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The State of American Business 2012, Address by Thomas J. Donohue President & CEO, U.S. Chamber of Commerce
As Prepared for Delivery
Thank you very much, and good morning ladies and gentlemen. Let me begin by expressing my appreciation to the National Chamber Foundation for organizing this event and to each of you for being here today.
It's something of a tradition at the Chamber to gather early in the New Year and assess the state of American business, size up our economy, and lay out the priorities we believe are important for our country.
This year is particularly special for us. We're observing the Chamber's 100th anniversary--100 years of representing the business community and standing up for American enterprise.
As we begin 2012, we can say that the state of American business is improving--but it is doing so weakly, slowly, and insufficiently to put our nation back to work. We were all pleased to see a positive jobs report last week, with unemployment inching down to 8.5%.
But let's not forget that it was 5% in December 2007 as the recession began. We're still down 6 million jobs since the recession ended. And there are more than 23 million Americans who are either unemployed, working part time, or who have given up looking for jobs.
Our nation's highest priority must be to put these Americans back to work. To achieve this goal, our economy has to grow much faster than it is today. Unfortunately, we think the economy will actually slow down in the early months of the year. We expect growth to average about 2.5% in the first half and then work its way back to about 3% by the end of the year.
Now, there is a long list of what economists like to call downside and upside risks. These factors could cause our economy to perform either more poorly or much better than we are forecasting. Our goal is to see the nation take advantage of our many opportunities on the upside--while doing everything possible to address the risks on the downside.
We are deeply concerned that our largest export market and commercial partner, the European Union, faces an unresolved financial crisis and a looming recession. There will be leadership transitions and elections in Taiwan, China, North Korea, Russia, France, Venezuela, and Mexico--just to name a few. And in case you haven't noticed, there's an election coming up in the United States as well!
We're seeing continued turmoil and violence across the Middle East and more saber rattling from Iran--including threats to choke off the flow of oil through the Strait of Hormuz. What happens to our economy if we have to pay $100 or more for crude oil throughout the year, as some have predicted?
Here at home, government policies and conflicts among our political leaders have added to these uncertainties--undermining business and consumer confidence and slowing down the economy. The federal government is expanding its powers, costs, and debt at a record pace. We've made virtually no progress in reforming entitlement programs, which could eat the federal budget and our economy alive.
In a new Chamber survey of small business members, more than 80% are very concerned about the prospect of new regulations, mandates, and higher taxes. These concerns have put the brakes on new hiring.
For all these reasons, the Chamber is putting forward an American Jobs and Growth Agenda with specific ideas to put people back to work--without raising taxes or adding to the deficit. We are calling on our leaders in Washington to work with business and with one another to build a stronger American economy.
2012 must not be a wasted year simply because it is an election year. There's no justifiable reason why it should be. The House of Representatives, for example, has passed 30 bills that its leaders say could accelerate growth and job creation. So far, these bills have gone nowhere in the Senate. Surely there must be some good ideas in those bills that a majority of senators could support.
Meanwhile, an administration spokesman recently said that there is just one item on the president's "must pass" legislative program for the year--a further extension of the Social Security payroll tax holiday. With all the challenges facing our economy and our country, it's inconceivable that the president would agree with that--and I trust that he doesn't.
Today, I'd like to briefly outline a few of the highlights of the Chamber's American Jobs and Growth Agenda.
Producing American Energy and Rebuilding the Infrastructure
Let's start with a big one--energy.
Our nation is on the cusp of an energy boom that is already creating hundreds of thousands of jobs, revitalizing entire communities, and reinvigorating American manufacturing.
Unconventional oil and natural gas development is on pace to create more than 300,000 jobs by 2015 in Ohio, New York, Pennsylvania, and West Virginia alone. Take a look at what's happening in North Dakota. The state is booming. Unemployment is at 3.4%. Oil production just surpassed that of Ecuador--one of the members of OPEC.
Energy is a game changer for the United States. It is, as the saying goes, "the next big thing." With the right policies, the oil and natural gas industry could create more than 1 million jobs by 2018. Not only can we create jobs, but we can cut our dependence on overseas imports while adding hundreds of billions of dollars to government coffers in the coming years.
Recent discoveries have confirmed that this nation is truly blessed with energy resources. We have 1.4 trillion barrels of oil, enough to last at least 200 years. We have 2.7 quadrillion cubic feet of natural gas, enough to last 120 years. We have 486 billion tons of coal, enough to last more than 450 years--and we need to use more of this strategic resource cleanly and wisely here at home while selling it around the world.
To tap our energy resources, we must speed up permitting and end many of the restrictions that have put key areas off-limits. Instead of handpicking a few technologies, we must harness all our resources, traditional and alternative--while expanding nuclear power and driving greater efficiency.
Our biggest and most reliable foreign energy supplier is Canada. The proposed Keystone XL pipeline would bring Canadian oil sands down to our Gulf Coast refineries and to other destinations along the way.
This project has passed every environmental test. There is no legitimate reason--none at all--to subject it to further delay. Labor unions and the business community alike are urging President Obama to act in the best interests of our national security and our workers and approve the pipeline. We can put 20,000 Americans to work right away and up to 250,000 over the life of the project.
Expanding our energy infrastructure is just one part of a broader effort to modernize the nation's entire physical platform. Congress has until January 31 to finish the FAA reauthorization, which has been delayed for more than four years. A new NextGen air traffic control system must be a top priority. It will ease delays, conserve fuel, create jobs, and save lives. Lawmakers also need to pass legislation to maintain investment in our roads, bridges, and transit systems.
SAFETEA-LU expires again on March 31st. If Congress doesn't act, the Highway Trust Fund would be cut a minimum of 35% by this fall, putting thousands out of work.
We also need to invest in our water infrastructure. And let me make this clear--every piece of infrastructure legislation should include reforms to speed up projects and encourage public-private partnerships and the use of private capital.
In fact, by knocking down the barriers, we can unlock up to $250 billion in private capital for infrastructure. Leverage this with public investments, and we could create
1.9 million jobs over 10 years.
Expanding Trade, Investment, and Tourism
Next subject--trade and global commerce.
Ninety-five percent of the people we want to sell something to live outside the United States. Let's get out there and convince more of these consumers to Buy American.
The president and Congress acted not a moment too soon when they finally passed trade agreements with South Korea, Colombia, and Panama. Americans were already starting to lose jobs to competitors that beat us to the punch by signing their own agreements with these countries.
We could lose sales and jobs in other competitive markets as well unless we act quickly to advance a bold trade agenda.
A great way to start is by completing a Trans-Pacific Partnership (TPP) Agreement in the booming Pacific Basin. Let's get a high-quality agreement done this year.
The Chamber has proposed a new Transatlantic Economic and Trade Pact with the European Union that would start by eliminating tariffs on goods. We're gaining a lot of support for it.
We applaud the accession of Russia to the WTO. Congress should now grant permanent normal trade relations status so that our businesses can get the full benefits of Russia's entry into a rules-based system.
It's time to get moving on additional free trade deals. Brazil, Egypt, India, and Indonesia are just a few of the countries that should be on the list for consideration. To do this and the TPP, Congress must renew Trade Promotion Authority. Every president should have it. The executive branch must be able to negotiate agreements that won't be picked apart by Congress but, instead, be subject to an up or down vote.
We also need to complete the task of modernizing the nation's export control rules, which have cost us billions in lost sales abroad. And we must continue to support the Export-Import Bank and the Overseas Private Investment Corporation. These organizations have helped support billions in U.S. exports while making money for American taxpayers.
Our country should make a major effort to attract global investors. Foreign investment already supports 5 million direct jobs and millions of indirect jobs. We need to negotiate more bilateral investment treaties to ensure that American investors are treated fairly overseas. India and China should be high on that list. We rank 44th in the number of such treaties and that's a competitive disadvantage.
We must not overlook the extraordinary benefits of expanding tourism and business travel to the United States. We need to broaden visa waiver programs, limit wait times at customs, and implement trusted traveler programs to reduce the hassles without jeopardizing safety.
By simply restoring our share of the travel market to 2001 levels, we could realize $860 billion in economic stimulus and create 1.3 million new jobs--at no cost to American taxpayers.
Advancing Regulatory and Legal Reform
Next subject--to grow our economy and create jobs, we need significant regulatory and legal reform.
The regulatory avalanche confronting our job creators is unprecedented. The Labor Department has 100 rulemakings in the pipeline. Dodd-Frank requires 447 rules, 63 reports, and 59 studies. The health care law established 159 new agencies, panels, commissions, and regulatory bodies. EPA has some 200 regulations in the works. And the business community must contend with a National Labor Relations Board that is clearly tilted toward the unions.
This adds up to a big drag on our economy.
When the need is there and the regulatory remedy makes sense, the Chamber will support it. But when we see regulatory activism that is based on bad data, dubious authority, or pure politics, we will oppose it.
We will go to Congress. We will go to the courts. And we'll go to the court of public opinion to explain how a regulatory system run amok is needlessly driving American jobs out of the country or out of existence.
Let me be clear. The Chamber supports necessary, sensible, and forward-looking regulations. For example, our capital markets center has advanced positive ideas to reform the SEC and is working to close regulatory gaps and minimize systemic risks in our financial markets. Dozens of the most critical Dodd-Frank rules are likely to be finalized in 2012. On derivatives regulation, the Volcker Rule, potential money market reforms, and other important matters, we will help ensure that regulators get the rules right.
We'll continue to push for accountability and transparency at the Consumer Financial Protection Bureau. It was deeply disappointing to see the president install a director without the advice and consent of the Senate and without any oversight from Congress.
The Chamber is also working to modernize the overall regulatory system--including legislation to reform the permitting process and update the Administrative Procedure Act for the first time since the Truman administration.
Our Institute for Legal Reform will continue to fight the expansion of excessive litigation that is sucking the vitality out of American businesses. We're going to build on our successful work in the states and seek passage of additional state-level legal reforms.
We'll be engaged in a major effort this year to educate voters as they choose state Supreme Court justices and attorneys general.
We're also aiming to stop the alarming rise of third-party litigation financing. That's where outside investors fund lawsuits in exchange for a share of the award or settlement. This encourages the filing of frivolous claims. It invites testing questionable claims in court. It provides an incentive to prolong cases. And it raises serious ethical questions. Who does the lawyer really represent--his client or the outside financial backers?
In our business, we hear dumb ideas every day of the week. But this one takes the cake!
My next topic is a critical one--how to maintain and advance America's leadership as the most innovative economy on earth. We're still No. 1, but we are in danger of losing that edge.
We can maintain our leadership by better protecting our intellectual property. Congress took an important step last year by passing long-overdue patent reform legislation. This year, we are asking lawmakers to pass balanced legislation to crack down on foreign websites whose only purpose is to trick consumers, steal American jobs, and pollute the vibrant Internet marketplace.
Leadership in innovation also requires that we reform visa policies to allow the world's best minds and most creative entrepreneurs to stay in our country after we educate them in our top universities. They are going to contribute and succeed somewhere--why shouldn't it be in the United States?
Visa reform is just the first step toward the long-overdue priority of immigration reform. America's prosperity has always depended on the hard work, sacrifice, drive, and dreams of immigrants. Our future will depend on them even more.
Leadership in innovation also demands substantial improvements in our K-12 public schools, a major overhaul of job training programs, and close cooperation with our universities to make sure that our workforce is competitive and ready for the jobs of the future.
Finally, innovation depends on a rational, efficient, and globally competitive tax system. If we want to keep industries here and attract new investors to our shores, we cannot continue to maintain one of the highest corporate tax rates in the world.
We need to lower that rate as part of comprehensive tax reform that broadens the tax base and reduces the costs and burdens of compliance. We must also recognize that current individual tax rates as well as taxes on dividends, capital gains, and estates are all scheduled to go up at the end of the year. If this happens, it would have a devastating impact on small businesses, consumers, and our efforts to grow and create jobs.
Promoting Fiscal Responsibility and Entitlement Reform
There's one more priority I'd like to raise that urgently needs our attention. We must rein in government spending and bring deficits and debt under control. And we can't do that without serious entitlement reform.
Despite some progress in controlling the growth of new spending, we'll still rack up another annual deficit in excess of a trillion dollars this year. Our total national debt has just surpassed 100% of the nation's GDP. That equates to $47,000 for every man, woman, and child in our country.
Medicare, Medicaid, and Social Security are the principal drivers of this runaway spending. They already consume more than 55% of federal outlays. Without reform, they will soon devour the entire budget.
All of us need to face the fundamental reality that the only way to continue these programs is to make constructive changes and make them now.
Conclusion: Living Up to Our Legacy
Ladies and gentlemen, let me conclude by underscoring that America's most pressing economic challenge is the lack of sufficient growth to create jobs, expand incomes, reduce government deficits, and fund essential programs.
The good news is that our country is superbly positioned for a new era of growth. We still have a lot of strengths, and there's no reason to wring our hands or cry in our soup. We're the most innovative, productive, and open economy in the world.
Even with millions of baby boomers set to retire, our country has positive, youthful demographics. This will be a critical competitive advantage.
We're home to the most sophisticated global companies and more than 25 million small businesses and entrepreneurs.
America leads the world in manufacturing and services, in high technology, and in higher education. We have unbelievable reserves of energy and other natural resources. We are one of the world's great breadbaskets.
The business community is excited about building on these strengths and growing our economy. We're ready to invest, eager to compete, and want to hire. In many instances, despite all the uncertainties, impediments, and risks, our companies and entrepreneurs are forging ahead. Business is leading the way.
So the compelling question is, What is blocking our path to stronger economic growth, more jobs, and better opportunities for all Americans?
There are some obstacles that will always be with us. There will always be uncertainties and risks that we can't foresee. But what we can plainly see is an urgent need for leaders in every sector and at every level who are dedicated to meeting the country's challenges, solving problems, and helping America achieve her full potential.
Real leaders don't ignore realities. They don't sweep problems under the rug. They don't point fingers. They don't divide us. They seek to unite us.
Real leaders understand that Americans can have big differences in philosophy but still find common ground. This nation has always succeeded when we have worked together.
Real leaders wouldn't wait another day without trying to solve the serious economic and financial challenges facing our country. They wouldn't tell us that the solutions will have to wait until after the election.
Leadership is also required of we the people. We can't simply point our own fingers at Washington. We have a responsibility to be honest with ourselves and consistent with those who represent us.
As much as we might want our government to balance the budget, reduce the debt, and cut our taxes--all while providing each of us with an unlimited array of benefits--we know that it just can't be that way. It just won't work.
The business community has a responsibility to lead as well. We must not lose the spirit of enterprise and risk taking that have served the country and our economy so well. And if government starts removing the impediments that we have long identified as stifling growth and jobs, then it will be incumbent on business to start taking a few more risks and making some new investments.
The business community also has a fundamental duty to stand up for the one economic system that can restore our nation to growth, prosperity, and opportunity--and that's American free enterprise.
If we don't do it, who else will?
It is not a perfect system. But no one has ever found a better one--for lifting people out of poverty ... for inspiring hard work, creativity, and personal responsibility ... for generating dynamic growth that is broadly shared ... and for keeping the American Dream alive for generation after generation.
As the Chamber turns 100 in this pivotal year, we are reaffirming our commitment to free enterprise, the greatest economic system ever devised and the driver of America's greatness.
This is no time to sit and wait to see what happens. It's time to live up to our legacy and make the right things happen. And you'll see us striving to do so throughout the year--on the Hill, before the administration, in the courts, in the court of public opinion, and with the most aggressive grassroots mobilization and voter education program in our history.
We passionately believe that it's time to stop apologizing for the one thing in our society that really works--American free enterprise.
And it's time for government and our fellow citizens to understand that the only way out of the problems we face is to drive economic growth from one end of the country to the other. So let's go do it.
Thank you very much.