The United States can't afford for Congress and the White House to avoid addressing critical issues such as infrastructure and job creation because it is an election year, U.S. Chamber of Commerce President Thomas Donahue said in his annual State of Business speech Thursday.
Inaction would be particularly harmful at a time when the economy is still underperforming and unemployment is at 8.5 percent, he said.
The head of the world's largest business federation predicted the U.S. economy would grow 2.5 percent in the first half of the year and reach 3 percent growth by the fourth quarter.
At a press conference following the speech, chamber officials expressed dismay that the Obama administration has signaled it has a limited legislative agenda for 2012 so the president can focus on re-election.
"For the sake of our economic recovery, we must reject the conventional wisdom that nothing gets done in an election year," Donahue added in a column posted on the chamber's new digitial hub for pro-business debate, FreeEnterprise.com.
Donahue urged Congress to pass a long-term surface transportation reauthorization to support continued investment in highways, bridges and transit systems. Department of Transportation programs for road construction aid to states and safety have been frozen at the same level since the last multi-year spending plan was enacted in 2005. That legislation authorizing how transportation dollars are spent expired in September 2009 and Congress has strung together a series of short-term extensions to keep the programs going. But transportation officials say states can't plan long-term projects without the certainty of getting reimbursed, which would be offered by passage of a long-term plan.
The extension of surface transportation authorization expires on March 31. Donahue warned that the Highway Trust Fund would be cut a minimum of 35 percent by this fall, putting thousands of people out of work, without action by Congress.
Congress could kick a decision down the road a few more months if lawmakers get distracted dealing with issues such as a payroll tax extension and can't come up with new revenue sources to supplement the fuel tax system when most of them have already rejected the option of raising the per gallon tax.
Donahue said at the press conference he would settle for the current spending level ($285 billion over several years set in the SAFETEA-LU bill in 2005) if it meant getting a long-term bill sooner than later.
"And let me make this clear -- every piece of infrastructure legislation should include reforms to speed up projects and encourage public-private partnerships and the use of private capital.
"In fact, by knocking down the barriers, we can unlock up to $250 billion in private capital for infrastructure. Leverage this with public investments, and we could create 1.9 million jobs over 10 years," he said in his speech.
Donahue also urged Congress to pass the long-overdue reauthorization of the Federal Aviation Administration, which would help speed up deployment of an expensive satellite-based air traffic control system designed to make air travel more efficient and safer.
Other top priorities on the chamber's legislative agenda include steps to open up trade opportunities and protection of intellectual property rights for U.S. businesses.
The trade association supports completion this year of a Trans-Pacific Partnership Agreement between several Pacific Rim nations, as well as new free trade agreements with Brazil, Egypt, India and Indonesia, Donahue said.
The chamber also recently proposed a new Transatlantic Economic and Trade Pact with the European Union that would eliminate tariffs on goods.
Donahue urged Congress to renew Trade Promotion Authority for the president so U.S. negotiators have the ability to strike deals with foreign governments knowing that Congress can only approve or disapprove them without amendments.
And he called on lawmakers to grant permanent normal trade relations status to Russia so that U.S. businesses can get the full benefit of Russia's entry into the World Trade Organization, which has rules for countries on how to address their trade disputes.
"As long as we have a way to adjudicate our differences it usually works out fine. That's why we want Russia in the WTO. It puts them under the same rules. And it puts us in a position to maintain our trade relations," he told reporters.
The chamber is also pushing Congress to pass legislation that would make it more difficult for rogue foreign Websites to sell counterfeit goods in the United States over the Internet.
"If the things we're talking about were going on in a store down the street, the police would go in and arrest them," Donahue said in response to question.
Asked if conditions are ripe for U.S. manufacturers to bring back more production from overseas, Donahue said that 20 percent of jobs lost in recent decades are due to improved supply chain techniques and automation that make plants more efficient. Progress on efficiency can't be rolled back to create jobs, so the country needs to expand manufacturing opportunities, he said.
The drop in the price of natural gas due to discoveries of domestic reserves will help bring a lot of the chemical industry back onshore, he added.
The best way to attract more manufacturers to operate plants in the United States is to lower the corporate tax rate, Bruce Josten, the chamber's executive vice president for government affairs, said. — Eric Kulisch