Address from Tom Donohue, President of U.S.Chamber of CommerceAugust 1
Congress and the President have reached an historic agreement to prevent a national default and reduce the deficit by at least $2.1 trillion over ten years, without raising taxes on American businesses and workers. The Chamber has been pulling out all the stops today to help gather the necessary votes in the House and the Senate to ensure the agreement's final passage.
We said from the start of this debate that raising the debt ceiling so the nation could pay its bills and prevent a default was absolutely critical to our economy and the livelihoods of our Main Street businesses and families. Failure to take this step would trigger higher interest rates and interrupt the flow of capital for consumers and companies, wreak havoc in financial markets, further undermine our fragile economy, and cripple job creation.
At the same time, we argued that the nation's current fiscal course is unsustainable. Federal spending as a percent of GDP is at a record high. The federal debt has increased by $5 trillion since 2007. The government is now borrowing 40 cents of every dollar it spends. And, we are facing annual deficits in the neighborhood of a trillion dollars or more for as far as the eye can see.
To put it simply, some in this debate have appeared willing to drive the nation to insolvency right now by refusing to raise the debt ceiling under any circumstances. Others have seemed content to drive us off the fiscal cliff a little bit later by refusing to take tough, necessary steps to stop the federal spending binge and its key driver-runaway entitlement programs.
The Chamber refused to accept insolvency now and we refuse to accept it later. That is why we have worked with equal urgency to both raise the debt ceiling and enact serious spending cuts without imposing anti-growth tax hikes. To achieve these objectives, we helped the administration rally the business community around the imperative of preventing default and educating Americans about the economic harm that skipping out on our debts would bring. We have also worked closely with the Republican Congressional leadership throughout this battle-supporting, for example, Speaker John Boehner's recent all-cuts budget plan in the House, in order to move the process forward and achieve genuine, enforceable spending restraint.
Employing our regional offices, our entire team of lobbyists, the Chamber federation, and all our other grassroots capabilities we individually lobbied most members of Congress on multiple occasions, ensuring that the business voice would be heard. The Chamber's communications team also made unprecedented use of the social media to spread our twin message-prevent default and cut spending.
So what does the final deal look like?
The debt ceiling will be raised in two stages. Default is avoided. Debt ceiling increases will be accompanied by dollar-for-dollar deficit cuts, with sequestering and strong enforcement mechanisms to ensure that the cuts are actually made. The agreement contains no tax increases on businesses or individuals.
Just over $900 billion in cuts and hard caps on discretionary spending will start being implemented right away. The debt ceiling will be immediately raised by a like amount.
Before the second stage of the debt ceiling increase can occur, a special committee of lawmakers from the House and Senate, divided equally between Republicans and Democrats, must identify an additional $1.5 trillion in deficit reduction and submit a plan to the full Congress by late November. Congress must vote up-or-down on their plan by the end of the year. Or, Congress can approve a balanced budget amendment to the Constitution and send it to the states for possible ratification.
If the special committee fails to submit a plan or if Congress rejects the plan, an enforcement trigger will be pulled. Domestic and defense cuts totaling at least $1.2 trillion will be made automatically. Given the depth of cuts the trigger could impose on Democratic priorities such as Medicare spending and portions of Obamacare and Republican priorities like national defense, there should be strong incentives for the special committee to successfully fulfill its mandate.
The agreement also clarifies and mandates the spending and revenue baselines that must be used to measure the progress of deficit reduction. This should help prevent the typical Washington game of trying to make the deficit look smaller by playing with the numbers or by building in tax increases and calling them "cuts."
While not perfect, this is a good agreement, consistent with Chamber policies and principles. It will shore up business and market confidence and put us on a path towards fiscal responsibility with many difficult steps still to come. It will allow us to turn our collective focus back to the over-riding priority of spurring greater economic growth and creating American jobs.
I'm proud of our organization's efforts. Bruce Josten and his team have done extraordinary work. Many members of our board and other key supporters showed considerable courage in stepping up and communicating their views to Congress. The safest course during this tortuous process was to keep one's head down, retreat to vague generalities, or thump the chest by opposing everything and supporting nothing. In fact some groups, interests, and voices in Washington took one or more of these approaches.
At the Chamber, we see our role and responsibility differently. We have the membership and organizational breadth and depth to take the heat that comes with taking strong stands. It's our job to look out for the health of the overall American economy and the broader interests of the entire business community. We believe it's important to be in the solutions business-doing more than just making statements, but also trying to actually make things happen.
For questions about the debt and deficit agreement and the Chamber's role in a critical debate that is far from over, please call Executive Vice President Bruce Josten at (202) 463-5310.
Chamber Scores Big Legal Win in Proxy Access Fight
Teaming up with the Business Roundtable, the Chamber has persuaded the U.S. Court of Appeals for the D.C. Circuit to unanimously vacate the Security and Exchange Commission's (SEC) proxy access rule. This is a big victory for investors because companies will now be able to focus on growing their businesses and increasing long-term shareholder value. The court agreed with us that the SEC had offered no evidence that unions, public employee pension funds and other special interest shareholders would use proxy campaigns or the threat of proxy campaigns to achieve positive results for all shareholders.
Empowered by the Dodd-Frank legislation, the SEC attempted to impose a rule that would grant shareholders (or a group of shareholders) with 3 percent or more of a company's stock the right to put a short slate of their own board candidates on the company proxy access. Unions and other special interest shareholders were poised and ready to exploit this process to wring concessions from companies that they could not otherwise win on the merits or at the bargaining table.
In its ruling, the three-judge panel criticized the SEC for failing to take into account the economic consequences of the regulation, even though it is required to do so by law. The court chided the SEC for claiming, inexplicably, that the benefits of proxy access would be great because it would be used at a large number of companies, but the costs would be low because it would not be used that often. This is not the first time the SEC has failed to meet its legal requirement to do a full economic analysis of proposed rules and consider other options submitted others during the comment period. The SEC could very well try again on proxy access, but hopefully the sharpness of this most recent legal rebuke will send a message to its regulators that they are not above the law.
This legal victory came just as stakeholders were taking stock of the one-year anniversary of the enactment of Dodd-Frank. Much of what we warned about a year ago has come true-instead of creating jobs, the law has added uncertainty for job creators. The vast majority of the nearly 500 required and suggested rules, reports and studies called for by Dodd-Frank have yet to be put in place and if not done the right way, they could further threaten what remains a fragile economic recovery.
The Chamber and our Center for Capital Markets Competitiveness (CCMC) are working every day to submit comments during rulemakings, seek legislative fixes, take to the bully pulpit, and when necessary, sue. In recent days, President Obama nominated former Ohio Attorney General Richard Cordray to direct the newly created Consumer Financial Protection Bureau (CFPB). We have urged the Senate to closely question him about how he would use his virtually unrestrained powers. Additionally, we will continue to push Congress to establish checks and balances and more oversight over the CFPB by moving from a single director to a five person bipartisan commission and bringing the budget back under the appropriations process.
We are also advancing ideas that will modernize and restore vitality and competitiveness to U.S. capital markets-important goals that were not achieved with the passage of Dodd-Frank. CCMC has just issued a new report identifying fixes in key areas where our regulatory structure and processes are reducing the quality and efficiency of our capital markets.
For a copy of this report and for more information about our capital markets agenda and our legal victory on proxy access, please contact CCMC President David Hirschmann at (202) 463-5609.
Chamber Jobs Summit Highlights Need for Growth and Certainty
With unemployment rising, job creation diminishing, and with new government figures showing that the economy grew less than 1 percent through the first half of 2011, the Chamber's July 11 jobs summit, spearheaded by our Campaign for Free Enterprise, could not have been more timely.
We released a new Harris Interactive Survey with the unfortunate finding that nearly two-thirds of small businesses do not plan to hire more workers in the coming year. The vast majority of these companies believe our economy is on the wrong track and that uncertainty is their biggest challenge. Can they get loans? Will they have enough customers? Will there be any relief from regulators and the provisions of the new health care law? What will Washington do to them next? These are some of the concerns aired by survey respondents and jobs summit participants.
In my address, I underscored the urgency of jumpstarting economic growth. We will not see robust job creation until the United States can push its growth rate to 3 percent and beyond. I outlined 7 specific steps the nation could take right now to spur growth and create jobs, including the expansion of trade, promoting travel and tourism, clearing away under water mortgages in order to revitalize the housing sector, modernizing our infrastructure, producing more American energy, and reforming the permitting process.
Action in these areas, combined with longer-term reforms in education, immigration, and innovation would put our economy in a more competitive position and enable us to win back the growth, jobs, and markets we have ceded to others in recent years. General Electric CEO Jeff Immelt, who chairs the President's Council on Jobs and Competitiveness, closed the summit with an excellent speech previewing the council's upcoming findings and recommendations, which will hopefully help galvanize action in the halls of government.
Stagnant growth, reticent consumer spending, business uncertainty, and market turmoil around the world are conditions that do not bode well for the 16 percent of our fellow citizens who are unemployed or underemployed. Government must change course and immediately remove the impediments that are driving jobs away and stifling the success of American enterprise. That's the message and mission of our jobs summit and Free Enterprise Campaign. For more information, please contact Stan Anderson, Managing Director of the Campaign, at (202) 463-5691.
There will be no let up for the Chamber in August, as issues that were pushed out of the limelight during the protracted debt and deficit debate now come back to center stage. Though Congress will be in recess, we will be working in Washington and in lawmakers' home states and districts to soon secure enactment of pending Free Trade Agreements with South Korea, Colombia, and Panama. Congressional leaders and the White House have been inching towards a legislative path to their enactment.
And, we're driving a vigorous North American energy agenda. In July, at our urging, the House passed legislation that will help spur action on the Keystone XL Pipeline. The pipeline will bring 1.1 million barrels of oil a day from Canada to our refineries, and in the process create 250,000 jobs and $20 billion in investment in the United States. Promoting the responsible development of domestic natural gas, clean coal, nuclear power, and oil reserves off our coast s and on federal lands will create hundreds of thousands of additional jobs, free us from unfriendly foreign suppliers, produce billions in new revenues for the government, and help bring more manufacturing back to the United States.
There are indeed common sense solutions to America's challenges and extraordinary opportunities for our country in the global economy. All we have to do is act on the solutions and seize those opportunities!
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