Creating Growth and Jobs: Where Do We Go From Here?, Remarks by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
Jobs for America Summit 2011
Washington, D.C.
July 11, 2011
Introduction
Thank you very much, Stan, and good afternoon everyone.
I’d like to commend Stan and the Campaign for Free Enterprise for organizing today’s summit.
To inform our discussions today, the Chamber has been holding listening sessions across the country with small businesses, entrepreneurs, and local Chambers. We have also commissioned Harris Interactive to conduct a nationwide survey.
There will be a presentation on the results later in the program and I think you will find it interesting.
We did this in order to find out what our nation’s job creators think about the economy … what they want government to do … and most importantly, what it’s going to take for them to expand their businesses and hire more people.
These Main Street businesses are telling us plain and simple: To start hiring, we need faster economic growth and we need a change of course in Washington.
That’s my message today as well.
Three years ago, we suffered the worst financial crisis and deepest recession since the Great Depression. And now, we are caught in the slowest and weakest recovery since the Great Depression.
In other recoveries, growth came roaring back and so did jobs. But that’s not happening this time.
This reality was brought home to us once again with the very disappointing jobs report released by the government on Friday.
New job creation has slowed to a trickle. Unemployment is up to 9.2%—and it’s over 16% when you include part-timers who can’t find full-time work and those who have dropped out of the workforce altogether.
That’s where we stand today—and to make matters worse, we’ve already tried the traditional tools that are commonly used to end a recession and rev up an economy.
The government has spent nearly $800 billion on a stimulus package … pushed interest rates down to near zero … filled the financial system with liquidity … and pump-primed the economy with new tax breaks and more deficit spending.
And still, the recovery is weak, growth is slow, and the jobs just aren’t coming back in the numbers we need.
So where do we go from here? What do we do now?
Ladies and gentlemen, the answers do not rest with bigger government. The answers can be found in the proven principles of American free enterprise.
We need to grow this economy in a big-time way. Stronger and faster economic growth is the best way to successfully put Americans back to work.
To generate that growth and create jobs, we must clear away the impediments government has imposed.
We must reduce the uncertainty that discourages businesses from expanding and hiring.
We must stop wringing our hands and start acting quickly and boldly to solve our problems.
We must recapture that American can-do spirit, which will instill new confidence in consumers and investors.
No, growth won’t solve all of our nation’s challenges, but we can do a helluva lot more with growth than without it. Businesses will get more customers, government will get more revenues, and most importantly, Americans will get more jobs.
Ideas for Growth and Jobs
So what must we do to get the stronger and faster growth we need to put Americans back to work?
Let me suggest a few steps to take. Some can help create growth and jobs almost right away. Others will help over the longer-term.
Some of these ideas will sound familiar to you, and you may wonder, why are we hearing about this again?
For a simple reason. There’s been plenty of talk about these ideas but precious little action. If there’s one thing we don’t need in Washington in July, it’s more hot air. We need action to spur this economy and create jobs—and we need it now.
Expanding Trade
Let’s start with trade. After years of dawdling, it’s time to finally enact the free trade agreements with South Korea, Colombia, and Panama.
Immediate jobs are at stake—380,000 of them. That’s how many jobs we’ll lose to competitors who have cut their own deals with these countries.
With these agreements, we can create tens of thousands of new jobs.
Our negotiators should also reach broad agreement on a Trans-Pacific Partnership Agreement by November. Asia is the fastest growing region in the world. American workers and businesses can supply those markets. So let’s get moving.
Our largest customer overall is the EU. We can generate up to $120 billion in new trade simply by removing tariffs on each other’s products, as a down payment on a broader deal that covers services and investment. Why not do it?
Travel and Tourism
And let’s not forget travel and tourism, a sector critical to the U.S. economy, growth, and jobs.
This is a $700 billion industry providing 7.4 million American jobs. And guess what? When foreigners visit and spend money here, that’s counted as an export!
To bring more of them here, we need to put the welcome mat back out. That means vigorously promoting what we have to offer, just like other countries do.
It means reducing the “hassle factor” of visiting the United States without compromising security.
We should bring more countries into the Visa Waiver program, which is a budget-neutral way to create more jobs in the travel and tourism sector.
Our businesses tell us all the time that before they can hire more people, they need more customers.
Well, 95% of the world’s customers live outside our borders—many in economies that are growing faster than ours. They like American products. They like American culture. And they have the cash.
So let’s go sell them something over there—and bring them to the United States as visitors and investors—and sell them something over here.
Housing and Foreclosures
There’s another critical industry on which American growth and jobs depend—and that’s the housing and construction sector.
The housing market remains very weak—despite low mortgage rates and low prices which have made homes more affordable than ever.
This is a big drag on economic growth, because families are unwilling to spend as long as their primary asset—their home—is losing value. And it’s a big drag on jobs, with housing and construction workers suffering from double-digit unemployment, in some areas, up to 30%.
There are no easy or nice answers to the housing crisis. Banks have moved preemptively to modify loans for at-risk borrowers, and government initiatives have tried to encourage it.
However, even with assistance, some home owners will have no choice but to enter foreclosure. And we must face the reality that there will not be lasting improvement in the housing market until the backlog of foreclosures is cleared and the existing inventory is reduced.
Through their actions over the last two decades, the politicians have already proved they can help royally mess up the housing sector.
Government should be smarter this time around and avoid the temptation to endlessly prop up those who, sadly, will never be able to afford the homes they are in now.
Instead of delaying the day of reckoning even further, our policymakers should let the market take its corrective course. The sooner that happens, the faster this key sector will recover and start building and hiring once again.
Infrastructure
One way to put some of our construction workers back on the job is by investing in infrastructure.
Last year, the Chamber released a groundbreaking study proving that investments in infrastructure can be directly linked to stronger economic growth.
I’m not talking about wasteful, make-work stimulus projects driven by politicians.
I’m talking about the kind of thoughtful, strategically planned improvements that expand our capacity to grow our economy and compete in the world.
Congress should act now to reauthorize the core surface transportation, aviation, and water resources programs—with adequate funding—so that states, communities, and private investors can plan, execute, and hire. They can’t do that with an endless string of short-term extensions.
Congress, the administration, and the states need to address the rules, disincentives, and other impediments that have locked away a potential $190 billion in private capital that could be invested in infrastructure. Unleash that money and you can create a lot of jobs.
And while I fully understand that high gas prices are a hardship for American families, we must also boost public investments in infrastructure without adding to the deficit.
The gas tax, which is a user fee motorists pay to drive on the roads, has not been increased since 1993—18 years ago.
And let’s not forget that gas mileage for cars and trucks has increased substantially since then, which means that as fuel efficiency increases, receipts to the Highway Trust Fund decrease.
The result—rapidly crumbling infrastructure with less and less money to rebuild it. Under these circumstances, it’s not unreasonable to suggest we phase-in a modest increase in the gas tax over time.
Producing Domestic Energy
We should also produce more American energy of all types, use it at home, and sell it around the world.
We’ve got plenty of it and allowing American industry to go get it won’t cost the government a cent. In fact, it will increase government revenues, create jobs, enhance our national security, and release us from the grip of some unfriendly governments.
Recently I wrote a letter to the president outlining specific steps he could take to move his administration in this direction.
I noted that the U.S. Department of Energy has estimated that the United States has in excess of one trillion barrels of oil off our shores and on our land.
We also have huge natural gas resources. In fact, we’re already experiencing a natural gas renaissance.
Increased domestic production has driven natural gas prices down—and that has brought some manufacturing back to the United States. And we have a great opportunity to bring the chemicals industry back because natural gas is their feedstock.
So let’s keep things moving in this positive direction.
By some estimates, increasing access to federal energy resources could create an additional $150 billion in federal and state revenue and add more than 500,000 jobs.
We also must continue to build the energy infrastructure in order to deliver an affordable and reliable supply of fuel and power. We’ll also create a lot of jobs building it.
That’s why the administration should allow the construction of the Keystone XL oil pipeline connecting Canada to U.S. refineries in Texas.
The one project would create 250,000 jobs and involve $20 billion of investment in the United States.
Regulatory Uncertainty and Reform
You’ve heard me mention the need to remove regulatory impediments and address uncertainties and delays.
Indeed, in our listening sessions and in the Harris survey, the regulatory burden and the uncertainty surrounding new regulations were repeatedly cited as a major reason not to expand payrolls.
Can you blame these businesses? They don’t know what’s going to hit them next—and that’s what worries them the most.
In addition to dealing with 170,000 regulations already on the books, there are hundreds of major new rules in the pipeline—generated by the health care law, Dodd-Frank, the Labor Department, and especially the EPA.
We’re not against all regulations and we can even see the need for some new ones. But the combined weight of all this new regulatory activity is something we have never seen before. It is unjustified and uncalled for in a free society and economy. And it is killing American jobs.
We need to fundamentally rethink our regulatory system. For one thing, Congress has ceded too much authority to an unelected “fourth branch” of government—the regulatory agencies.
Before a major new regulation takes effect, Congress ought to be required to have an up or down vote.
And, there should be a stronger burden of proof placed on the regulators to show that the rules they are proposing are sound and justified.
In addition, one major factor hobbling our recovery is the inability to build anything anywhere in a timely manner.
By reforming the permitting process, we can start generating new economic activity, growth, and jobs right away.
How do we do it? First, let’s limit most environmental reviews to six months. That is ample time for a thorough review of most projects.
If experts don’t believe that a project will have any significant environmental impact, then speed it through.
If a review is required, and if the state has already done one, the federal government should accept it. Why do it twice?
When reviews involve more than one government entity, the administration should require the designation of a lead agency to expedite the review.
As Jeff Immelt has noted in the preliminary recommendations of his Council, what businesses and job creators need is some speed and clarity. Tell them yes, or tell them no, but give them a timely answer.
The Debt Ceiling and Deficits
There’s another immediate challenge facing our economy and its ability to grow and create jobs—and that’s, of course, what to do about the current and future level of deficits and debt.
Now I’m going to make a comment some may not like, believe, or want to hear: Congress needs to raise the debt ceiling and it must do so without delay. It’s an unfortunate reality but it must be done.
Failure to do so would have grave consequences for Main Street businesses and families.
It would drive interest rates up and drive the markets, the dollar, and our economy down. It would take today’s economic uncertainty and expand it to destructive levels. Investors will turn away from the United States and take their job-creating capital with them.
So we are calling upon the leaders of both parties to make tough choices and come to closure.
They need to agree on a plan now to raise the debt ceiling—and also agree on a plan that controls the deficit and the level of debt through major spending cuts and entitlement reform.
And by following the approaches I have suggested, government can also generate new revenue—not by raising taxes, but by spurring growth, creating more taxpayers, and by prudently developing our natural resources.
Ensuring America’s Long-term Competitiveness and Prosperity
So let me recap.
We can help spur growth and create jobs in the near term by expanding trade, tourism, infrastructure, and energy …
By fixing the housing sector …
By reforming regulations and the permitting process…
And, by raising the debt ceiling while also cutting government spending—to reduce uncertainty and put our nation back on the road to fiscal responsibility.
These are important and urgent priorities. But we must also embrace a broader, long-term agenda to ensure America’s growth, competitiveness, and prosperity.
Time does not permit me to discuss all of the elements of this broader agenda. But clearly, we need to develop and attract the world’s best talent.
We must maintain our unsurpassed leadership in higher education, while reforming K-12 schools and strengthening our vocational and technical schools.
We need comprehensive immigration reform that is humane, efficient, and economically smart.
We need to carefully examine our workforce needs at all skill levels and adjust visa and immigration programs accordingly.
We need to make it easier for the world’s best and brightest to study and train in the United States and then be allowed to stay here. If companies and institutions can’t find the talent in America, they will have to send the work to where the talent is.
Our nation must also remain the global leader in science, research, and innovation.
To do so, we need the strongest, most balanced, and most effective patent system in the world.
And we must have strong intellectual property protections, the cornerstone of America’s economy and the catalyst for innovation.
Alongside talent there is the need for capital. To create new industries and future jobs, we have the most attractive, transparent, competitive, and vibrant capital markets in the world.
These markets breathe life and success into the ideas, innovations, and reasonable risks of America’s entrepreneurs and businesses.
I can assure you that the Chamber is working every day on major efforts to fix our schools … reform immigration and visa rules … strengthen patents, intellectual property rights and our legal system … and repair the excesses of Dodd-Frank, while working for effective capital markets regulations.
And, we still must find genuine solutions to rising health care costs—which will continue to have a major impact on job creation.
Conclusion
Ladies and gentlemen, nothing is more important to the American dream than creating American jobs.
Despite all the bad economic news we’ve had of late, and all the uncertainties that cause us to question the future, we must not get discouraged. We must not indulge in despair.
We can create American jobs if we remember who we are and what has made our nation so successful in the past.
It’s not about bigger government dividing up the existing economic pie. It’s about a free enterprise system that creates a bigger pie with more opportunities for all of our citizens.
Government has a role to play, of course—to make sure that the rules are clear and fair, and that our economic fundamentals are the best in the world.
Today, in addition to fixing these fundamentals, the most important role the government can play is to remove the impediments and uncertainties that have slowed our growth and shackled our job creators.
By unleashing economic growth and freeing our job creators to do what they do best, we can and we will put America back to work.
These are challenging times, but there is no problem facing us that doesn’t have a solution. The answers may not all be quick or easy, but there are answers and they are almost always made in America.
We have so much going for us. We have strong demographics, abundant natural resources, the world’s most productive workers and businesses, an unquenchable thirst for entrepreneurship, and a long history of picking ourselves up when we are down.
One of the people we talked to during our listening tour was a young man who created his first company at the ripe old age of 13.
Enrico Palmerino went on to create two more businesses and today, he is cofounder of a company specializing in lighting efficiency. He’s still a few years shy of his 25th birthday.
That’s the spirit of enterprise that makes America successful and unique.
As long as America welcomes and encourages people like Enrico … as long as we continue to stand up for the principles of free enterprise and limited government…and as long as we reward rather than punish the dreamers and doers and risk takers … we’ll always come out on top.
Thank you very much.