While acknowledging that the “state of American business is improving,” one of the nation’s chief business spokesmen said a variety of economic challenges face the United States and called for the Obama administration and the Congress to form a “governing center” to solve problems.
Investing, hiring and consumer spending are all firming up, Chamber President and CEO Thomas J. Donohue said in his annual State of American Business address. Millions of jobs are being created by the U.S. energy boom, though he warned falling oil prices could slow the sector over the next year. Still, the chamber is forecasting U.S. growth of 3% to 3.5% at least through the middle of 2015.
But while the short-term outlook is encouraging, Donohue warned that global events make the longer term forecast less certain. “China is slowing, Europe is floundering and Japan may be sinking back into recession,” he noted.
Donohue directed much of his address to a call for action on changes in domestic policies. He said the fall election had “clearly rejected the economic course we are on.” He said conservatives, progressives and moderates should be able to work together, to find common ground when possible but if not, to “acknowledge your differences and just make a deal.”
To support “stronger and deeper economic growth,” Donohue called for an agenda addressing the following issues:
Trade. Donohue reiterated the chamber’s support for two trade agreements currently under negotiation – the Trans-Pacific Partnership Agreement and the Transatlantic Trade and Investment Partnership. He said a top legislative priority was to provide the president with Trade Promotion Authority. Donohue said other trade priorities were a revised Information Technology Agreement, a Trade in Services Agreement and a Bilateral Investment Treaty with China, as well as successful implementation of the WTO’s Trade Facilitation Agreement, customs reform and reauthorization of the Export-Import Bank, which has come under attack from Tea Party conservatives.
Energy. Donohue said the chamber would continue advocating clearance for the Keystone XL pipeline, and urged changes in export rules so that domestic oil can be exported. He also noted that “energy development can deliver hundreds of billions of new dollars to government coffers and that would be a nice down payment on our rapidly growing bill for entitlements.”
Technology. The chamber president warned that the U.S. tech sector was becoming “more of a target of governments and activists at home and abroad” and vowed that his organization would defend their interests. He said the chamber opposes efforts to regulate the internet “as if it were a 20th century public utility.”
“The Internet is one of the greatest drivers of prosperity and innovation in our economy. We need to develop better and smarter frameworks for data security and sharing – but the system must remain open, flexible and innovative – and excessive government regulation of the Internet would just kill that goose.”
Infrastructure: Congress should pass a long-term highway and mass transit bill with full funding, Donohue said, as well as fund U.S. aviation and water systems. Addressing the conundrum of how to pay for these improvements, he said the “simplest and fairest” way would be through an increase in the federal fuels user fee. Given that the average price of gasoline has dropped $1.45 a gallon since last summer, Donohue said, “Isn’t it reasonable to consider investing a dime or two of those savings” into infrastructure?
Government Reforms Needed to Boost Economy
Donohue also called for extensive government reforms, including:
Immigration. Implicitly rejecting executive action on immigration reform, Donohue said, “Meaningful immigration reform can only be achieved through bipartisan legislation.” He called for measures that would better secure U.S. borders, provide workers at all skill levels, improve the employment verification system and deal with undocumented immigrants. He said action was possible this year because both parties stood to gain from dealing with immigration.
Regulatory Reform. Donohue said the U.S. regulatory system has not been modernized since the Truman administration and called for “smart regulations” to bring a $2 trillion system into the 21st century. He promised all-out action to pass three regulatory reform bills currently before Congress, including the Regulatory Accountability Act that was passed by the House on Tuesday. President Obama has threatened to veto that bill but Donohue said he hoped the president would reconsider his opposition.
Along with these measures to change the regulatory system, Donohue repeated the chamber’s opposition to new EPA efforts to regulate ozone, waters of the U.S. and greenhouse gas emissions.
Donohue supported efforts in Congress to amend the Affordable Care Act to define a full-time workweek as 40 hours, not 30. That is threshold at which employers must provide health benefits. He also called for repeal of the medical device tax, the Cadillac tax and the health insurance tax.
Capital Markets. The chamber president questioned who was actually in charge of financial markets regulation, noting that two dozen agencies “often conflict, compete and fail to work together.” He called for a modernized system that “both drives financial stability and encourages capital formation.”
Tax Reform. Donohue called for tax reform that would reduce the corporate tax rate and end double taxation of the earnings of U.S. firms in foreign countries. He also called for reforms of the tax code to help the 28 million businesses that pay taxes as individuals. While supporting a simpler, fairer tax system, Donohue warned the chamber would not support an approach that “uses tax reform as an excuse to engineer another big tax increase on American business.”
Noting that the U.S. deficit now totals $18 trillion, Donohue said the next budget would be an early test of Congress’ ability to act on tax and entitlement reform. He warned that by 2024, federal spending will reach $5.8 trillion and more than 76% of that “will go to mandatory programs plus interest on the national debt.”
“America’s leaders need to start telling the American people the truth. The entitlement crisis is an entirely predictable crisis. It demands action and leadership without further delay,” Donohue urged.
Donohue said that despite “a few good quarters of economic growth,” the U.S. is “not out of the woods.” He said the Republican majority in Congress must prove it can legislate and the president needed to engage. “Together, they need to govern,” he said.
