State of American Business, Remarks by Thomas J. Donohue President and CEO, U.S. Chamber of Commerce
As Prepared for Delivery
Thank you very much, Margaret, and good morning ladies and gentlemen. I'd like to thank the U.S. Chamber of Commerce Foundation for organizing this event, and thanks to all of you for being here.
As many of you know, we like to begin the New Year by looking at how American business is doing, discussing the key challenges facing our economy, and identifying the top priorities the Chamber plans to work on.
The Economic Outlook
In some important respects, the state of American business continues to slowly improve.
We believe the economy will grow throughout the year and not fall into another recession. The Chamber is forecasting growth of 1 ½ to 1 ¾ percent for the first half of the year, gradually accelerating to 2 ½ percent by the end of the year.
On the positive side, housing is continuing to improve, Europe seems to be stabilizing, and energy prices are steady. Big companies at home and abroad are flush with cash and looking for reasons to invest.
On the negative side, the recent tax increases resulting from the fiscal cliff deal will hit successful small businesses hard, which will dampen growth and hurt job creation.
As illustrated by the Chamber’s latest survey of small business members, there is significant uncertainty over health care, regulations, taxes, and deficits.
Last week’s jobs report was mediocre. Only 63 percent of our eligible workforce is even participating, and we don’t see much improvement in unemployment through the year. So while our economy may be growing, it is fragile growth and not nearly strong enough to create the jobs Americans need or to expand their incomes.
And now, we face a series of new Washington deadlines over deficit spending, the debt ceiling, sequestration, and a continuing resolution to keep the government running.
We also face other domestic and international uncertainties that have the potential to drive down confidence and discourage job creation—from a regulatory flood here at home, to economic problems in Europe and Japan, to geopolitical conflicts that could erupt into war at any time.
We must also be concerned about America’s capacity for leadership and action—and not only in government. Is this a country that can still get big things done? Do we have leaders with the courage to put the country first—ahead of their own careers, politics, ideologies, and egos? Can we find leaders in government who truly appreciate the role that the private sector can and must play in building a new American prosperity?
The imperative of economic growth should not be an afterthought. It should be job one. Economic growth must be front and center here in Washington—just as it is in many state capitols across the nation, led by innovative governors from both parties.
Today, 23 million Americans are unemployed, underemployed, or have stopped looking for work. A record 47 million people are poor enough to be on food stamps. Median family income has dropped to 1995 levels—so we’re going backward. Millions of new college graduates, many of them deeply in debt, can’t find promising positions in their fields. What is happening to the American dream for them? We see despair in our urban areas where up to 50 percent of our young people don’t even graduate from high school.
We need to build an economy that gives them hope too. From top to bottom we need more success in America. We need to nurture success, empower it, reward it, and celebrate it.
The American Growth and Jobs Agenda
This is why the Chamber will advance the American Jobs and Growth Agenda this year. The over-riding objective of this ambitious plan is to generate stronger economic growth in order to create jobs, lift incomes, and expand opportunity for all Americans.
We are fully aware that economic growth alone cannot solve all of our problems. But without growth, we will not be able to solve any of them.
Our plan contains many proposals and reforms, which we will be discussing and advocating all year long. But in the short time we have today, I’d like to highlight five key issues:
- Producing more American energy;
- Expanding American trade;
- Modernizing our regulatory system;
- Reforming immigration and visa policies;
- And addressing the fiscal crisis with a bold plan that slows the growth of spending, reforms entitlements, and overhauls our tax code.
Addressing the Fiscal Crisis
Let me begin there, because the next battles over the nation’s fiscal condition have already begun. As I mentioned, Congress and the administration are soon to face new critical deadlines around the debt ceiling, sequestration, and the need to fund government operations. These deadlines will mean more uncertainty for our economy, our businesses, and for financial markets at home and abroad.
As they address these deadlines, policymakers must seize the opportunity to make real progress in the areas they neglected in the fiscal cliff deal. First and foremost, that means controlling deficit spending through common sense entitlement reform.
The last debt ceiling increase was passed in August of 2011. That was for $2.1 trillion. Here we are 17 months later and the $2.1 trillion is gone, kaput. And now we need another increase. How much longer can this kind of spending go on?
As a nation, we must finally face up to the single biggest threat to our economic future—and that is our exploding national debt driven by runaway deficit spending, changing demographics, and unsustainable entitlements.
If we fail to address this threat, automatic spending will soon consume every dollar the federal government collects, leaving nothing for education, national defense, or other essential programs.
We have no illusions that putting our country on a sound and responsible fiscal course will be easy. Our government is divided and conflicted because the American people are divided and conflicted. But we cannot ignore this crisis any longer. Nor can our leaders.
As important as economic growth is, we can’t grow our way out of this problem and we certainly can’t tax our way out.
We must address the fundamental reality that, due to our aging society and increased life expectancy, the entitlement programs written and designed for an earlier era must be revised. We’re not talking about cuts in absolute terms—we’re simply talking about slowing the rate of increase. This can be achieved with reasonable adjustments phased in over a number of years.
Comprehensive tax reform is another essential part of the solution to our fiscal crisis. The right kind of tax reform will make us more competitive across the globe and empower our businesses, small and large, here at home. The right kind of tax reform will turbo-charge our growth, create jobs, and generate more revenues for government at all levels.
But make no mistake. While there are solid economic and competitive reasons to pursue it, tax reform cannot be seen as a substitute for spending restraint. Our spending problem must be addressed before, or concurrently with, comprehensive tax reform.
Energy—America’s Historic Opportunity
Now all last fall, the Chamber talked about how fortunate we are in the United States to have a third bucket to draw from to address our deficits and debt. The first bucket is spending. The second bucket is revenues. And the third bucket is energy, which is the next priority I’d like to discuss.
Proceeding swiftly and responsibly to develop more American energy can help us immeasurably with our fiscal problems, but it can also do so much more for our country.
We have more oil, gas, and coal than any other country and we are now the largest single natural gas producer in the world. We are now in a position to export liquefied natural gas and coal, and thus reducing our trade deficit and bringing billions of dollars into the United States. The abundance of affordable natural gas is attracting good manufacturing jobs back to America, particularly in the chemical and steel industries.
All of this adds up to a lot of jobs, growth, improved national security, and more revenues for government.
According to the American Petroleum Institute, oil and gas companies already account for 9.2 million American jobs and pump more than $500 billion into our economy. Over the next 20 years, energy can create millions of additional jobs, spread all across this country. In the last few years, shale activity alone has created 1.75 million jobs. Between now and 2035, we can double shale’s economic impact, double the number of jobs, and generate a cumulative $2.5 trillion in government revenues.
To achieve these great benefits, we need to safely open up new land to exploration. We’ve foolishly locked away too much of our resources on land and off our coasts.
We need a predictable and fair regulatory environment. The federal government shouldn’t pick the winners and losers or subject energy projects to endless and duplicative reviews. Such roadblocks have stymied vital projects like the Keystone XL Pipeline, which must be built. We should stop EPA’s senseless and ideologically driven battle to ban the production and use of coal.
We should continue with the next generation of nuclear power plants. And we should waste no time in pursuing research to develop alternative energy sources, such as wind, solar, and geothermal.
By fully embracing America’s energy opportunity, we can accelerate growth, create millions of new jobs, free ourselves from some less-than-stable global suppliers, and create huge new revenues for government—which will help reduce budget deficits.
Expanding American Trade, Investment, and Tourism
We also have extraordinary opportunities to create growth and jobs through the expansion of trade, investment, and tourism.
Small and large businesses say they really can’t create a lot more jobs without a lot more customers. Well, 95 percent of their potential customers live outside of the United States and we need to go sell them something. That’s why a bold and aggressive trade agenda will also be a major priority for the Chamber in 2013.
We need to conclude the Trans-Pacific Partnership (TPP) Agreement in the booming Pacific Basin. Let’s get a high-quality agreement done this year.
The Chamber has also been leading the fight for a trade agreement with the European Union.
We’re gaining a lot of support for it from business and government leaders on both sides of the Atlantic. Negotiations should be launched without delay.
In Geneva, 50 countries have stated their intention to launch talks on an international agreement to boost trade in services, which we strongly support.
And to conclude any of these agreements, we must renew the president’s authority to negotiate trade agreements, known as Trade Promotion Authority.
As we pursue a more ambitious trade agenda, let’s make sure it includes robust intellectual property protections. The Chamber’s Global Intellectual Property Center will continue to lead a vigorous effort throughout the year, at home and abroad, to protect IP and the millions of high paying, high quality jobs it supports.
Our country should also make a major effort to attract more global investors. Foreign investment already directly or indirectly supports 21 million American jobs. We need to lower investment and visa barriers at home—to attract more business visitors, investors, and tourists. And we should negotiate more bilateral investment treaties to ensure that American investors are treated fairly overseas.
Reforming Regulations to Create a More Competitive Economy
Here’s another big issue for us. We need to address the coming flood of new regulations that will discourage our job creators and damage our competitive edge in the global economy.
When you consider all the new rules now pouring through the regulatory pipeline, and those still to come, it is staggering.
The Dodd-Frank financial reform law mandates 447 new rules—and regulators have only finalized a third of them.
The Chamber’s Center for Capital Markets will advance an agenda to make sure we preserve diverse sources of capital for our nation’s job creators by seeking fixes to those areas of Dodd-Frank that Congress and the regulators simply got wrong. We will promote additional reforms in areas where Congress has not yet acted. And, we will seek to replace areas of Dodd-Frank that do not work and do not achieve their intended goals.
On the environmental front, major EPA rules imposed over the last decade cost more than $23 billion and its new ozone regulation could cost up to $90 billion. If EPA moves forward with rules on greenhouse gas emissions—and applies them beyond power plants and refineries—it could ensnare roughly 6 million facilities in burdensome permitting requirements.
The regulatory flood is particularly pronounced in the health care arena. The new rules and mandates in the health care law—not to mention the extraordinary confusion businesses are facing as they try to comply—could drive costs through the roof and cause many Americans to lose the health coverage they are accustomed to.
All told, the federal government issues about 4,000 regulations every year. It would be hard to convince any reasonable person that all of that is really necessary.
We need to do three essential things in response to this regulatory flood.
First, we need to streamline the permitting process. It takes too long to build things in this country and a big reason is the months and even years it can take to get the necessary permits.
Second, we need to modernize our regulatory system to bring more accountability to the regulators and to restore the role of Congress in the rulemaking process. The bipartisan Regulatory Accountability Act, which passed the House last year, would accomplish these tasks and help ensure that rules are based on good data and sound science.
Third, you are going to see us significantly expand the expertise in our law firm, the National Chamber Litigation Center and in other areas of our institution, in order to deal with regulations.
Our preference is always to work within the legislative and regulatory processes and we do that on a daily basis. But when rights have been trampled on, or regulators have overstepped their bounds, we’ll take the necessary legal action.
Let me turn to immigration reform.
America has grown and thrived because we have attracted and welcomed the most talented and the hardest working citizens of the world to our shores.
Immigrants teach in our universities, invest and invent in our technology companies, staff our hospitals, care for our elderly and young, harvest our food, and serve in our armed forces.
Given our changing demographics, we need more workers to sustain our economy, support our retired population, and to stay competitive. Even with high unemployment, we have millions of job openings that go unfilled. Either the workers come here to fill those jobs or the companies take all of their jobs somewhere else.
Some argue that we should do a better job of educating, training, and putting our own people to work. Damn right. That’s why the business community is fighting hard for school and job training reform.
And it’s why we are especially proud of our Hiring our Heroes program which aims to employ and tap the skills of our soldiers returning from the battlefield. Since the launch of this effort in March of 2011, we have held 387 hiring fairs for veterans and military spouses. More than 14,000 veterans and military spouses have found jobs—with many more placements yet to come.
But we still need immigrants. We are locked in a global competition for the world’s best talent. This is the competition that will separate the economic leaders from the laggards in the 21st century.
The Chamber is already teaming up with the labor unions, faith organizations and ethnic groups, and law enforcement to build a coalition for comprehensive reform.
We believe immigration reform should include the following inter-related components:
We need to secure our borders. It is imperative that people and commerce flow efficiently and lawfully through our nation’s ports and across our borders.
In addition, our laws must be revised to welcome needed labor and talent into our economy through thoughtfully-designed guest worker programs. This includes provisional visas for lesser-skilled workers. It also includes expanding the caps for high-skilled visas, and, expanding green cards for foreign nationals who graduate from our colleges and universities with advanced degrees.
We also need a workable, reliable national employee verification system. And, we need to provide a path out of the shadows for the 11 million undocumented immigrants who live in the United States today—provided that they meet strict conditions.
As we have this important debate, let’s remember who we are and where our families would be today if earlier generations of Americans had decided to slam the door shut.
The door to the American dream must always remain open.
Advancing the Jobs and Growth Agenda
Before concluding, let me underscore that there are other significant priorities that I haven’t discussed today—but they are vitally important and we will be working hard on them all year.
Our Institute for Legal Reform will continue the fight to curb frivolous litigation on the state, federal, and international fronts. Legal reform is inextricably linked to economic development and jobs.
Our Workforce Freedom Initiative will encourage efforts in the states to maintain flexible and fair workplace rules, adopt right-to-work laws, and repair seriously underfunded public employee pension and benefit systems.
We’re going to redouble our efforts to make the economic and the moral case for reforming our public schools and overhauling job training programs. Every child, young person, and worker in America deserves an opportunity to succeed—and millions in our country don’t have that chance today.
When I discussed energy development, I mentioned the positive impact it was having on American manufacturing. In fact, the Chamber has been conducting an extensive inquiry into what the country needs to do to further expand its manufacturing base and manufacturing jobs, and you’ll see us advancing an important initiative on this subject this year.
And anyone who knows me or the Chamber, knows how deeply committed we are to rebuilding America’s infrastructure. If we don’t expand our infrastructure and make it more efficient and seamless, we can’t grow our economy. Congress and the president took some positive steps last year and we must build on them in 2013.
Information technology is a critical part of our infrastructure. America needs robust cybersecurity to protect public safety, guard against disruptions to business operations and utility services, and prevent the loss of capital and intellectual property. We will continue to urge Congress to pass consensus-oriented cybersecurity legislation that will truly enhance businesses’ efforts to deflect and defeat cyber threats.
Leadership That Puts the Country First
Ladies and gentlemen, let me conclude where I began by underscoring the fundamental importance of economic growth.
We must get this economy moving faster. Growth of 1 ½ or 2 percent is simply not acceptable. It won’t produce the jobs Americans need or the revenues the government must have to reduce trillion dollar deficits.
Congress and the administration must focus their attention on this critical priority. Every bill that is considered, every regulation that is written, every negotiation that is held, everything our elected and appointed officials do or say must be shaped in large part by these simple questions: What does it mean for jobs? What does it mean for growth?
To advance our jobs and growth agenda, the Chamber will continue to strengthen and improve itself as an organization and as an influential force and powerful brand at home and around the world.
We will expand our grassroots network of small businesses, free enterprise advocates, and federation of chambers and industry groups—while gearing up and refreshing our political program for the next election cycle.
We’re going to deepen our bench of policy experts, communicators, and lawyers to prevail in the battle of policy ideas, reach new audiences with a message of economic opportunity, and win courtroom victories and regulatory relief.
In the difficult environment of divided government, we stand ready to work with both parties and within both parties, with the administration, and with both traditional allies and adversaries, wherever and whenever we can agree. But we will not sugarcoat or shy away from the disagreements that will inevitably arise.
We’re going to passionately defend the right of the business community and all Americans to speak freely and participate in the politics and public affairs of our democracy without fear, intimidation, or undue regulation.
And we will intensify our efforts to educate and explain the workings and principles of American free enterprise to citizens and government leaders—including the fundamental values of risk, profit, individual initiative, and limited government. These values benefit all in a free society.
Business is not the problem. It is business that creates jobs—high quality, well-paying jobs—and jobs and business are the solution. Our leaders in government need to understand this. We cannot afford smallness in our politics when what the nation really needs are big solutions.
The Chamber will proudly and vigorously represent the American business community in all of the great debates that lie ahead. But we will reject narrow agendas wherever they come from and put the country first.
We call upon all of America’s leaders in and out of government to do the same. The Chamber will stand squarely with those who do.
Thank you very much.
# # #