Penske Corporation Officers' Meeting Remarks

Scottsdale, AZ
February 28, 2003

Introduction

Thank you very much. Good morning, ladies and gentlemen. I'm very pleased to be here.

It's always good to reunite with some old friends from the transportation industry. I've always enjoyed a wonderful relationship with the people of this company while at ATA, and now as head of the U.S. Chamber.

Jim Rosen serves on the Chamber's Energy and Environment Committee, and Roger Penske and I go back a long time.

I came here from Florida, where the Chamber held its winter board meeting and our National Chamber Foundation its Business Horizon Retreat.

We had extraordinary thought-provoking discussions about many great challenges and opportunities facing the country.

Treasury Secretary John Snow talked about the economy. A retired Major General gave us an inside look at power and politics in the Middle East.

The chairman of the President's Critical Infrastructure Protection Board spoke to us about cybercrime.

A senior fellow from a major think tank discussed technology and its links to communications, energy and homeland security.

And the director of the McKinsey Global Institute led a discussion on globalization.

These discussions got me thinking that some of biggest challenges we face as a country have extraordinary implications for the Penske line of businesses.

For example, we're entering into an entirely new debate on how to move people and products safely and securing but also quickly and efficiently.

This debate will have extraordinary consequences for trade, travel, logistics and immigration.

Questions of how to balance security concerns with the values of freedom, mobility and economic competitiveness and who pays for it all will create an ongoing series of flashpoints for government, business and society.

Also, instability in places around the globe is having a dramatic impact on oil and energy prices. What impact will a war in Iraq and its aftermath have on prices and supplies?

A better question is "what should we be doing so that events like this have a lesser impact on prices and supplies?"

The Chamber is shaping the debate on these and many other issues that determine our economy's ability to grow and prosper. I'd like to take this opportunity to lay out the Chamber's prescription for growth.

Some might argue that it's not an appropriate time to focus on growth with all the national and homeland security issues facing us.

The truth is, there's never been a more appropriate time because we cannot achieve our goals in those areas without a prosperous economy—it pays the bills for national and homeland security and a strong military, as well as education for our kids and health care for our retirees.

Before I get into key ingredients for growth, it might be helpful to shed some light on the extraordinary confluence of events, conditions and decisions facing lawmakers and the administration.

Political Environment

The nation's political environment could best be described as fragile. The Bush Administration is walking a tightrope on Iraq, and it knows that a failed effort could ruin any hopes of a second term.

If there is indeed a war, press attention will almost exclusively focus on it and push the domestic agenda off center stage at a time when the president and the Congress need to demonstrate concern and leadership on the economy.

Adding to the political fireworks are no fewer than 8 declared Democratic presidential candidates—many of them current congressmen—whose every move and word are carefully choreographed with next year's election in mind.

In addition, the president's new economic team—which includes a new Treasury secretary, SEC chairman and economic advisor—and the new leadership on Capitol Hill are in just settling in, and that transition process has hindered the president's rollout on key domestic initiatives.

Suffice to say that we are at a time when strong, united business leadership is critical…leadership in policy, politics and the economy…leadership that rejects complacency or fear…leadership that puts the country first and transforms this moment of danger and uncertainty into a sustained period of opportunity and prosperity.

Leadership is making bold business decisions that strengthen the economy—as opposed to a "wait until" approach that delays decisions to hire, invest and expand until current uncertainties are resolved.

In the post-9/11 world, we may never see a time when there is little or no uncertainty.

Business has to learn to become comfortable with the new realities shaping our world—globalization, the continuous threat of terrorism, and economic and political instability in places all over the world.

So I urge the business leaders of America—the people in this room—to move forward with bold plans for future growth, because if you won't, your competitors will.

Chamber Agenda

Leadership also means driving a set of policies that will ensure both short-term and long-term economic growth.

This is where the Chamber is exerting its influence and leveraging its resources. Let me share with you some key components of our economic growth agenda.

First, we are continuing to boost support for President Bush's tax cut package.

The president's plan has lost some momentum since its announcement for all the reasons I've stated and also because it contains key elements of fundamental tax reform, which always generates the strongest resistance from certain special interest groups.

It's going to take some skillful political maneuvering to get this bill through Congress, perhaps even fashioning a budget "reconciliation bill" that can carry the tax cuts and potentially other controversial items without having to overcome the 60 votes in the Senate needed to stifle a filibuster.

Advancing the president's plan is a top Chamber priority because it strikes the right balance between providing short-term stimulus and incentives for long-term growth.

It will put money in consumers' pockets right away by increasing the child tax credit…reducing the marriage penalty…moving more Americans into the lowest tax bracket…and by speeding up the tax cuts that were passed in 2001.

It will also spur investment and future growth by dramatically increasing write-offs for small businesses—and by ending the double-taxation of dividends.

Let me make a quick comment on the dividends tax cut, because that element of the plan seems to be generating the most controversy.

Simply put, the taxation of dividends boils down to an issue of fairness. It IS fair to tax a company's profits. It is NOT fair to tax shareholders on the same profits.

The Bush plan to eliminate the tax investors pay on dividend income would draw money into equity markets…money businesses need to build and expand plants, buy equipment, and hire more people.

It's a pretty safe bet that the president's proposal will not pass in its current form, but the Chamber will do what it must to ensure the biggest and boldest package possible.

Second, we need to secure America's energy future by becoming less dependent on energy imports.

Any time there are hostilities, a public rally, a strike, a change in leadership—or even the threat of one—in a major oil-exporting country, we feel it at the pump and in our heating bills.

We're dependent on our trading partners for nearly 60% of our oil because we deny ourselves the vast amount of natural resources buried right in our own backyard.

It's time for America to take care of its own energy needs. We need a national energy policy that boosts domestic production, modernizes our power grid, and encourages both conservation and the development of new energy technologies.

Developing wind, solar, and biomass energy and funding research for hydrogen-powered cars are part of the mix.

But so, too, are tapping oil resources in currently forbidden areas, including a small portion of the Alaska National Wildlife Refuge.

Another very important item on our agenda is improving and expanding the nation's transportation infrastructure.

I know this is a very high priority for your company and the entire transportation industry. But you may be wondering why the Chamber has taken a lead in pushing for full funding of the federal highway trust fund.

It's because transportation is a global issue—affecting every sector of society. A secure, dependable and integrated transportation system shapes our cities and states, forms the foundation of our just-in-time economy, and enables us to enjoy the highest standard of living in the world.

And if for a second you don't believe that, then simply think back to some recent occurrences.

Two weeks ago, millions of people in the Northeast and Mid-Atlantic states were immobilized and millions of dollars in retail sales lost because of the terrible snowstorm that shut down our airports, roads, and mass transit systems.

Last fall, produce, parts and goods sat on cargo ships resting offshore during a 10-day lockout at 29 West Coast ports. What was the price tag on that? $20 billion.

And, of course, there was 9/11, when our entire aviation system was paralyzed and our borders barricaded, causing auto plants in the Midwest to close and send workers home.

These instances—regardless of whether or not they could have been anticipated or prevented—underscore the tremendous value of our transportation system to all segments of society.

Unfortunately, we're at risk of losing that system.

Without additional investment in our infrastructure, our system of commerce is impaired; our mobility restricted; our safety threatened; our environment endangered; and our way of life compromised.

The main reason why increased transportation investment is critical is obvious – we need to ensure that our infrastructure can safely handle more vehicles logging more miles on our roads, greater air traffic, and more ships carrying bigger containers of cargo.

But there are other benefits that aren't so obvious. One of those is cleaner air.

Did you know that improving traffic flow at the nation's 167 most congested highway bottlenecks would reduce gasoline and diesel consumption by nearly 20 billion gallons over the next 20 years?

That's more than just a humongous savings in fuel costs.

Those improvements over the next two decades could reduce carbon monoxide by 45%, carbon dioxide by 71%, and smog-producing compounds by 44%.

Another less obvious benefit of increased transportation investment is enhanced national security.

Outfitting the nation's border crossing points, airports, railways and seaports with top of the line technology is critical to our nation's safety and well-being.

And don't forget that our military depends on a robust transportation system to move equipment and troops for the purpose of protecting freedom and free enterprise all over the world.

And finally, increased infrastructure investment has a unique multiplier effect on the economy like few other forms of government expenditures.

For every $1 billion invested in transportation, the nation's economy generates more than $2 billion in economic activity and 42,000 new jobs.

The Chamber has a comprehensive plan to ensure that the nation's infrastructure receives the funding and improvements it needs.

We are fighting to ensure that Congress fully dedicates federal transportation trust fund dollars for their intended purpose of fixing our roads, airports, ports and waterways.

For years, the Highway Trust Fund has been raided for non-surface transportation projects, and this urge will only become exacerbated by the growing budget crunch.

We're also working to establish a streamlined, environmentally-responsible approval process that doesn't allow the anti-growth crowd to hold projects hostage.

Something is terribly wrong with the system when it takes 15 years to build a single runway, as is the case at San Francisco's airport.

We will engage in an all-out battle to win reauthorization of TEA-21 and AIR-21, legislation on the table this year that will appropriate surface and aviation transportation dollars for the next several years.

This will be a lively debate, given the new urgency to contain spending.

But with your help we can achieve maximum funding levels, similar to the success we had this year when Congress approved a 2003 fiscal year budget that maintains the current spending level of $31.6 billion for surface transportation.

You might also be interested in knowing that the Chamber is working with organized labor groups, ATA, and others to amend the Administration's proposed hours of service rule.

In comments we filed with the Administration last year, we argued that weekly caps on drive time are incompatible with the nation's just-in-time delivery system, and we look forward to reviewing the Administration's revised proposal in the near future.

Achieving a transportation agenda as aggressive as ours requires a lot of support and organization. That's why the Chamber nearly two years ago organized Americans for Transportation Mobility, or ATM.

ATM is a broad-based coalition of trade associations, transportation users and providers, state and local chambers, state and local government officials, and labor unions. We're at 380 members—and counting.

The purpose of ATM is to build public and political support for a safer and more efficient transportation system, and if you haven't heard of us yet, you likely will as TEA-21 and AIR-21 come before Congress.

And speaking of transportation, the Chamber is leading the national debate on how to achieve the right balance between security and mobility.

The war on terror is unlike any we've ever fought, and it's here to stay. We're dealing with a foe that wants to cripple the spirit of America, and therefore cripple our economy.

The business community and government on all levels must work together to ensure that the country doesn't surrender to the fear of terrorism.

Part of the role of business is to support increases in military manpower, homeland and national defense spending, and necessary call-ups of the National Guard and Reserve.

At the same time, let's understand that the law creating the new Department of Homeland Security was just the beginning of the process—not the end.

The Chamber is working closely with this agency to ensure that it acts to protect the economic security of Americans along with their physical security.

In fact, Chamber staff just last week met with the senior level Homeland Security Department officer whose job is to consult with the business community for the purpose of developing new security measures—the first of many such conversations we intend to have with that new department.

The country's return to prosperity depends on the free flow of lawful commerce, transportation and immigration. Mobility and security must go hand-in-hand. Sacrifice one for the other, and we'll pay a horrific price.

The fourth item on our economic growth agenda is comprehensive legal reform, which includes stemming the tide of abusive class action lawsuits, asbestos litigation, medical liability, and vicarious liability—an issue that is of particular concern to your organization.

Last year the Chamber strongly supported the Small Business Liability Reform Act that, among other things, would have limited the operation of vicarious liability on those who are in the business of renting or leasing products.

And that effort continues in the current Congress. We cannot allow trial lawyers to hold innocent companies vicariously liable for the acts of others.

We're up against a formidable opponent. The trial lawyers have a stranglehold on our judicial system and are reaping unbelievable riches because of it. No industry, no business is safe.

Doctors are moving their practices or retiring early and patients are being denied care because of increased medical liability costs.

60 companies nationwide have been pushed into bankruptcy and 60,000 people have lost their jobs because of asbestos lawsuits that are now targeting companies that had absolutely nothing to do with the making or selling of asbestos.

The auto manufacturing industry and several others that used asbestos without knowing its potential for harm are now in the cross-hairs of the trial lawyers.

We're working hard for legislative fixes to our troubled legal system in Congress. Last year, the House passed class action and medical liability reform bills, but both stalled in the Senate.

We're not waiting for Congress to restore fairness to our civil justice system. We're forging change at the state level in a number of different ways.

We've formally called on people in the states with the worst liability environments to urge their legislatures to pass meaningful legal reform.

We took this unprecedented step in Mississippi last year, and—lo and behold—lawmakers and the governor responded to public pressure by passing medical liability reform AND broader legal reform.

This month, we did the same thing in West Virginia, and we hope to get the same response there as we got in Mississippi. And we'll continue right on down the line of the worst offenders.

There's another method in which we're working for legal reform on the state level, and it's through voter education in state attorney general and supreme court races.

We got involved in 18 of these races last year and the candidates we supported won 17 of them. That's not a bad batting average by anyone's standards.

So while we continue to lobby Congress for national solutions to excessive frivolous litigation, we'll continue to stay very active in the states as well.

Finally, the Chamber remains committed to comprehensive regulatory reform that ensures a system of rulemaking based on science and cost-benefit analysis.

Business spends more than $850 billion a year complying with government regulations, many of which are not carefully thought out, void of any degree of reason or common sense.

To its credit, the Administration is making significant headway in creating a system based on flexibility and voluntary measures instead of heavy-handed government mandates and "gotcha" tactics.

Repeal of the ergonomics regulation and recent enactment of the Data Quality Act, which requires agencies to use sound science and statistics when developing policies and regulations, are significant achievements.

But the road ahead is littered with many regulatory battles, including the reformulation of fuel and diesel engine standards—an issue of great interest to your company.

Like we have on asbestos and other potentially divisive issues, the Chamber is committed to bringing all of the stakeholders together to form a united business front on diesel engine rules. I know we can count on Penske's support in this endeavor.

Conclusion

Ladies and gentlemen, these are challenging times for our nation's businesses and for the organizations that represent them in Washington.

The economic picture is cloudy and uncertain. The political environment in Washington is equally so.

But the Chamber has a proven strategy for accomplishing its objectives in times like these.

We work with friends and allies from both sides of the aisle in Congress. We work closely with our strongest supporters—organizations like Penske. We strengthen the ties that bond the entire Chamber Federation—3 million businesses strong.

Reform taxes and regulations…change the legal system…improve the infrastructure…fight the war on terror by protecting both security and mobility. That's what the Chamber is committed to doing, and with your help, we can get it done.

As a final note, let me reiterate that no amount of policy or legislative success can restore prosperity without decisions by business leaders to take risks, invest capital, and hire new people.

My message to companies is that if you wait too long to act, someone's going to eat your lunch.

We are a nation of risk-takers…of doers. Our ancestors risked everything coming to this country, and they worked hard and made great sacrifices to build and defend it. Now history calls on us to do the same. We must rise to the occasion, and I'm confident we will.

Thank you very much.