State of American Business Address
Address by Thomas J. Donohue
President & CEO, U.S. Chamber of Commerce
January 7, 2004
Introduction: The Economy in 2003 and 2004
Good morning ladies and gentlemen and Happy New Year. I'd like to thank you all for participating in this "Outlook 2004" conference. I'd also like to thank you, David Rapp, and all the folks at Congressional Quarterly for joining with our National Chamber Foundation to sponsor this timely program.
Looking around this room I see many good friends and partners who worked closely with the Chamber last year to create the policies that helped put our economy back on track. Thanks to you and all those in and out of government who worked to lower taxes, reform the legal system, reduce regulations, and open markets, our economy has regained its momentum — and the State of American Business today is much, much better than it was one year ago.
Economic growth, productivity, business investment, corporate profits, and even manufacturing activity have all recently posted their best gains in years. Companies, led as usual by small businesses, have started hiring again.
At the Chamber, we see the economy growing at 4.8 percent this year – a healthy, balanced performance with strong consumer and business demand, low inflation, steady interest rates and a gradual decline in unemployment.
So we begin 2004 in a position of gathering economic strength. Yet we still face an array of challenges – economic, political, social and international – that could turn this positive picture upside down before any of us have time to rewrite our speeches and redo our forecasts. Just ask the American cattle industry or the international airlines about that.
This is the wrong time to be complacent. It is the right time to up the ante, which is exactly what we're going to do this year at the Chamber. Let me tell you how.
A Pivotal Election Year
First of all, in case anyone hasn't noticed, this is an election year. Not just any election year, but one where the results could determine the future of our economy, America's role in the world, and the role of government in our lives.
To influence the results, the Chamber will launch the most aggressive political program in our history. Though we will undoubtedly update our program throughout the year, we now plan to direct unprecedented resources to at least 33 of the most competitive congressional races—24 House contests and 9 Senate races—tough, close elections that will determine whether the next Congress is pro- or anti-growth.
We will not let the unfortunate Supreme Court decision on campaign finance stop us or slow us down. Working within the new rules – and drawing upon our unique, distinctive asset, the Chamber federation — we will hold fund-raisers and endorsement events, put expert political organizers on the ground in key districts, and launch a massive get-out-the-vote campaign to turn out the business vote like never before.
At the same time, the Institute for Legal Reform will educate voters in important state-level races. This year, voters will decide 42 state Supreme Court contests and a dozen attorney general races around the country. We're taking a hard look at each of these elections, and will devote significant resources to those we deem the most critical. Voter education is just one component of our comprehensive campaign to reform state legal systems.
We fully expect business — along with the policies we need to compete and trade around the world — to come under frequent attack this year. And so the Chamber will expand efforts to educate fellow citizens about the many positive benefits that spring from American enterprise and American companies. We will attend the two parties' national conventions. The Foundation will hold over 60 events like this one highlighting important issues. We will not allow attacks on the business community to go unanswered.
The "Great Debate" of 2004
But what will the 2004 elections really be about? On one level, they will be about Democrats and Republicans battling it out in a closely divided nation. But there is another battle going on in the country today. It crosses party lines and its outcome could have an even greater impact on our future than which party prevails in November.
There is a great philosophical divide between those whose policies would shut America off from the world — for reasons of economics, security, politics or fear – and those who understand that America must remain an open society, engaged and working with the world to build economic strength here at home.
For 50 years, the U.S. has been preaching the virtues of open markets and free enterprise around the world. Well, guess what – the world listened! Many nations have followed our lead and some have now become strong competitors.
How have Americans responded now that we are no longer the sole beneficiaries of globalization? Regrettably, some believe an open trading system is only worth supporting when it benefits them. Substituting emotion for reason, they have created the image of greedy, unpatriotic companies shipping massive numbers of jobs overseas, while a torrent of cheap imports and immigrant workers overwhelm our communities here at home.
In fact, companies have moved some jobs offshore. But many more jobs have been supplanted by tremendous gains in productivity. Consider this: 25 years ago it took General Motors 454,000 workers to turn out 5 million cars and trucks. Today it takes just 118,000 workers to produce the same number of vehicles.
Without question, advances in both productivity and global competition have caused hardships for some workers and communities. Yet for the nation as a whole, they have reduced inflation, increased consumer choice, freed up capital for innovation, and raised wages and living standards.
Still, many citizens fear America's openness to the world – and the elusive search for "perfect" homeland security has only added to these fears. In the name of security, American companies, citizens and our partners around the world are being asked to submit to a growing number of costs and regulations that are unworkable and potentially damaging to our economy and our way of life.
The Policy Agenda in 2004 and Beyond
In 2004, the Chamber will vigorously challenge the new isolationists in both political parties who, for whatever reason, would shut America off from the world. Instead, we offer a positive agenda of both immediate priorities and longer-term structural reforms designed to expand our recovery and make our nation more competitive and more prosperous. Let me briefly highlight our top issues.
First, America can no longer afford to squander its productive capital on frivolous litigation, unfounded regulations, and an antiquated tax system. We spend $233 billion dollars on the tort system, nearly $1 trillion dollars on regulations, and we double-tax U.S. companies, putting them at a global disadvantage.
That's why, early on, we will again seek passage of the Class Action Fairness Act. An agreement last November should produce the remaining votes we need to stop a filibuster in the Senate. The Chamber will also continue to play a major role working with all the parties on an acceptable solution to the asbestos litigation crisis.
The Litigation Center will continue to represent business and sue government agencies in court if that's what it takes to uphold the principles of common sense and sound science in the application of laws and regulations.
In the tax arena, we need to replace the FSC/ETI provisions of the tax code. The Senate must also extend expired tax provisions such as net operating loss carryback, brownfields expensing, the Welfare to Work credit, MSAs, and Section 809 relief.
Second, America's economic base must be wired with the best technologies, fueled with a secure energy supply, and interlinked with safe and efficient transportation.
Congress has dithered for five years without passing a national broadband policy, and other nations are speeding ahead. If we don't expand domestic energy supplies, companies will have no choice but to move away. For the sake of both national and economic security, the Senate must pass the comprehensive energy bill. And, the nation's core surface transportation program, TEA-21, has expired and must be reauthorized – the first step on the road to a needed expansion of all transportation programs.
Third, our companies must be able to trade around the world under free and fair rules. The European Union has 32 free trade agreements. We have just five. We must push that number up in an aggressive way and do a better job enforcing the deals we already have.
This year, we will strongly support the approval of agreements with Australia as well as Central America and the Dominican Republic. We will work to ensure that other commercially meaningful agreements are negotiated and that the 34-country Free Trade Area of the Americas pact is completed.
Fourth, a special effort should be made to unshackle America's entrepreneurs and lift the burdens from small businesses at all levels of government. Important steps in 2004 include making the Bush tax cuts permanent and enacting Association Health Plans — so that small companies can band together to provide medical coverage for their workers.
Small business is where most of the new jobs, innovations, and avenues of opportunity will be found – and we should not forget this.
Fifth, we must remain a free and open society that welcomes tourists, scholars, workers, businesspeople, investors, and products—even as we fight a necessary war on terror. That means striking the right regulatory balance between security and mobility – something the Chamber will continue to work on with the government every day.
Make no mistake, there are many steps we should take to improve our defenses against terrorism, but if in the process we destroy that which we seek to protect – our freedom, openness and economic strength – then the terrorists have won.
Sixth, the potential of every American worker should be strengthened through better education and training. The massive outpouring of scientists, engineers and software developers from the universities of China and India should indeed be a wake-up call.
And yes, we need more immigrants at all skill levels – along with a few more politicians who have the courage to say so. President Bush will have a major announcement about immigration later today, and we will review it closely. Some suggest that an election year is no time to be talking about immigration, yet you will see the Chamber vigorously pressing this issue throughout 2004.
Seventh, our country has to find innovative ways to meet the health and retirement needs of our people without bankrupting businesses or younger generations of workers.
The Senate should immediately follow the House in replacing the 30-year Treasury bond rate for determining contributions to defined benefit pension plans, and also address multiemployer pension plan reform. Failure to do so will take tens of billions of dollars out of business expansion and job creation.
Private pension reform and entitlement reform must go hand in hand, and individual citizens must be empowered to save and provide more for their own needs. This has to include adding a private investment component to Social Security.
Eighth and lastly, companies must have the flexibility to innovate and take reasonable risks so that they can grow and stay ahead of the curve. This means resisting excessive corporate governance and accounting rules, modernizing outdated labor laws such as who qualifies for overtime pay, and stopping efforts to penalize firms for sourcing around the world to meet their needs.
Conclusion: Securing the Future
In each of these areas, the Chamber, along with our affiliates and coalition partners, is working on programs and strategies to produce essential reforms in 2004 and beyond.
We don't have all the answers or even most of them, but we do have an outstanding staff, dedicated volunteer business leaders, and great supporters and partners. And we have a passionate determination to advance, without hesitation or apology, the interests of the business community and the free enterprise system that built our great nation and pays most of its bills.
As the Chamber strives to provide vital business leadership in such challenging times, we must also prepare our institution for the future. We will do this by continuing to grow our operating revenues. And we will significantly strengthen our capital base by launching a Capital Campaign which we call Securing the Future of the Chamber of Commerce of the United States.
Over the next three years, we intend to raise a minimum of $150 million dollars in reserves to bolster our efforts in legal reform, refurbish and maintain this historic headquarters, and increase the Chamber's policy expertise and influence.
We hope that the breadth of this Capital Campaign demonstrates our absolute commitment to stand up and fight for businesses of all sizes, and to protect and defend the free enterprise system from any threat as we work to create a more prosperous and hopeful future for all Americans.
Thank you very much.