Time to change course on the US economy

 July 14, 2010 - The Hill

By Thomas J. Donohue

The congressional majority and the administration have taken their eyes off the ball when it comes to Americans’ top priority — creating jobs. Although the economy may be growing again, it is not growing nearly fast enough to create the 20 million jobs we’ll need in the next decade to replace those lost in the recession and to keep up with a growing population.

Instead of partnering with the business community and embracing proven ideas for job creation, the congressional majority and the administration have embarked on a course of rapid government expansion, major tax increases and suffocating regulations.

Their actions have injected tremendous uncertainty into our economy. Banks, investors, companies, entrepreneurs, and consumers are concerned and worried. They don’t know what is going to hit them next.

One thing is certain: If we continue on our current course, we may lose even more jobs and we could end up in a double-dip recession. We will also erode our competitive position globally, as other nations take steps to cut taxes, reduce regulations, and restrain the appetites of government.

As the president has said repeatedly, and as every economist knows, prosperity and job growth come from the private sector, not from the government. Government’s role is to establish the right conditions so the private sector can invest, grow, compete, create new products and services, and put Americans back to work.

Today the Chamber is offering Congress and the administration some fresh approaches to unlock frozen capital and jolt our economy back to life.

This should start by addressing America’s uncompetitive tax rates, what small business owners say poses the greatest threat to job creation. This Congress has already raised taxes by almost $700 billion to pay for healthcare, stimulus and other programs. Proposals in the capital markets, energy and climate change arenas would raise hundreds of billions more. And beginning next year, Americans will be hit with the largest tax increase in history.

Our weak economy simply cannot sustain such massive tax hikes at this time. We therefore urge Congress and the administration to immediately support at least a temporary extension of all the tax relief passed in the prior decade. We must also reduce the corporate tax rate, which would make American companies more competitive on the world stage and help spur investment and job growth here at home.

Even as taxes are going up, spending is going through the roof and deficits right along with it. Instead of expanding entitlements, the administration and Congress should control and modernize them without further delay. Sustained economic growth can help bring down the deficit, but we will also need to generate additional revenues. Our policy challenge is to do so in ways that do not undermine economic growth or competitiveness, such as the government sale of $1.7 trillion worth of oil, gas, and shale leases.

The president has also said that millions of American jobs can be created by doubling U.S. exports in five years, and we agree. We can start by immediately passing three pending free trade agreements with Colombia, Panama and South Korea and reviving global trade talks known as the Doha Round.

Millions of jobs, as well as our global competitiveness and quality of life, depend on modernizing all forms of American infrastructure. We must remove the regulatory, legal and financial roadblocks to private investment. Doing so would unleash up to $180 billion and create more than 1.5 million jobs in the next decade in water infrastructure alone. Incentives and legal surety for investments in clean coal technologies, carbon capture systems, as well as a massive expansion of nuclear power, would also create hundreds of thousands of jobs, as would a multi-year, federal surface transportation bill.

The regulatory burden imposed on the job creators of our country has reached a tipping point. Congress has approved a 2,800-page healthcare bill that includes a new employer mandate and hundreds of billions of dollars in business taxes. The Senate is poised to pass a sweeping financial reform bill fraught with unintended consequences, huge new bureaucracies and higher taxes and fees. The Environmental Protection Agency and Labor Department are embarking on an unprecedented amount of regulatory action.

The administration and Congress must address the cumulative impact of this regulatory avalanche to restore certainty, unleash investment and create a better atmosphere for job creation.

It is imperative that during these difficult times, business and government leaders work with each other, not against each other. Our current economic direction is not working and it’s undermining our position in a very tough and competitive global economy.

The business community wants to help our economy and our country succeed. We don’t want to wait until after the November election. We’re ready to start today and we don’t care who gets the credit.

Thomas J. Donohue is president and CEO of the U.S. Chamber of Commerce, the world’s largest business federation.