energy Management Controls for Improved Energy Integration" at Department of Defense installations; and a $649,903 award from the Department of Energy related to "training for the development of a Smart Grid Center of Excellence."
Immelt, who was appointed in January 2011 to head up President Obama's Council on Jobs and Competitiveness, is listed as having 25 appointments in the White House visitor's log.
At the kickoff meeting of the president's jobs council on Feb. 24, 2011, Immelt told the president: "I'm glad to be a part of this group. I really like the way it has come together."
He also told President Obama that the council members agreed that they wanted the group to be "laserlike focused on creating American jobs."
"We don't like the cynicism that exists in the economy today," he said. "We view that we share the responsibility in the private sector, in the private markets to do the things that are important to create jobs in this country, good jobs."
Despite the stimulus funds, GE's U.S. employee population declined by 14 percent during the stimulus fund investment by the federal government. In a 2008 GE Citizenship Report, GE listed 152,000 employees in the U.S. with $85.3 billion in sales in the U.S. Today, the company has 131,000 U.S. employees, according to a GE spokesman, making the company "one of the largest employers in the U.S."
NEXT: Honeywell International
No. 2: HONEYWELL INTERNATIONAL
|David Cote, Chairman and CEO|
Citing the "incredible fear" gripping the markets, Honeywell Chairman and CEO Cote's message regarding ARRA was simple: "Needs to get done fast," Cote said at a press gathering after the Jan. 28, 2009, meeting with President Obama that he attended as well.
"We have to get this thing done quickly and get it out there. A lot of people have said it and I think it is absolutely right: We can't let the perfect be the enemy of the good. We need to start investing for our future. We very much appreciate an aggressive approach here and think it makes a lot of sense: getting money out fast to people who will spend it."
Honeywell was awarded $238 million in ARRA funding on 173 awards, according to the Recovery.gov database. The awards came with Honeywell spending $23.88 million in lobbying expenditures during the Obama administration.
Honeywell's U.S. employee population, meanwhile, dropped 9 percent from 58,000 as of Dec. 31, 2008, to 53,000 as of Dec. 31, 2011, according to Honeywell reports.
Among the Honeywell awards listed on the Recovery.gov website: a $27.2 million award from the Department of Energy intended to help Honeywell "become the first U.S. supplier of high-purity lithium hexafluorophosphate (LiPF6)," a critical component used in lithium ion batteries -- aimed at establishing a secure domestic supply for the "critical material in the Electric Drive Vehicle supply chain;" a $3.85 million award from the Department of Energy related to developing and demonstrating "a High Temperature Downhole (HTD) Directional Drilling (Navigation) Instrument Supporting the DoE (Department of Energy) Geothermal Technologies Program and the American Recovery and Reinvestment Act (ARRA) Goals and Objectives By: Creating And Retaining American Jobs;" and a $7.0 million award from the General Services Administration that "provides for the implementation of Energy Conservation Measures (ECMs) with progress payments made from ARRA funds."
The Honeywell awards came with Cote listed as having 22 appointments on the White House visitor's log, including a Feb. 4, 2010, Super Bowl party and a Feb. 22, 2010, state dinner, according to the White House visitor's log.
No. 1: IBM
|Sam Palmisano, CEO|
With President Obama standing behind him at the White House press gathering on Jan. 28, 2009, then-IBM CEO Palmisano, a self-described Republican, was adamant in his assertion that the country did not need to spend money on projects just for the sake of spending money. Yes, he said, there was a need to "reignite economic growth in the country" with a focus on creating jobs, but not just any jobs -- "21st century jobs" born from an investment in more competitive infrastructure.
"There is clearly no reason we believe to undertake projects just for the sake of activity," he said. "We need to undertake projects that actually create jobs that will make infrastructure, make our country much more competitive for the long term."
Palmisano, usually reticent about taking political sides, took to The Wall Street Journal in a Jan. 13, 2009, editorial piece titled "Let's Spend On Broadband And The Power Grid -- Not All Stimulus Is Created Equal" as part of a push for technology funds from the federal government. In that editorial, Palmisano argued that "smarter infrastructure is by far our best path to creating new jobs and stimulating growth." He claimed a $30 billion stimulus package focused on smart grids, health-care IT and broadband would create 1 million jobs in a year. "That's possible because these kinds of infrastructure have significantly greater economic and societal multiplier effects than traditional infrastructure like bridges and highways," wrote Palmisano.
Today, the question of just how many jobs were created from the stimulus remains is in question, according to economists. IBM, for its part, was awarded $180.85 million in stimulus funds on 123 awards, according to the Recovery.gov database. For 12 prime recipient awards in which it received $57.93 million in funding, IBM reported 130.1 jobs, according to Recovery.gov reports.
At the same time IBM was benefiting from government contracts and grants, the computer giant reduced its U.S. workforce by 23,000 employees from 115,000 in 2008 to an estimated 92,000 employees today, according to Alliance@IBM CWA Local 1701, which has been pressing for collective bargaining rights for IBM employees for many years.
In a CRN interview with Lee Conrad, national coordinator of Alliance@IBM CWA Local 1701, Conrad called IBM's ability to benefit financially from the government stimulus funds at the same time it was cutting U.S. head count "disgusting." He said there should have been strict U.S. job creation rules regarding ARRA.
"When I hear of IBM getting all this money to create jobs and then I see the reality, which is more and more longtime IBMers being thrown out the door, it just makes me sick," said Conrad. "There should have been strings attached to that money and transparency as to how many jobs were created in the U.S. Something is wrong with this picture when you've got IBM getting that kind of money and not increasing its U.S. employee population."
NEXT: IBM Continued
IBM would not comment on the total funds it received from the ARRA, how many jobs it reported funding to the federal government or even its U.S. employee headcount. An IBM spokesperson in an email said that the company no longer "breaks out its workforce number by country."
"The geographic distribution of highly skilled employees required to be successful in this industry is guarded, competitively, by companies that operate globally," wrote the IBM spokesperson. That noted, the IBM spokesman pointed out that IBM believes it is "the largest tech employer in the U.S. and the world."
IBM's ARRA funds came with the company spending $18.98 million in lobbying expenditures during the Obama administration, according to the Center for Responsive Politics. In 2009, IBM filed eight lobbying reports related to ARRA. The lobbying efforts included "additional funding" for the digital TV transition. That lobbying effort appears to be related to the $43.51 million award under ARRA for a $120 million contract that was awarded two years before the stimulus to administer the federal government's digital TV converter coupon program. IBM, in effect, received those funds as part of a contract to administer the digital TV converter coupon program that provided U.S. households up to two coupons worth $40 each to be used for TV converter boxes.
As for the IBM hardware, software and even services related to ARRA that were purchased by the government, among the awards listed on the Recovery.gov website include a $6.98 million award from the Department of Homeland Security for a contract related to a "commercial off the shelf (COTS) Integrated Workplace Management System" with "special emphasis" on integration with an SAP/ERP system; a $799,525 award with the Department of State for an IBM Blade Center 8677-HC1; a $259,419 award with the Department of Interior for IBM Blade Center systems; a $187,499 award from the Department of Transportation to "develop and execute grant accrual and estimated liability methodology for Recovery Act funds;" a $113,674 award with the Department of Transportation related to in part "analysis of data and accrual preparation for Recovery Act and Discretionary Tiger grants;" an $85,137 award with the Department of Interior for IBM X Series Servers; and a $38,520 award from the Department of Education for a "system enhancement" related to in part to "e-Grants and e-Application" to support "new requirements resulting from stimulus funds."
Contributions to the Obama campaign were strong in the 2008 and 2012 campaigns from IBM employees and their families, coming in at No. 15 in the list of contributions from companies and universities for both election periods, according to the Center for Responsive Politics.
Donations to Obama's 2008 campaign from IBM employees and their immediate families accounted for $532,372, according to the Center for Responsive Politics. Those donations to the Obama campaign so far in 2012 amount to $218,761, according to the latest figures from the Center for Responsive Politics.
During the Obama administration, Palmisano is listed on the White House visitor's log for 11 entries, including an Oct. 7, 2009, meeting with President Obama and then-director of the White House Economic Council Lawrence Summers. Palmisano also attended a state dinner at the White House for Chancellor Angela Merkel of the Federal Republic of Germany on the evening of June 7, 2011, and a private luncheon with the president on the evening of July 12, 2011.
In a Sept. 14, 2010, interview on a Wall Street Journal Live video segment, Palmisano said his visits to the White House were part of the Obama administration "reaching out to the business community."
"I was one of many [business leaders focusing on] economic-related issues. So we were having lots of input and lots of exchange. And that was what we were all working on at the time. Like everybody, you always have to have a diverse audience so I could represent the minority [Republican] party," he said.
Palmisano told Wall Street Journal Live that he does not make any political contributions nor does IBM have a Political Action Committee. "It is back to the IBM philosophy," he said. "If you are in 170 countries, where do you have a PAC?"
As for how Palmisano viewed the progress that the administration was making at the time in improving the functioning of government, he told Wall Street Journal Live: "We haven't made any progress. It doesn't mean there hasn't been a lot of interaction." That's because, Palmisano said, IBM has not been in "sync" with the administration's "priorities."