TRALA Annual Meeting - Keynote Speech by Tom Donohue

AS PREPARED FOR DELIVERY

Truck Renting and Leasing Association Annual Meeting
Keynote address by Thomas J. Donohue
President & CEO, U.S. Chamber of Commerce
Carlsbad, California

March 29, 2006

Thank you. It's good to reunite with some old friends from the trucking world. When I was at ATA, we fought a lot of tough political battles, and we're fighting some of those same battles at the Chamber today, with TRALA as a strong, dependable partner.

Because of Pete, Mark [Siegal], and the rest of the leadership, TRALA has earned a reputation in Washington as a significant player in the political and policy arenas, and both of our organizations were key players in a number of legislative victories last year.

We got Congress to pass a $286 billion six-year highway and transit spending bill. Over the six-year period, states will receive about 20 percent more funding than they received under the last six-year authorization.

The Chamber worked closely with TRALA to ensure that vicarious liability reform was included in the highway bill. 

That provision prevents rental companies from being held liable for actions taken by renters and establishes a national standard that all but a small handful of states already follow.

Vicarious liability reform will produce lower costs, more choices for consumers, and a better litigation posture for the truck and auto rental and leasing industry in several key states.

Speaking of legal reform, we had a breakthrough with the passage of class action reform last year. This new law allows some lawsuits that are filed in state courts, which can be unpredictable and a haven for the trial bar, to be moved to more predictable federal courts, where business has a better chance at getting a fair shake.

Our victory on class action reform defines the impact the business community is capable of having on the Washington political scene.

When the Chamber started the Institute for Legal Reform in 1998, class action reform was a pipe dream. The trial bar had become quite cozy with Congress – it was very good at protecting its interests.

Well, the business community finally mobilized and started fighting back. Now, we've got the trial bar on the run.

Passage of a first-stage energy bill was another major victory for business in 2005. The law includes incentives to increase domestic production of traditional sources of energy as well as renewable and alternative types.

It's the closest thing to a comprehensive energy strategy this country has seen in 25 years – though we now need to take the next step toward securing our energy needs.

Business should feel good about what it has accomplished in Washington, and it should also feel good about the economy it has helped create.

Corporate profits are up, lots of new jobs are being created, workers are earning more per hour in real terms than they did at the height of the 1990s expansion, and household wealth is at an all-time high.

The unemployment rate is lower than the averages of the last three decades, nearly 70% of Americans own homes, and interest rates and inflation remain low by historical standards.

But we can't afford to become comfortable. We have to continue to fight for a better business environment because competition coming from all corners of the world is getting stronger.

We're being challenged by the likes of China, India, and others who are opening their economies, educating their people, investing in infrastructure, and embracing the global economy.

To maintain our competitive advantage, we must focus on a few key areas.

1. Transportation

First, we must invest to create a transportation infrastructure capable of handling the rapidly increasing number of goods and people. Here is the reality – federal highway trust fund revenues and those collected by the states fall far short of what is needed to improve or even maintain existing infrastructure.

How bad is the problem? Current revenues fall $23 billion short annually of the cost of maintaining our roads and transit systems from now until 2030.

If we have any intention of improving our roads, bridges and transit systems, revenues will fall $1 trillion short.

And so we need to be thinking about alternative financing mechanisms.

Indexing the motor fuel tax to inflation, implementing a vehicle mile tax, expanding the use of tolling, and encouraging public-private partnerships in the construction of roads are all ideas that deserve to be studied.

The implementation of these strategies will require policymakers at all levels of government to make difficult decisions, but their leadership is critical to continued U.S. economic productivity and competitiveness.

2. Security and Environmental Regulations

Second, we must create a balance between security and the free flow of commerce. If we impose security measures that unnecessarily restrict the ability to move people and goods, then we will have abandoned the very principles that we have sought to protect.

The private sector doesn't need to be told to take steps to protect the nation's assets or be told how to do it.

Businesses are doing it voluntarily, in a way that makes sense for them.

It is the private sector, after all, that owns 85% of the nation's critical infrastructure. Business has the most at stake and will do what is realistic and feasible to protect assets, employees, and customers.

Applying a one-size-fits-all mandate to every potential target is a losing proposition. Our best opportunity for greater security AND economic growth is with flexibility and risk management.

The government is also getting it wrong with environmental regulations. In the case of particulate matter, the EPA is so eager to regulate that it didn't even give communities an opportunity to meet its standards before it changed them—with no scientific justification.

Areas that were on the verge of attaining the old standards will fall out of attainment, subjecting businesses in those areas to regulatory micromanagement, new and costly permitting requirements, and new EPA enforcement actions. The EPA needs to wait until its programs have been implemented and their effectiveness judged before it adds more stringent rules.

The Chamber is also concerned about possible approaches to controlling greenhouse gas emissions in response to climate change. There is a better way than mandates that slow economic growth, threaten jobs and competitiveness, and raise consumer energy prices – nations that signed the Kyoto Protocol are finding that out.

Our best resources for combating climate change are investment in innovative clean energy technologies and a strong, vibrant economy that is capable of paying for environmental improvements.

3. Legal Reform

In addition to regulatory reform, the business community must stay focused on legal reform. A new report shows that torts drain $260 billion from our economy. The direct costs of torts on business are substantial - $129 billion a year – but there are also tremendous opportunity costs associated with lawsuit abuse.

For example, some contractors, volunteers, and emergency relief personnel decided not to get involved in Gulf Coast relief and rescue operations out of fear of liability. Breakthrough and life-enhancing pharmaceuticals and vaccines never make it to market because drug companies don't want to get sued if someone has a bad reaction.

We don't want to deny justice to people who have been truly harmed. But we also don't want trial lawyers flooding our courts with bogus lawsuits and exploiting plaintiffs for personal gain. We need to change the legal landscape in this nation, and business needs to lead the way.

Eight years ago, business wasn't even putting up a fight against the trial bar. When the Chamber started the Institute for Legal Reform in 1998, business decided it wasn't going to get pushed around any longer.

In addition to our success on federal class action reform, half a dozen key states passed meaningful legal reform of their own last year. Some reforms have been spurred by an annual ranking of all 50 state legal environments conducted by the Harris Poll for the U.S. Chamber.

State policymakers are learning that these rankings have become the benchmark by which their legal climates are judged and are taken into consideration by businesses when making decisions on where to locate operations and jobs.

Also, because of ILR's voter education program, more legal-reform minded state Supreme Court and Attorneys General are being elected to office.

In the 2004 elections, ILR participated in voter education efforts in 16 important races across the country, and the pro-legal reform candidate won in 15 of them.

In a few races last fall, we had mixed results, which means we need to turn up the heat this year.

We're also spearheading a campaign to rein in the growing number of securities class action suits, and we have a comprehensive strategy to head off a new effort by trial lawyers to import foreign disputes to U.S. courts, where they can take advantage of our more permissive judicial system.

And finally, we're successfully challenging the validity of abusive lawsuits in court.

The Chamber's own law firm, the National Chamber Litigation Center, is considered the leading organization in challenging punitive damages and class action litigation and is building a formidable reputation in securities litigation issues.

Though we can point to many successes, we know that the trial bar is a persistent adversary, and so we must remain vigilant on legal reform.

A third major challenge for business is expanding access to health care. Few issues are as complex as trying to keep a lid on risings costs while extending coverage to the 45 million Americans without it.

The longer this crisis remains unchanged, the greater the possibility that drastic proposals will gain favor. I'm talking about more government control.

Think about what the necessary tax increases of a single payer system would do to our economy and what a government-run system would do to health care quality.

And so the Chamber is advocating a number of free-market solutions which by themselves won't completely solve the health care crisis but will go a long way toward improving access to care.

We're lobbying for expansion of health savings accounts, which give consumers greater control over their health care dollars, and for small business health plans, which would allow small businesses to band together to purchase coverage.

We're also lobbying Congress to reduce medical liability, a significant cost driver, by capping noneconomic damages in health care lawsuits.

Improving patient safety and the measurement of quality, efficiency, and outcomes through greater use of information technology is also an important part of the equation, and we're throwing our support behind passage of a health IT bill in Congress.

4. Energy/Environment

A fourth area of focus is building on last year's energy bill to create a plentiful and affordable supply of energy.

Twenty years from now, the United States will require a third more energy than we use today – even with continued improvements in efficiency.

Where are we going to get that energy? Are we going to continue to rely on unstable exporters in the Middle East, Venezuela, Africa, and Russia? 

That would be a mistake we cannot afford to make. We must secure our economic future by developing greater energy supplies in our own country.

The energy plan that was signed into law last year was an important first step.

It calls for increased domestic production of traditional energy sources and also contains 60 provisions targeted specifically at alternative and emerging energy technologies – wind, biomass, ethanol, hydrogen fuel cells, and hybrid technology, to name a few. 

But we need additional legislation to increase refinery capacity, open up more federal land to energy exploration, and increase incentives to expand nuclear power plants – which by the way, do not emit the greenhouse gases believed to cause global warming.

5. Globalization/Trade 

Let me move to another issue of great importance to the economic future of this country - international trade and investment. We cannot afford to turn our backs on the global economy. When you combine all forms of trade, we are the world's largest exporter, and its largest importer. Trade and returns on foreign investment account for a third of our economy.

95% of the world's population lives outside the United States. We need those consumers and their investment in our country to grow and strengthen our economy.

The recent development involving the Dubai port company, DP World, is the wrong approach to trade and investment. While national security should always be the most important consideration, this deal was never about security.

Our government agencies have and will always be in charge of port security – the Dubai deal wouldn't have changed that.

Also, the United Arab Emirates has been a strong ally in the war on terror, and DP World helps move U.S. military personnel and material in the Middle East. There are less friendly nations with investments in our economy.

The rejection of the deal sends a message to Middle Eastern countries and to the rest of the world that our commitment to free trade and foreign investment softens under certain political circumstances.

It's a critical time for global trade and investment. Leaders from 148 nations belonging to the World Trade Organization are negotiating further cuts in global tariffs and other trade barriers. 

America must lead by example and demonstrate a firm commitment to openness and free trade.

6. Education/Workforce/Immigration

Finally, ladies and gentlemen, we must tackle the enormous challenges surrounding the availability of qualified workers – now and in the future.

We simply won't have enough bodies to fill the jobs our economy is creating. 77 million baby boomers are nearing retirement age, and there are not enough younger workers to replace them. 

We need a new immigration policy that enforces our immigration and border security laws but that also gives immigrants an opportunity to come here and fill jobs that Americans don't want or won't take.

And that policy must give undocumented workers already here an opportunity to earn legal status if they pay a penalty, keep their noses clean, and follow the rules. Deporting the 7 million undocumented workers currently contributing to our economy would create the loudest sucking sound you've ever heard.

We also need to do a better job of preparing our young people for the workforce. Nearly one-third of U.S. high school students fail to graduate in four years, and the percentage is even higher in minority and inner city school districts. Business can no longer sit on the sidelines and watch our students – tomorrow's workers - fail.

And so the Chamber is doing something it hasn't done before – we're taking steps to spur education reform on the state and local levels.

This year, we will work to facilitate positive change by conducting a study that shines a spotlight on school districts that are underperforming and recognizes those that are doing well.

Conclusion

Ladies and gentlemen, business is in a pretty good place at the moment. The short-term economic outlook calls for solid growth and job creation.

But we cannot make the mistake of becoming comfortable. We must continue to make our economy more productive, flexible, and innovative because there are new global players out there who are ready to eat our lunch.

We have to strengthen our infrastructure…reduce the regulatory burden…cut down the number of frivolous lawsuits…increase access to health care…take care of our energy needs… embrace the global economy…and develop a workforce with the numbers, skills, and education to compete in a global, high-tech economy.

The U.S. Chamber looks forward to working with TRALA to make these things happen. Thank you very much.