January 10, 2018


As Prepared for Delivery

State of American Business 2018:

An Agenda for Stronger, Sustained, Shared Growth

Address by

Thomas J. Donohue

President and CEO, U.S. Chamber of Commerce

January 10, 2018

Washington, D.C.

The Economic Outlook

Good morning, ladies and gentlemen. Thank you for joining us today.

At the outset of what promises to be another momentous year, the state of American business is strong—and positioned to grow stronger still.

After nearly a decade of muddling through, our economy has at last achieved consecutive quarters of 3% or higher growth. Barring any unforeseen circumstances, we expect stronger growth to continue this year and well into 2019.

Unemployment has fallen to levels not seen since the beginning of this century, as hiring remains vigorous. More people who had stayed on the sidelines when labor markets were weaker are finally reentering the workforce. And we’re seeing signs of stronger wage growth.

Inflation and interest rates remain low by historical standards, even as the Federal Reserve has begun the steady march to normalize monetary policy. The stock market is on a historic tear, with the Dow posting its largest annual gain ever—a whopping 5,000 points—in 2017. It’s off to a strong start this year, too, blowing through 25,000 last week.

It’s no wonder business optimism is rising—especially among the small businesses that often feel economic changes most quickly and acutely.

How do we account for these improvements? Simple. Better policies from Washington and some states and a pro-growth mindset among more of our nation’s private and public sector leaders.

But there are always risks and developments that have the potential to upend our economy and reorder our priorities.

A major mistake in Washington—such as withdrawal from NAFTA or defaulting on our debt—would undermine growth. An upheaval in our government would sap confidence, stoke uncertainty, and stymie progress on a pro-growth agenda.

And any number of geopolitical hotspots could erupt at any time, with significant economic repercussions. From the potential for conflict with North Korea, to ongoing unrest in the Middle East, to the threat of major terrorist attacks or cyber attacks—there are plenty of global risks.

To be clear, we don’t need everything to turn out just right to prosper this year. Our economy’s underlying strength is deep and wide, so we can overcome a lot of adversity. But if we can stay on track at home, and events remain relatively stable abroad, we can expect the economic gains to continue.

New Economic Realities

Now, we can’t look at the numbers without also looking all around the country at the people who are living and working in this economy.

Because first and foremost, our economy is about people.

And we must ask ourselves: are these economic gains being felt by all, or even most, Americans?

While our economy is improving, the prosperity hasn’t flowed to every community or every household.

Families and workers are living in a time of rapid change and disruption that is driven by many factors—from automation and technology … to globalization and greater productivity … to energy innovation … to the large-scale movement of jobs out of some communities and into others. These disruptions are creating economic insecurity for those who don’t have the right skills or education—or who don’t live in the right places—to compete for today’s jobs.

So despite overall economic gains, we’re seeing workers who have lost their jobs due to plants or companies shutting down for one reason or another—and they’re often left with limited options. If they want to keep working, they can stay put and take a big pay cut. Or they can go where the hot jobs are—but many Americans don’t have the means or the flexibility to up and move.

We’re seeing underemployed young people whose degrees don’t match up with existing job opportunities. They are shouldering mountains of student loan debt and have real questions about the value of their education.

We’re seeing entire communities plunged into distress—all at once dealing with joblessness, the opioid crisis, and long-term cycles of dependence.

Facing these circumstances, many Americans have lost faith in core institutions—public and private alike. They don’t believe that government or business understand the challenges they face, or are willing or able to address them.

Many Americans are looking for reasons to explain their economic insecurity—for someone or something to blame—like trade, immigration, or technology.

And all of this has helped fuel the deep political divisions in our country today. Populism is on the rise on both sides. Nationalism and socialism are finding new support.

These realities are very much on the minds of today’s business leaders.

This isn’t the first time America has dealt with major change and disruption, and we have always come out on top. But hope is not a strategy.

The business community has a responsibility—and a unique ability—to offer solutions to address these challenges.

And it all goes back to growth.

The New Growth Agenda

Economic growth remains the best way to expand opportunity, increase wealth, and restore the American Dream—for the many, not the few … for communities across the country, not just in urban centers and along the coasts … and for the everyday Americans that make this nation great.

So growth must be strengthened—two quarters of 3% growth is a start, but we must make up for a lost decade.

It must be sustained—we need policies that will support growth for years, not quarters.

And the benefits of growth must be shared broadly to advance opportunity and increase economic security.

Let me be crystal clear. I’m not talking about cutting the existing pie into smaller pieces and passing them around. I’m talking about growing the economic pie so more people can get a bigger slice. Growth must be inclusive—and its benefits within reach for all Americans.

In order to achieve that stronger, sustained, shared growth, the Chamber today is unveiling a forward-looking agenda that will build on recent gains for the long-term.

A Brief Look Back

We set the table for this agenda last year by helping kick-start growth in two critical ways.

The Chamber worked vigorously to help pass the first major tax overhaul in 31 years.

The final package wasn’t perfect, but it was pretty darn good. It achieved our priorities of lowering rates for all businesses, instituting an internationally competitive system of taxation, and allowing for full expensing of capital investments.

Most important, it will usher in a new era of growth for the American economy.

Upon passage we saw a number of businesses immediately stand up and declare their plans to raise wages, give bonuses, boost charitable donations, and improve benefits—all thanks to the expected gains from a more competitive and productive tax system.

The second major pro-growth achievement last year was reining in the regulatory state after eight long years of regulation run amok.

Last year we saw regulatory actions fall to a 17-year low, down 40% from their peak in 2011.

And building on years of work, we helped unravel a slew of major Obama-era regulations, including sweeping rules that shackled our nation’s energy innovators; burdensome labor regulations that hampered business operations and harmed workers; and onerous financial rules that would have suppressed retirement investment and disadvantaged consumers.

But there is more work to do.

Regulatory burdens stemming from Obamacare still need to be dealt with. Employers continue to face escalating health care costs and market instabilities. On health care and more, the administration must now write new regulations to undo and replace bad ones. The Chamber will be closely involved.

And we will continue advocating for systemic regulatory reform—including passage of the Regulatory Accountability Act.This is crucial to preventing an onslaught of new rules under a future administration.

In addition to our federal efforts, we will also look to the states, where business critics are shifting their focus and adopting new measures to carry out their agendas. The Chamber’s Institute for Legal Reform will push back against the state attorneys general who are picking up the mantle of regulation through over-enforcement.

Through all of these initiatives and more, continuing to reverse unworkable or unnecessary regulations will remain a major priority for the Chamber this year.

Priorities for 2018—and Beyond

Now, to build on recent economic gains—and to make the most of them—in 2018, and beyond, we’ll be focusing on several other issues vital to sustained growth.

Building the Workforce of the Future

First, we must focus on our workers.

Growth doesn’t happen without people—the men and women who provide the energy, ingenuity, and ideas that power our economy.

One of the most common concerns we hear from our members of all sizes and industries, and from across the country, is that they can’t find the qualified workers they need to grow their businesses.

The Chamber believes that we need an all-of-the-above approach to address the dual challenge of people without jobs, and jobs without people.

We need bold education reforms.

K-12 education should focus on foundational skills that will help children learn how to learn. Too many American students quickly fall behind because they don’t develop basic reading or math skills on which to build. Higher education must be better aligned with the needs of our economy and show a real return on investment.

Students, parents, and taxpayers are investing $400 billion a year in higher education—they must have confidence that what is being taught in America’s colleges and universities will translate into credentials of value in the economy.

We also need to make it clear that a 4-year degree is not the only path to prosperity. Work-based learning, like apprenticeships, can lead to fulfilling careers. I’m proud to serve on the president’s Task Force for Apprenticeship Expansion to help more Americans learn relevant skills and get good-paying jobs.

We also need to encourage life-long learning—the jobs of the future will require it. Businesses must proactively develop and engage their workers to drive innovation and adapt to change. And all workers must be entrepreneurs when it comes to investing in and upgrading their skills.

And we must get people off the sidelines and back on the job—especially men. As of 2015, nearly 22% of working-age men were out of a job for a variety of reasons—from job displacement to disability to addiction.

Research shows that the opioid epidemic alone is responsible for 20% of the drop in men’s labor force participation. Governments at every level, community organizations, and businesses all have a role to play in addressing the epidemic. The Chamber will soon convene leaders from all of these sectors to discuss practical actions that can be taken now to support communities and curb the crisis.

And while we’re talking about keeping folks on the job, let’s not overlook a vast pool of talent that is leaving the workforce in droves. 10,000 Baby Boomers are retiring a day. I may be a little biased, but the experience and expertise of older Americans is still very relevant and needed in today’s workforce, so we should find ways to keep them engaged.

Who says you need to throw in the towel when you hit a certain age? Not me!

And finally, we must reform our immigration system to meet the needs of our economy.

A great place to start is by retaining the over 1 million individuals who are currently allowed to work here legally—but are at risk of losing that status.

This includes 200,000 TPS beneficiaries who have been legally living and working here for up to two decades, but were just told they must leave the country. It includes over 30,000 spouses of high-skilled visa holders who may be allowed to stay, but not to work. It includes the Dreamers, some 690,000 young people brought here illegally as children through no fault of their own.

These hard-working individuals contribute their talents to our economy in integral ways, and we will lose them if Congress doesn’t act early this year.

The Chamber and our Center for Education and Workforce are looking at all of these complex challenges from every angle and promoting business-led solutions.

The bottom line is that we can’t strengthen and sustain economic growth if we don’t expand and support our workforce. Nor will Americans be able to share in the benefits of growth if they are locked out of our economy.

Embracing Technology in our Economy

Next, technology must be embraced as the growth-driver and game-changer that it is.

Technology is not a single, all-powerful industry. It is now a part of every industry. It will continue to change the way we work, communicate, and live—at a rapidly accelerating pace. Even with these changes, technological advancement is an opportunity, not a threat.

The Chamber Technology Engagement Center, or C_TEC, is helping businesses, communities, policymakers, and workers understand and adapt to the new economy.

This is essential to broadly sharing the benefits of growth—especially in distressed communities that could really use a boost. But in some parts of the country, the barriers are significant.

The 34 million Americans who don’t have internet access are all but locked out of the new economy, both as consumers and entrepreneurs.

Middle America also struggles to attract investment needed for high-growth startups. Currently, two-thirds of venture capital are concentrated in Silicon Valley, New York, Boston, and Washington. And many leaders around the country simply don’t have enough information about how technology can be leveraged to strengthen state and local economies.

The Chamber recently established a working group to promote the value of the new economy and to address the barriers standing in its way.

Another priority is highlighting the ways technology is improving people’s everyday lives—from better health care to streamlined small business operations to more productive family farms.

This is especially important as a backlash against major tech companies is gaining strength—both at home and abroad, and among consumers and governments alike. We must be careful that this “techlash” doesn’t result in broad regulatory overreach that stifles innovation and stops positive advancements in their tracks.

And even as we work to advance technology in our economy, we must also safeguard businesses and consumers from its risks, including cyberattacks, data privacy, and intellectual property theft.

Technology will continue to be a major driver of stronger, sustained growth—and if we leverage it smartly and carefully, we will all benefit.

Modernizing and Expanding Infrastructure

To keep up with the changes of a growing economy, we must also modernize the infrastructure that allows for the movement of people, products, power, and information.

We cannot build a 21st century economy on 20th century infrastructure.

This year can and must be the year of major infrastructure investment. We have the political will, the bipartisan support—and we certainly have the need. Now it’s time for action.

The Chamber has been working with the administration to determine what a forward-looking infrastructure package should achieve.

We must pave our way to the future by choosing projects of national significance that maximize long-term growth.

We need to rebuild our roads and bridges and modernize them for the technological changes to come, including driverless cars. We need to expand broadband so every American can access digital opportunities in the new economy. We must revitalize our seaports and airports to handle the demands of our increasingly global and mobile economy. Water supply systems must be updated—many for the first time in a century—so that basic resources remain safe and available.

And don’t forget we’re also living in the midst of an energy renaissance, yet we don’t have the infrastructure to support it. So we must revamp our power grid and build the pipelines necessary to transport our abundant resources to market.

These long-term, nationally significant infrastructure projects will enable serious growth and job creation.

But how do we pay for it? That’s a problem that has dogged the debate for ages.

We have a number of ideas and proposals, which we’ll lay out in more detail at an infrastructure event here at the Chamber on January 18th. We’re going to help jumpstart the conversation between private and public sector leaders.

Reasserting American Leadership in the World

To strengthen growth, we must also access global markets, and that requires smart trade policy. Trade is how we shape the reality of globalization to benefit American businesses, consumers, and workers.

And if we aren’t leading on trade, we’re falling behind. I’ve been saying that for years, and today, we’re seeing it happen. As the administration has pulled back on trade agreements, governments around the world have rushed forward to fill the void. The EU is striking major deals with Canada, Japan, and Mexico. And the Trans-Pacific Partnership is now moving forward without U.S. involvement.

This is a reminder that we are in a global competition to sell to the 95% of the world’s population that lives outside of the U.S—and that competition goes on with or without us.

So we must strengthen our trading partnerships—not weaken, or worse, abandon them.

Let’s start in our own hemisphere with the North American Free Trade Agreement. Mexico and Canada are America’s largest trading partners, supporting 14 million U.S. jobs and $1.3 trillion in annual trade.

The Chamber has said from the beginning that we support the effort to modernize the 24-year-old agreement. A modernized deal should account for the gains of North America’s energy revolution and add rules for digital trade. It should not close markets, undermine investment protections, or limit trade with regulatory red tape.

Above all, withdrawing from NAFTA would be a grave mistake.

The American economy has taken several big steps forward with regulatory relief and tax reform, and the administration deserves lots of credit. But a wrong move on NAFTA would send us five steps back.

The same holds for KORUS, a vital trade pact with a key ally, South Korea. We agree that in some areas the Koreans need to do more to faithfully implement the deal. But overturning it would hurt American farmers and manufacturers—and benefit only our foreign competitors.

Trade with China will also be high on the agenda this year. The White House is right to focus on China’s industrial policies and their challenge to the global economy. This includes Chinese market access restrictions, subsidies, data and cyber policies, forced tech transfer, and IP theft.

The status quo is not sustainable, but we need a smart approach. We need to work with allies in Europe, Japan, and elsewhere to forge a common response to China’s state capitalism.

The president says he wants more trade and more trade agreements. So do we. So we need to go back on offense!

We need to bolster our trade and investment ties with strategic partners—India should be a top priority. We need to tap the potential of growing regions such as the Middle East and Africa. And we need to clinch new deals that will open markets—not undermine the ones we have.

The bottom line is that growth will be weakened, not strengthened or sustained, if we pull back from trade.

Fueling Business Growth

Next, in order to drive growth across our economy, U.S. businesses must have the resources to grow and the freedom to make decisions that will allow growth to continue.

Today, even as our economy gains strength, there are some significant impediments and threats that are preventing businesses from starting, growing, and going public.

One is a lack of access to capital, especially for Main Street businesses. The period following the Great Recession marked an alarming turning point—for the first time, more businesses were being destroyed than created in this country. And we still haven’t seen business creation rates bounce back to pre-2008 levels.

The administration and Congress must unlock the resources needed to start and grow businesses. We must have robust private markets and expand bank and non-bank lending to Main Street businesses.

Another threat is the growing disincentive to go or stay public. There are a number of reasons for this—and we need to tackle all of them, including the role of proxy advisory firms.

Some special interest activist investors are pushing politically motivated agendas. Short-termism is forcing leaders to make decisions to satisfy quarterly goals instead of to meet long-term growth objectives.

It’s no wonder that we have half as many public companies today as we did in 1996.

This is not simply a curiosity or an observation. This is a big problem. Public companies are a major contributor to job growth in our economy. And when more companies go public it creates more opportunities for Main Street America to build wealth through share ownership.

To help address these problems, the Chamber is focusing on capital formation, supporting IPOs, and improving governance and investor protections. At the same time, our Institute for Legal Reform and Litigation Center are continuing their efforts to curtail lawsuit abuse and an overzealous plaintiffs’ bar—these are also major drags on business growth.

And if businesses can’t grow, our economy can’t grow.

Restoring Fiscal Health

Finally, stronger growth and lasting prosperity must be built on a stable fiscal foundation.

There is no greater threat to our country’s long-term economic security than unsustainable entitlements. They are the true drivers of our nation’s rising debt. And if left alone, major parts of our entitlement programs will go bankrupt, putting the economic security of vulnerable Americans at risk.

Moreover, if we don’t address this looming crisis soon, future generations will pay for our failings twice. Once by shouldering the burden of massive debt they didn’t incur. And again in lost opportunity, as investments we should be making in our nation’s competitiveness are sacrificed for runaway spending and debt service payments. Mandatory spending already gobbles up every dollar of federal income tax revenues—and then some.

This is something I talk about nearly every year—and the only thing that’s really changed is that we’re now counting down in years, not decades.

Many recognize that something must be done. But the reality is that the bipartisan leadership and national consensus needed for real change doesn’t exist today.

Public support for entitlement reform will remain low as long as broad swaths of this country are economically vulnerable, and as long as hard-working Americans struggle to make ends meet. That’s just a fact. And that’s why the rest of this agenda to drive growth is so important.

No, growth alone won’t solve our entitlement crisis. But growth can help restore the sense of security that too many middle-class Americans lack today.

So this is yet another crucial reason to advance the policies that will strengthen economic growth, sustain it, and most, important, share its benefits broadly.

Electing Pro-Growth Leaders

Now let’s talk a little about politics. To have a fighting chance of succeeding on the policy objectives I’ve laid out, we need the right people in Washington.

And we have our work cut out for us heading into this year’s midterm elections.

A lot of smart people already think they know how things are going to turn out in November. But remember, a lot of smart people can be wrong. In 2016, they said there was no way we could keep pro-business majorities in the House and Senate. And no one expected a businessman in the White House.

The Chamber doesn’t engage in presidential politics, but in 2016 our voter education efforts helped deliver significant gains in Congress.

We’re going to double-down on our winning strategies this year.

First, candidates matter. When you’ve got a weak candidate on the ballot nothing can be taken for granted—even in the safest seats and the most reliable places.

We’re working closely with state and local chamber partners to recruit good candidates. We’ll support those who understand why growth is important and who are committed to governing so we can achieve growth.

And by-the-way, that will require a willingness to reach across the aisle. Remember, many big priorities—like infrastructure and entitlement reform—can only be done in a bipartisan way. If we’re only sending ideological purists and strict partisans to Washington, we’re stopping progress before it can even start.

So we’re going to fight back against the extremes in both parties—the Steve Bannons and the Elizabeth Warrens of the world, who do not represent the best interests of this country.

We need to rebuild the middle in Congress. Pro-growth, pro-business candidates can come from both sides—and we want more from both sides.

Second, many of the most crucial races will be determined in the primaries, not the general election. So we’re going to again play aggressively in key primary contests.

Third, we must turn out the business vote. The candidate and the operation that get the most people to the polls win—period.

We’ll enlist the help of local chambers to turn out their members, and businesses to turn out their employees. We’ll also spread the message that it is in the vital interest of every American family to have a growing economy. When the pro-growth agenda succeeds, America succeeds.

Protecting Free Speech and Civil Discourse

Before I close, I want to mention one other priority that must be central to our growth efforts this year. It’s not another policy prescription or political tactic. It’s a principle that undergirds our society and system of free enterprise—and that’s allowing people and groups to speak freely and participate in civil discourse.

We won’t make much progress on any of these priorities if we aren’t able to articulate our positions in a compelling way, win hearts and minds, build consensus, and encourage compromise.

That’s tough to do in a deeply divided, 50-50 nation.

The decline of the political center has amplified the more ideological voices on both sides. The result is a less civil, more bombastic political conversation that frankly disgusts many Americans and prevents our government from solving problems.

In this environment, there’s a growing faction of people who are no longer content to argue the merits of their ideas—they simply want to silence their opponents and shut them out of the debate.

We’re seeing this erosion of free speech on college campuses; in the demonization of political opponents; in media bias; and in efforts to control or silence people, institutions, and businesses through intimidation tactics or smear campaigns. And it is a major driver of the division and dysfunction that is gripping our nation.

What we need today is more debate on the big questions facing our government, our economy, and our society—not less. We need more points of view in the public dialogue—not political correctness or speech restrictions.

The business community has long fought to protect its right to be heard because we believe passionately in the merits of our ideas and are more than willing to defend them in the public square. And we believe that, if given the chance to truly hear and consider those ideas, most Americans will see their merits too.

So today, we must elevate the fight to protect free speech—not just to advance our own ideas and interests, but to preserve one of the key principles on which our nation was built.

There can be no progress toward policies that will help the greatest number of people if leaders aren’t able to come together and exchange ideas and reach common ground. There can be no prosperity without competition allowing the best ideas, products, and services to prevail. That’s what drives growth and a higher standard of living.

In short, there can be no free enterprise without free speech. And free enterprise is the foundation on which our nation’s legacy and future rest.


So, what is the state of American business today? It is strong—but determined to grow stronger.

Business is determined to be a voice of reason and a bridge between sides. We’re determined to help, and when necessary, correct our government as it does the nation’s business.

We’re determined to help lead our country through this period of rapid change so that it emerges stronger, more competitive, and more secure. We’re determined to help restore optimism for the discouraged, opportunity for the downtrodden, and mobility for all. And we’re determined to help turn growth today into prosperity that endures.

We’re confident we can succeed because business is, and always has been, a powerful force for positive change.

Today, the economic winds are at our backs. There is so much we can do this year and beyond to make America more prosperous and hopeful—and this time, for everyone.

So let’s get going, and let’s keep growing.

Thank you very much.


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