South Shore Chamber Annual Lunch, Remarks by Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce

Randolph, Massachusetts
March 10, 2011

Introduction

Thank you very much, Bob, and good afternoon everyone.

Bob, let me add my congratulations on your very successful term as chairman.

Your tenure has been bold and visionary—where others saw only despair and retreat, you saw an opportunity … an opportunity to attract more and better talent to the chamber and to groom a new generation of business leaders.

Whether it’s at the global, federal, state, or local level, the race to succeed and win in the 21st century will be about the race for human talent. It’s a race you have helped win for the chamber and the local area.

Let me also congratulate Jack Sparr on his election as chairman. Jack has a great opportunity to help lead this area’s recovery, leverage its many outstanding assets, and bring much greater prosperity.

But that’s not going to happen without two things.

First, it’s not going to happen without a strong South Shore Chamber and an engaged and active membership.

The staff and volunteer leadership is outstanding. Peter and Jack are doing a great job, supported by a strong board.

But nothing happens until the members decide it’s going to happen. And that means not only offering your financial support, but getting involved in politics and policy … getting involved in the South Shore Chamber.

We have a saying in Washington that applies equally well here: “If you’re not at the table, you’re on the menu.”

So if you’re not in the arena, get in. Get active. Get engaged. It’s your business that’s at stake.

I congratulate the ambassadors who have worked so hard to retain current members and bring in new ones. They’ve twisted a few arms—something I’ve been known to do from time to time!

But it’s more than arm-twisting—it’s really building consensus and speaking with a united voice. There really is power in numbers.

The simple fact is that this area’s economy will not be strong and successful without a strong and successful South Shore Chamber.

The second factor for success are the policies coming from Washington.

As distant as Washington may seem in geography and culture, there’s no question its policies have a profound impact on your bottom line.

Just think about some of the sweeping legislation and regulation that’s passed in the last two years … health care, financial reform, an onslaught of new regulations, monetary policy, stimulus … and the list goes on.

In short, you ignore federal policies at your own peril.

Today I’d like to focus on just three big issues that will help define America’s success or failure at the federal and local levels—regulation, infrastructure, and education.

But before I do that, let me say a word about the economy.

Economic Outlook

Put simply, the economy is improving.

Last week we learned that 220,000 private sector jobs were created in February. 30,000 were lost in the public sector for a net gain of 190,000.

That’s a positive development. But there are some caveats. We still have 13.7 million officially unemployed Americans, with 2.7 million more who stopped looking for jobs. People are giving up and that shouldn’t happen in the United States.

And the main reason the unemployment rate has fallen the last several months is that the labor force participation rate—which measures the percentage of adults who have jobs or are seeking them—remained stuck at its lowest point since the mid-1980s.

If, for example, labor force participation today were at the same level as before the recession, the jobless rate would have been 11.5% in February.

On the brighter side, we’ve seen solid retail sales, which means consumers are opening up their wallets a bit.

The turnaround at the Big Three car companies has been impressive.

Regardless of how you felt about it, the TARP program worked. It stabilized the economy and the financial system, it gave companies much-needed time to repair their balance sheets, and the government is getting most, if not all, of its money back.

In sum, we predict the economy to grow by about 3.2% this year.

While that’s all good news, we need to recognize two things—the hole we’re digging ourselves out of is enormously deep and our recovery is still fragile. Any number of factors could take the wind right out if its sails.

Unrest in the Middle East is driving up oil prices—no one knows what’s going to happen next in that volatile region or how high prices might go.

If oil prices remain high for a protracted period of time, it could be like a dagger at the heart of our recovery.

If we hooked up the housing market to a heart monitor, we’d get the tiniest of blips.

So much of consumer sentiment—and therefore, spending—is tied to home values. When prices go up, people feel richer and start buying things. When prices go down, people sew up their pocketbooks.

And then there’s always the menace of inflation. Commodity prices are surging. Food costs are skyrocketing. We all feel the pain at the pump.

And you have to wonder if this enormous amount of money the Fed has injected into the economy is going to inflate some bubbles or ignite inflation. A lot is riding on the Fed’s ability to know when to apply the brakes.

But even if everything goes right and the recovery goes as planned, we are many years away from a full jobs recovery.

The U.S. economy needs to maintain a pace of 190,000 net new jobs for at least the next 12 months merely to get the jobless rate back to a still awful 8%.

Over-regulation

That’s why it’s critical that our elected officials promote policies that give our economy the greatest chance at succeeding, in both the short and long-term.

The U.S. Chamber has identified the explosion of new regulatory activity as the biggest single challenge facing business, job creation, and the future of our free enterprise system.

The numbers alone tell a compelling story:

The massive health care law creates 159 new agencies, commissions, panels, and other bodies.

The financial regulatory reform bill has 259 mandated rulemakings, another 188 suggested rulemakings, 63 reports, and 59 studies.

The EPA is advancing 29 proposed major rules and 173 others.

The Department of Labor and the National Labor Relations Board (NLRB) are working on at least 100 regulations and policy changes covering a broad range of issues.

And all this is on top of the hundreds of thousands of regulations already on the books costing taxpayers $1.75 trillion a year.

Make no mistake—we need a lot of these regulations. Businesses require certainty and “rules of the road.” We need adequate protections for health and public safety.

But the tsunami of new rules, regulations, and mandates emanating from Washington is without precedent.

So what are we doing about it?

We’re trying to hold back the tide. We’re trying to smooth the roughest edges, eliminate the absolute worst provisions, and slow the process down so we can be smart and deliberative.

For example, on health care we’re trying to change or repeal provisions such as the ridiculous paperwork reporting mandate that requires the filing of 1099 forms for every purchase over $600 per year.

We’re also working to blunt the bill’s needless attack on successful consumer-driven health care approaches, such as Health Savings Accounts and Flexible Spending Accounts.

And we’re leading the effort to repeal or significantly change the employer mandate that requires employers with 50 or more workers to provide a certain level of benefits or pay extreme penalties.

On capital markets, we’re trying to shape the creation of the new Consumer Financial Protection Bureau, which may represent the largest and most powerful bureaucracy ever created, with a huge budget and near total autonomy.

We need to reform the system itself—the way new rules are written, codified, and enforced is broken.

Far too much discretion and authority has been turned over by Congress to an unelected “fourth branch” of government—the regulatory agencies.

The Chamber is working to build support for reform ideas, such as giving Congress an up or down vote on significant new rules (costing $100 million or more) before they can take effect.

But it’s not just that the system is broken in Washington and that there are far too many unnecessary rules and regulations—it’s how these rules are implemented at the local level and how the system is so wide open to abuse.

For example, we’ve determined that a combination of federal, state, and local regulatory red tape is preventing Massachusetts businesses from creating 25,000 new green energy jobs and generating nearly $10 billion in economic output.

Is that really acceptable with high unemployment and a struggling state economy facing increased competition from its neighbors? Or is there a better way?

By our estimates, nine job-creating projects promoting renewable energy in the Bay State are currently snarled by a broken permitting process and by a regulatory system that fails to ensure timely reviews and actions.

Case in point: The former Westfield River Paper Company mill on the state’s west side has sat idle since 1994. But this isn’t due to a lack of interest in bringing new life to a blighted brownfield site.

The Russell Biomass Power Plant was proposed on the site in 2005. Yet the project has sat in regulatory purgatory.

Another example is Cape Wind, the nation’s first proposed offshore wind farm planned for Nantucket Sound.

This project is constantly being challenged in court by activist groups who argue that local ocean views will be spoiled.

Massachusetts is hardly the only state suffering economically from these regulatory burdens.

The U.S. Chamber has identified 351 energy projects that have been stalled by legal and regulatory roadblocks. If allowed to go forward, they could produce an estimated $1.1 trillion boost to the economy and create millions of new jobs.

So to turn this around, we need to make a compelling case to the American people.

We’ve already generated an unprecedented level of attention in the media and among opinion-leaders as to the sheer magnitude of new regulatory activity now underway, as well as the job losses if we don’t change course.

We’re bringing our messages to Main Street America, informing people about the dangers, costs, and ridiculous excesses of absurd government rulemaking.

The Chamber will stand up a new group of respected authorities, including small businesspeople, who will travel the country to tell the story. We hope you can help.

Slowing the regulatory tsunami that threatens to wash over our business system and economic freedoms will be a major activity of the Chamber’s for years to come.

Infrastructure

A second issue critical to the country’s economic success is infrastructure.

I don’t need to remind you how important an adequately funded and well-maintained infrastructure system is to economic growth and job creation.

Transportation improvements in the South Shore area over the past 15 years are creating the right conditions for an economic boom.

Thanks to good planning and investments, infrastructure has brought the South Shore closer to Logan Airport through the Ted Williams Tunnel and Boston closer to the suburbs through rail.

At the federal level, no sane person would argue that our infrastructure is in good shape. Civil engineers give our overall system an abysmal “D,” even as our international competitors invest more and race ahead.

Critics do make some valid points when they talk about waste in the system, the lack of national planning, and the barriers to private sector partnerships and investment.

But that doesn’t obviate the need for a strong federal commitment to the platform on which our entire economy must operate.

I made that case before Senator Barbara Boxer’s Committee on Environment and Public Works recently—at her invitation.

I urged legislators to put aside their ideological and partisan differences and unite behind policies that will rebuild our nation’s crumbling infrastructure system.

Guess who sat right beside me? AFL-CIO President Rich Trumka. We were the oddest couple since Oscar and Felix! 

While not agreeing on all the details, we presented a united front on behalf of passing a multiyear highway and transit bill that is well past due.

It will create jobs, increase productivity, bolster U.S. competitiveness in a global economy, and most critically, save thousands of American lives.

The big question is—how do we pay for it? And how do we pay for it when the needs are so great and the purse strings so tight?

It’s a big challenge.

We can begin meeting it by telling the politically incorrect and unpopular truth about the federal gas tax—it hasn’t been increased in 17 years, even as miles per gallon have nearly doubled, and it needs to be raised.

In addition, we can unlock some $180 billion in private infrastructure investments by removing barriers, providing incentives, and ensuring legal certainty for investors. 

Public and private investment in the economic foundation of the U.S. is critical for long-term economic prosperity and public safety—in your local community, in your state, and across the country.

We are ready to work with Congress, the administration, with the AFL-CIO, and anyone else so that we can become a nation of builders once again.

Education

Third, America’s long-term prosperity rests, without question, on one thing—education.

We need to go all-in on education reform … to build the best, most innovative, and most effective school systems in the world.

On this issue, we have praise for the Obama administration. It believes the need for innovation and reform is urgent. And it’s putting money where its mouth is.

It’s $4 billion Race to the Top grant program is a tremendous catalyst for greater innovation, accountability, and higher standards in American schools.

It says if you want a piece of this pie to improve your schools, impress us with the depth and scope of your reforms. Get some real results. Stop business as usual.

The White House has also spoken out in favor of charter schools, teacher merit pay, and a greater emphasis on STEM, or “science, technology, engineering, and math.”

So we believe the administration is on the right track and we proudly support many of their efforts.

The challenge will be enacting these reforms in the face of likely political and interest group pressure, especially the teachers’ unions.

And the teachers’ union is fighting just as hard against education reform as they are reasonable cuts in unsustainable teacher benefits.

On the reform effort, the administration has not been bold enough in challenging one of its key constituencies. 

The U.S. Chamber’s Institute for a Competitive Workforce is actively working with our members to increase their capacity at the local, state, and national levels so that they can be better partners and advocates for change.

We are using our bully pulpit to raise awareness for what works and what doesn’t. We are providing cover to those who are working to do the right thing.

The bottom line: There is a faint pulse of education reform coursing through the land—our job is to turn it into a strong heartbeat.

Conclusion—Stick Together

Those are just 3 of the major issues the Chamber is advancing this year. Others include trade, debts and deficits, and free enterprise.

I could give an entire speech on each of those topics—and if you invite me back, I just might!

I encourage you to ask me about these priorities during the discussion period.

Now this is key—how we pursue policies is just as important as what policies we pursue.

On that note, three quick thoughts.

First, we need to work with anyone who will work with us. Forget about party labels. Forget about differences in other areas. Forget about past slights, real or perceived.

I just mentioned how we’ve made common cause with the AFL-CIO on infrastructure. While we disagree on almost everything, there are some areas where we share goals, such as on energy.

The White House has gone from accusing us of paying for campaign ads with foreign money—a totally false, outrageous, and fraudulent charge—to walking across the street to address us at our own headquarters.

President Obama said he’d gotten off on the wrong foot with business and could do better. We welcome that change in attitude—and will be watching closely to make certain his actions match his words. 

We’ll continue to work with the White House on issues like education reform and job creation. And we’ll continue to disagree with them in other areas.

It’s never personal with us—it’s all about policy. We are just doing job and we’re not going to stop.

Second, to effectively advocate our positions, we need strong chambers.

You should be proud that the South Shore chamber is five-star accredited. That means something. It speaks to the professionalism of your staff and the soundness of your organization.

Peter has sent two of his staff people to our Institute for Organization Management, where they learn best practices in running chambers and network with peers.

And he is launching an important membership drive to secure the future of your institution.

Your chamber is in the trenches everyday pushing for policies that will strengthen your business, your community, and your state.

The South Shore Chamber is exerting pressure, building alliances, and making the case.

They have a helluva track record, and it wouldn’t be possible without your support. So keep your support coming!

In the same way, we work equally hard to ensure the strength of the U.S. Chamber … and we happen to think membership in our group is a good deal, too.

And, finally, we simply must stick together.

There is depth, strength, and power in the Chamber federation. We’re not going to agree on everything, but we can agree on a common agenda that benefits all of us.

This is critically important in light of the coordinated, sustained, and sometimes vicious attacks against the business community and the U.S. Chamber.

There is a concerted effort to fracture our alliance, leverage wedge issues, and sully our reputation. All with the express purpose of undermining our common agenda.

We can’t let that happen. Now is the time to stand together.

You know, when Peter picks up the phone, we answer it. When your house is burning down, we’re going to help put it out. And when we need your help on a federal issue, you’ll be there for us. That’s strength. That’s a winning formula. Let’s stick to it!

Our nation, our states, and our local communities are facing big challenges. As the job creators and the opportunity makers, business must be a part of the solution.

That’s my challenge to you this afternoon … and I know it is a challenge we can meet together.

Thank you very much.

# # #