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The State of American Business 2014, Remarks by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
Thank you, Jock (McKernan), and good morning everyone. Thanks for coming.
Assessing the state of American business and taking stock of the New Year’s challenges and opportunities is a tradition we established at the Chamber over 15 years ago. This year, I’m pleased to report that the state of American business is improving and our economy is gaining strength.
Since the “Great Recession” officially ended in June 2009, the American economy has struggled to regain its footing. The recovery has been the slowest and weakest since World War II.
The 21 million Americans who are unemployed, underemployed, or who have given up looking for work have paid a heavy price—and they still are. Middle class families have not seen decent increases in their real incomes for a long time.
It’s convenient to blame all this on the severity of the downturn, but let’s face facts. Misguided government policies have also slowed our growth and cost Americans a lot of jobs and raises. We must fix these mistakes and not repeat them going forward.
This year we have an opportunity to turn the page. Overall growth for 2013 will probably come between just 1.8% and 2%. We should do considerably better this year—with growth accelerating to near 3%.
Housing is recovering and overall household wealth has now surpassed its pre-recession level. This has boosted consumption, which is leading to more business investment and some new hiring.
Our economy is also benefitting from continued strength in domestic energy production and improvements in trade. Note to the president and Congress: Let business do more of both, and we’ll generate more jobs and income than any government program can deliver.
Alongside the positive signs are some pretty big question marks. Employers are concerned about the negative impacts of Obamacare. The cancellations that swamped the individual market last year are expected to hit the small business market even harder this year. Many firms are stopping new hires and cutting workers’ hours because of the law’s mandates.
There are other uncertainties—driven chiefly by regulatory overreach and concerns about markets at home and abroad. How will an avalanche of confusing and conflicting regulations on energy, the environment, capital markets, and workplaces impact business operations just as things are starting to hum?
What about Europe, our largest trading partner? It continues to lag with very slow growth. Any one of a dozen or more global hotspots could flare up at any time, which could seriously impact our prospects.
Some degree of uncertainty will always be with us. The question is how do we maintain and build upon the economic momentum that is finally taking hold?
In 2014 the Chamber will focus its tools, talent, capacities, and resources to advance a Jobs, Growth, and Opportunity agenda that we believe will benefit all Americans.
Our plan includes ideas to expand trade, produce more domestic energy, and improve our infrastructure—which together would create millions of good-paying jobs. We’ll push for government reform to modernize a regulatory process that hasn’t been updated since Harry Truman was president.
We’ll highlight the need to make thoughtful changes in entitlements, fix flaws in Obamacare, curb lawsuit abuse, protect intellectual property, and revitalize our capital markets—by striking the right balance between legitimate investor protections and the freedom to innovate and take responsible risk.
We’re going to be a leader in efforts to improve education and training. It’s a disgrace that our country has allowed so many children to fall through the cracks and so many of our workers to be left behind.
And we’re determined to make 2014 the year that immigration reform is finally enacted. The Chamber will pull out all the stops—through grassroots lobbying, communications, politics, and partnerships with unions, faith organizations, law enforcement, and others—to get it done.
The Election Year Environment
Now the pundits will tell you it’s going to be hard to accomplish much of anything in an election year. We hope to turn that assumption on its ear by turning the upcoming elections into a motivator for change. It’s based on a simple theory—if you can’t make them see the light, then at least make them feel some heat.
In primaries and in the general election, we will support candidates who want to work within the legislative process to solve the nation’s problems—and who understand that business is not the problem, business is a big part of the solution.
We previewed the aggressive efforts the Chamber has planned for the midterm elections with a recent victory in Alabama’s First District—as well as early advertising in support of pro-business candidates.
In 2014, the Chamber will work to protect and expand a pro-business majority in the House and advance our position in the Senate. The business community understands what’s at stake. They respect our political team, support our strategy, and understand the powerful impact our brand can have in pivotal elections. This means we will have all the resources we need to run the most effective political program of 2014.
The Chamber will also be working on many other important activities outside of Congress and the administration. The National Chamber Litigation Center, our in-house public interest law firm, is going to be more active in the courts than ever before.
We will be working with governors, mayors, state and local chambers, and many others to improve educational, training, and job opportunities for students and workers.
The Hiring Our Heroes program will continue its successful efforts to find good jobs and new careers for veterans and military spouses.
Our Institute for Legal Reform and Workplace Freedom Initiative will be active in many states to stop lawsuit abuse and to counterbalance some of the policies of organized labor.
Meanwhile, our International Division and Global Intellectual Property Center will be all over the world, working to open markets and protect IP.
I think you can see that the Chamber’s agenda is not only national. It is local. And it is global.
The Jobs, Growth and Opportunity Agenda
Let me make some additional comments on just a few of the priorities I have mentioned.
Expand Global Trade
We’ve got a great opportunity this year to spur jobs and growth by expanding international trade and investment. The administration is now more focused on trade. The World Trade Organization is standing tall again following the completion of a landmark trade facilitation agreement.
Now it’s time to move quickly to pass Trade Promotion Authority, or TPA. TPA allows Congress to set negotiating objectives for new trade pacts. It requires the executive branch to consult with Congress. And it gives Congress the final say on any trade agreement in the form of an up-or-down vote.
Bipartisan legislation has been written and will be introduced very soon. We’re going to do all we can to make the case for its approval.
What new opportunities will TPA create? The first is the Trans-Pacific Partnership. We are within striking distance of concluding an agreement that is critical to America’s economic and strategic leadership in the world’s fastest growing region. But we must have a high-quality agreement that opens markets for manufacturers, farmers, and service providers—and fosters the digital and creative economies. And TPP must include a strong intellectual property plank in order to earn our unqualified support and that of Congress.
The Chamber will also lead the business community’s efforts in support of a Transatlantic Trade and Investment Partnership with the EU. We’re also working on a Trade in Services Agreement and an expansion of WTO’s Information Technology Agreement.
We’re pursuing bilateral investment treaties with China and other countries, as well as much-needed improvements in intellectual property protections—especially in India.
And with 20 years of NAFTA success under our belt, it’s time to move the North American partnership to a higher level—working together to develop energy, attract manufacturing, and build a competitive position in the world that is second to none.
Whether a company does business around the world or just in the neighborhood, the global economy beyond our borders now has an impact. That’s why the Chamber takes very seriously its unique role as the global voice for American business.
Advance and Protect the Energy Revolution
Let me turn to another key part of our agenda—and that is to advance and protect America’s energy revolution.
In 2012, unconventional oil and gas alone added $284 billion in GDP; generated nearly $75 billion in federal and state tax revenues; and supported 2.1 million jobs.
We have more recoverable conventional oil and gas off our shores than the proven oil reserves of Europe and Asia combined—yet 87% of it remains off limits. We have enough recoverable coal to power our economy for more than 200 years. We must tap this vital resource—prudently, safely, and vigorously.
We must continue to support and develop nuclear energy—which provides 20% of our electricity. And we should continue smart investments in viable alternatives, renewables, and greater energy efficiency.
America’s new era of energy abundance gives us an unrivaled opportunity to transform the United States from a nation dependent on imports to a significant energy exporter. It means we can continue to attract new manufacturing and, over time, trillions of dollars of investments to our country.
Yet the progress we’ve made so far has come about largely in spite of national policy rather than because of it. We need to thoughtfully open more federal lands onshore and offshore. And, we must remove and guard against unnecessary restrictions, delays, and regulations.
There’s no better example than the Keystone XL pipeline. We have idled American workers and deeply offended our most important ally for the sake of domestic politics. We are calling on the Obama administration to put American jobs before special interest politics and approve this project now.
Next week, our Institute for 21st Century Energy will unveil its new “Energy Works for US” initiative, which contains more than 60 recommendations to help our country seize its energy potential and unleash the benefits across our entire economy.
I encourage you to watch for this announcement. The Chamber will be working to advance these proposals throughout the year—and in the elections.
Improve America’s Infrastructure
Trading around the world and moving energy across the country requires a safe, seamless, and modern infrastructure. Families, workers, visitors, tourists, and our environment need it too—to speed mobility, conserve energy, clean the air, and save lives.
The Chamber will work for a multi-year reauthorization of the nation’s core surface transportation program, which expires at the end of September. And, we’re asking Congress to complete work on a major water resources bill as soon as possible.
Save Social Security, Medicare, and Medicaid
However, our nation won’t have the money to invest in infrastructure, national defense, or much of anything else until we stop ignoring what I call the elephant in the room—America’s unsustainable entitlement programs.
The recent improvement in the budget deficit is only temporary. We still have a serious overspending problem. We’re still piling up debt. And entitlement programs are the primary cause.
Last year, the Chamber began an effort to wake up the nation to this reality. It hasn’t been easy—but we’re not going to rest or stop. This is the most predictable crisis in American history.
In ten years the total price tag for Social Security, Medicare, and Medicaid will reach $3 trillion a year. Without reform all the major programs will be financially insolvent in 20 years.
The share of the budget to pay for these programs plus the interest on our debt will expand from 65% of the budget last year to 76% in 2023.
Demographics are destiny and there’s no way around it. Americans are living longer. Each and every day another 10,000 baby boomers retire—and that will add up to 77 million new retirees over the next 17 years.
In just another month, Congress and the president will need to raise the debt ceiling yet again. Under no circumstances can this nation risk default. But it’s also time to deal with entitlements. Producing more energy can help generate new revenues to pay for entitlements, and stronger economic growth is essential. But even that won’t be enough.
It’s time for our leaders to act like leaders, tell the American people the truth, and craft a fair, sensible plan to reform and save these vital programs.
Address the Need for Health Care Reform
The entitlement crisis and rising health care costs are closely linked. In opposing Obamacare, the Chamber repeatedly warned Congress and the administration of the many flaws in this massive legislation.
The administration is obviously committed to keeping the law in place, so the Chamber has been working pragmatically to fix those parts of Obamacare that can be fixed—while doing everything we can to make regulations and mandates as manageable as possible for businesses.
In 2014, we will work to repeal onerous health care taxes; repeal, delay, or change the employer mandate; and give companies and their employees more flexibility in the choice of health insurance plans.
Last year we organized a Health Care Solutions Council and their report contains many useful reform ideas which should be pursued.
All responsible parties need to work together and be more open to change—because this nation still needs true health care reform that controls costs, improves quality, and expands access to the uninsured.
Reform American Government: Regulations, Taxes, and the Legal System
Regulatory and Permitting Reform
Turning to our next priority, the nation is in the midst of an historic expansion of regulatory activity. Federal agencies are churning out 4,000 new regulations every year. The Dodd-Frank bill alone has 398 rulemakings. Only half of these have been finalized after three years.
Our Center for Capital Markets Competitiveness is pursuing a practical agenda to ensure that job creators have access to capital by fixing or replacing provisions of Dodd-Frank that simply don’t work as planned—while also pushing regulators to act in areas that the law did not address.
We’re also very concerned about the Department of Education’s proposed Gainful Employment Rule, which discriminates against private sector colleges and universities. This is wrong and unfair. These institutions can play a major role in helping our nation close a serious skills gap. We’re going to do everything we can to change or stop the rule as it is currently written.
Another serious regulatory challenge is the abusive “Sue and Settle” process. With a wink and a nod, an interest group sues EPA. They agree on a settlement, find a court to bless it, and even get to collect legal fees courtesy of the American taxpayer. With no transparency and little opportunity for public input, new regulations are then imposed on business and our economy. Between 2009 and 2012, EPA settled with interest groups at least 60 times—creating some 100 new regulations.
In 2014 the Chamber will continue to work directly with the federal agencies and with Congress to win changes and improvements to Obamacare, Dodd-Frank, and many other regulations. And when these efforts fall short and regulators insist on overstepping their bounds, we will head to the courts and sue.
We’re also making the case that government needs to reform the way it writes and enacts new rules and regulations. The Chamber is building support for legislation that would modernize the regulatory system, streamline the permitting process, and blunt that abusive practice of “Sue and Settle.”
The Chamber will also continue to make comprehensive tax reform a priority.
This is a complicated issue for the country and especially for the business community, and here’s why: Everyone likes tax reform in theory, until it’s their own favored provision that’s up for elimination!
We need comprehensive pro-growth reform that lowers rates on both the corporate and individual sides of the code and increases our global competitiveness. And we must simplify a system that has been accurately called a monstrosity.
Legal reform will be a major focus of our work as well. Our Institute for Legal Reform is fighting the expansion of lawsuits on all fronts—in the Congress, in the federal agencies, in the states, and even around the globe where U.S. companies are getting sued.
In this election year, ILR will be very engaged in voter education efforts in state attorney general and state Supreme Court contests.
On the federal level, we helped convince the House to pass the FACT Act, which will attack fraud and double-dipping in the asbestos settlement process. We’re now asking the Senate to follow suit.
We also need reasonable reforms in the False Claims Act. This is an important tool to uncover and punish fraud by government contractors. But it is also being stretched and abused in ways that actually discourage companies from developing strong compliance systems, or from coming forward with reports of mistakes or instances of wrongdoing.
Expand Opportunity for All
Ladies and gentlemen, the proposals I’ve highlighted will solidify our recovery, create jobs, and expand growth. But before concluding, there’s a third part of the Chamber’s agenda I want to speak to—and it’s all about opportunity.
You may have noticed that there has been a lot of focus recently on the subject of inequality. It’s seems to me that what we should really be talking about is equality of opportunity. How do we give everyone a fair shot at the American dream?
The fact that we have many Americans who are successful is not a problem. The fact that many Americans don’t get a fair chance to succeed is a problem.
Let’s focus on the real problem and do something about it.
We know what doesn’t work. Getting stuck in stagnant growth, as has been the case for the past five years, doesn’t work. And doubling down on the policies of tax, spend, regulate, and mandate won’t work.
So let’s talk about what will work. Instead of devising more ways to slice up the existing economic pie, let’s seize all of the opportunities we have to expand the economic pie. And then, we must help those who are struggling by ensuring that they have the education, skills, incentives, and opportunities to share in this prosperity.
Many other nations have stumbled along the path of redistribution and government dependency. They have promised equality of outcome and that’s a course doomed to fail. Why would we ever want to go down that path? America’s promise is one of equality of opportunity, not outcome. The real challenge is how to give those who have been left out a real chance to choose their own path and rise by their own efforts.
Economic growth is absolutely critical, but it is not a panacea. I’ve talked in positive terms about America’s energy revolution. Well, we need a positive revolution in American education and training as well.
It is beyond me how this nation can be so complacent while some 30% and more of our young people don’t even graduate from high school. Millions who do graduate have not even learned to properly read, write, or count—and tragically, that can be a prescription for permanent inequality.
Where is the outrage? Where is the urgency? Where is the political courage to really challenge the status quo in our educational establishment? The severe educational and skills gap we face is a challenge that should unite us as a nation and a society.
Of course the states should adopt and implement the Common Core educational standards, which the Chamber strongly supports. But that’s just a start. Teachers, parents, school districts, businesses, community leaders, and institutions of higher education must all get directly and personally involved.
We must ensure that every young person learns basic skills and is properly equipped for jobs and careers that are actually going to exist in the 21st century.
Immigration reform is important to expanding opportunity as well. Why? Because throughout our history immigrants have brought innovation, ideas, investment, and dynamism to American enterprise.
In fact, we must do more to encourage all of our young people and many others to participate in American free enterprise. In a growing economy and with the proper schooling and skills, there are many opportunities to rise by one’s own efforts—even if you don’t have a lot of fancy degrees or rich relatives.
If you’ve heard nothing else I’ve said on the subject of equality of opportunity, please hear this: If our nation doesn’t get damn serious about the millions of young people who drop out of school—or who graduate unable to master the most basic skills and work habits—nothing else we do or try is going to work.
For their sake and ours, we can’t afford to fail.
Conclusion: Keeping America’s Promise
Ladies and gentlemen, the Chamber’s Jobs, Growth, and Opportunity agenda is built on the belief that our nation’s best days are not over, they are still yet to come. No other country, no other people, no other society starts from such a position of strength and advantage as we do.
By making the right decisions and adopting the necessary reforms, we can usher in a new era of economic prosperity and extend its benefits to all Americans.
I think you can tell I’m a pretty optimistic fellow. So let me tell you what I most worry about. I worry that for the first time in history, we’re in a situation where America is taking from the young in order to support the old.
We’re doing this by continuing to ignore the entitlement crisis, by piling up trillions of dollars in new debt, and by trapping so many of our young people in failing schools and denying them a fair shot at the American dream.
The promise of America has always been that the older generations will leave to the young a stronger, better, and more hopeful country. This is a promise we can still keep and we must keep. But it all comes down to leadership—leadership in our government, leadership in business, and leadership in every sector of American life. Leadership that puts our country and the future first.
Thank you very much.