America After the Election: It’s Time for Leadership and Action, Address by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
As Prepared for Delivery
U.S. Chamber of Commerce Board of Directors Meeting
Good morning and thank you all for coming.
In just a few minutes, we’ll officially convene the 520th meeting of the Chamber’s board of directors. The first one was held 100 years ago in 1912, and there’s no truth to the rumor that I made a speech at that one too!
It’s been three weeks now since the election. It seems a lot longer, doesn’t it? The pundits are still pouring over the results—and if you can believe it, prospective presidential candidates are already jockeying for 2016!
What we’re doing here at the Chamber is focusing on the urgent challenges facing our economy and our country right now.
It’s time to give the politics a little rest. It’s time to get some things done for the country.
The Fiscal Cliff
At the top of the list—keeping the nation from falling off the fiscal cliff. The stakes are high for every American worker, family, and business.
The Congressional Budget Office has issued a report on the likely consequences of allowing sequestration to begin and all of the 2001 and 2003 tax relief to disappear—a return to recession, and a rise in unemployment to at least 9.1%.
All year long the Chamber has been warning lawmakers of these consequences. We have been asked: Would the impact really be that bad? Our response is: Why take the risk?
The economic recovery is weak and fragile. Uncertainties over taxes, regulations, health care costs, and international events are already holding back consumers, investors, and businesses. Twenty three million Americans are unemployed, underemployed, or have given up looking for work. Record numbers of citizens must rely on food stamps, unemployment benefits, and other public assistance.
They need a stronger economy and bigger opportunities—and time is running out. The fiscal cliff is not a sudden surprise. Congress and the administration have known about it all year. It’s time to act!
And with the election over, the Chamber stands ready to work with the administration and both parties in Congress to prevent the short-term cliff—and then strike a longer-term deal that controls our explosive debt and puts this country on a path to robust growth and renewed global leadership.
The Big Deal and the Three Buckets
We know it can be done. Let me briefly outline our ideas.
First, we continue to believe that the best approach to avoiding the fiscal cliff is to suspend sequestration and extend all expiring tax provisions for a reasonable period of time. This would give the recovery a chance to pick up some steam and give lawmakers the time they need to negotiate and properly legislate a Big Deal. That deal should include:
- Serious spending cuts.
- Significant and reasonable entitlement reforms.
- Comprehensive tax reform that would generate more revenue than today’s tax system, while spurring growth and competitiveness.
- And, a third bucket in addition to the two buckets of spending and taxes—an energy bucket.
Let me make several points about each bucket.
The principal driver of the nation’s exploding debt burden is our unsustainable entitlement programs. We can’t tax or even grow our way out of the country’s fiscal mess without entitlement reform.
Spending on Medicare, Medicaid, and Social Security already accounts for almost 58% of all federal spending. In fact, we spend almost twice as much on these programs than we collect through the federal income tax system. Before too long, they will consume 100% of all the revenues collected by the federal government—leaving nothing for schools, roads, defense, or other priorities.
The reason is simple—it’s demographics. This year an estimated 10,000 baby boomers began retiring daily. Over the next 10 years, we’ll increase our population of seniors by one-third and they will live longer than ever before.
The good news is that we can put entitlement programs on a sustainable path by making reasonable changes and gradually phasing them in—while exempting current retirees and those very close to retirement.
When it comes to the Big Deal, the Chamber is not drawing lines in the sand. Except for one—we could not support a deal that doesn’t include sensible entitlement reform. For a simple reason—it would never work!
This is always a fun subject, especially in the business community. Start talking about taxes and everyone’s mental calculator clicks on immediately. They quickly do the math on what various tax proposals would mean to their companies and to them.
Most reasonable people acknowledge that the government needs more revenues to run a country that is growing larger and older, a country that must defend itself and keep the peace around the world.
The important question is: What’s the best way to generate those revenues?
The smart way is through comprehensive tax reform that spurs growth and makes us more globally competitive. We can raise more revenue and grow our economy by broadening the base, lowering rates, closing loopholes, and simplifying compliance. On the other hand, raising rates punishes success and discourages legitimate risk taking and hard work, which are absolutely vital to the success of our economy.
Tax reform could also help our companies compete. Adopting a territorial tax system will ensure American-based companies aren’t taxed twice on overseas earnings, putting them at a competitive disadvantage.
And we need to lower our corporate tax rate, now one of the highest in the world.
Now, let’s talk about the third bucket—energy.
This is our country’s true cash cow. Expanding energy development is an extraordinary opportunity for America on so many levels.
It will help ensure a stable and inexpensive supply, which would help bring more manufacturing to the United States. It will help our economy grow and create new jobs both domestically and through a higher level of exports. It will bolster our national security and reduce our dependence on unfriendly or unstable suppliers. And, it will create a larger tax base and higher revenues and direct royalties, all of which will make our deficits lower and reduce debt levels.
I’ve been around this town for a long time. I think I know the difference between what’s real and what’s wishful thinking. And I’m telling you that if budget negotiators have to rely on just two buckets—spending and taxes—to control the huge deficits we’re facing, they can’t get there.
We need that third bucket—and we’ve got it in energy. And it’s fuller and deeper than anyone imagined just a few years ago.
Now the budget experts quickly tell us that future revenues from energy can’t be scored in the traditional Washington sense. They may not be able to score it, but they can sure spend it. And through further research and study, we’re going to find a way for them to score it properly.
We already have compelling evidence.
According to a recent study by our Energy Institute, shale activity alone generated $237 billion in economic activity in 2012 and $62 billion in government revenues. In the last few years it has created 1.7 million jobs. Between now and 2035, we can double the economic impact, double the number of jobs, and generate a cumulative $2.5 trillion in government revenues.
Then there’s the Wood-Mackenzie study sponsored by the American Petroleum Institute. This study found that by 2018, we can create another 1 million jobs by expanding the development of North American oil and gas, as well as building the Keystone XL pipeline.
Taking these steps would also add hundreds of billions of dollars over time to federal, state, and local tax coffers.
Another Chamber study has identified 351 proposed energy projects—many of them “green” energy projects—that have been blocked thanks to permitting delays and other obstacles. If all these projects moved forward, we could create 1.9 million construction jobs and 790,000 permanent jobs.
This gives you an idea of what is possible if we streamline the permitting process; expand access on federal lands and off our shores; and, issue sensible regulations that are aimed at protecting the public—not shutting down prudent and legitimate energy development.
We also have opportunities to further develop clean coal and modernize and expand nuclear power. We can do all of this in a way that is fully consistent with our responsibilities to the environment. Environmental reviews can be tough and rigorous. That’s fine by us. But they don’t have to take forever or be repeated over and over again.
So let’s get on with America’s energy revolution. Let’s keep that third bucket filled.
Everyone with a stake in it can and should be at the table to guide this revolution—not only the business community, but the environmental community, governors, federal budget writers, and those who are responsible for our national defense and our health and retirement social safety net.
An Opportunity for America
Ladies and gentlemen, we’re so used to thinking about these tough fiscal decisions in an atmosphere of crisis and pain, that it’s easy to overlook the fact that the right kind of deal could be an extraordinary opportunity for the United States.
It’s been said that we are one Big Deal away from reaffirming our economic, competitive, and geopolitical leadership across the world—and I believe it. No one’s going to get everything they want in that deal—and everyone is going to find something in it they don’t like.
But fiscally, economically, and politically we can greatly expand our chances for success if we have three buckets to draw from instead of only two. So as lawmakers confront difficult decisions on spending and taxes, the appeal of American energy is only going to grow—and the Chamber is going to pull out all the stops in the coming weeks and months to see that it does.
An Expanding Business Agenda
Before concluding let me say that the fiscal cliff is not the only challenge we face—and energy is not the only opportunity we have.
In addition to the fiscal cliff, we’re on the edge of a regulatory cliff. You may have seen the recent Wall Street Journal commentary that catalogued the new rules that have been recently issued and many others that are about to emerge from the pipeline. It is staggering.
The individual merits of various regulations are fair game for discussion. Many of them could make sense—in their intent, if not in their execution. But what cannot be debated is that if we continue to weigh down our small and large businesses with layer upon layer of regulation and red tape, it will have a negative effect on growth and a bad impact on jobs.
This avalanche of regulations—and the vast and expanding power of the regulators—are matters we must address in a thoughtful way if we hope to remain a productive, innovative, and free economy.
On a more positive note, I believe this is an ideal moment to work with Congress and the administration on an ambitious free trade agenda.
We hope to see negotiations launched soon with the EU on an economic and trade pact that will open markets and spur growth on both sides of the Atlantic. We’re going to continue to push for a Trans-Pacific Partnership Agreement with Pacific economies—including Canada and Mexico—to further tap into these promising markets.
You can count on the Chamber to lead a renewed effort to open markets, fight protectionism, and improve the human condition around the world through trade and the free exchange of investment, ideas, and people.
Comprehensive immigration reform is fundamental to that principle of openness and we are determined to finally achieve it in 2013. Our economy needs the talent and we need the hard workers that immigration has always brought to our country. But it’s more than that. It’s who are. It’s what America is all about.
We can protect our borders and still be an opening and welcoming society. We can establish a fair and rational system of legal immigration while also defining a pathway out of the shadows for the millions of undocumented immigrants who are already here.
Immigration reform is long overdue. It won’t be easy, but we’re very hopeful that its moment has finally arrived.
Standing Up for Economic Freedom
There are many other priorities we’ll have in the coming year, but time does not permit me to discuss them today.
So let me conclude with a few personal reflections as we draw close to the end of this eventful year—which also happens to be the 100th anniversary of the Chamber’s founding.
Over the course of the year we not only celebrated our proud past, but we learned from it. And we’re already working on ideas to make the Chamber stronger and more effective than ever before. We are preparing for what the future might bring to us and what we can bring to the future.
Our members are telling us that a strong and vital U.S. Chamber of Commerce is more essential than ever—to the business community, to our country, and to all who believe in and hope to achieve the American dream. That’s nice to hear—now we have to do the hard work that it takes to live up to our legacy.
In the days following the election, we noted with interest the declaration from the White House and its allies that they would engage in a kind of permanent campaign to advance the positions they believe in. And that’s fine. That’s America.
But it occurred to me that for a hundred years and counting, the Chamber has been engaged in a permanent campaign as well. It began the day the Chamber was founded and it will continue long after we are gone.
It’s not a campaign positioned against anyone or anything.
Ours is a campaign for free enterprise … a campaign for opportunity … a campaign that honors hard work of all kinds and respects every job. It’s a campaign that celebrates success … that believes that profit is a six-letter word not a four-letter word … and that upholds the freedom to take a responsible risk and to fail and then to try again. It’s a campaign for the freedom to speak no matter how unpopular or politically incorrect the views. Yes, even if the speaker happens to own a business or work for a corporation.
It’s a campaign to reform our government so that we can make our nation more competitive and revitalize and grow our private economy. It’s a campaign for jobs and a campaign to equip all Americans with the education and skills they need to fill those jobs.
It’s a campaign to uphold America’s legacy as an open society, freely exchanging goods, services, capital, and talent around the world and welcoming them here. It’s a campaign to become a nation of builders again, a nation that taps the extraordinary natural and human resources we have—in order to create a more prosperous society and a better world.
In fact, it’s more than a campaign. It’s a cause. And it’s our passion.
I’m certainly not suggesting the Chamber can do all of this—but America can. We’ve done virtually all of it before. But it requires leadership. If there is one deficit more serious and alarming than our fiscal deficit it is our leadership deficit. America needs leadership from all sectors to tackle the big challenges we face and to seize the extraordinary opportunities we have been blessed with.
The American business community has a tremendous capacity to help provide this leadership and a profound responsibility to do so. I’m confident that business will step up. I can assure you that the Chamber will.
We are challenged, energized, and excited by the hard work, complicated issues, and great opportunities that lie ahead.
Thank you very much.
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