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IntroductionThese are difficult and troubling times for millions of American workers, families, and businesses.
The nation is in a recession. Credit remains tight, jobs are scarce, and confidence is low. Basic industries, such as housing and autos, have yet to find the bottom of their downward spirals. Some stability has been restored to our financial system, but it remains in precarious health. The global economic slowdown has begun to shrink our export markets while helping fan the flames of isolationism both at home and abroad. While there is every reason for concern, there is no cause for despair. Americans have an opportunity to emerge from these difficulties with a more prosperous economy, a stronger nation, and a renewed reputation as a global leader. We can do this by pragmatically and sensibly fixing what is broken and by not mindlessly breaking what already works. This means immediately enacting an economic stimulus package followed by significantly reforming our financial regulations, overhauling our public schools and workforce training programs, fixing our broken legal culture, and making major investments in infrastructure, energy, and technology. It also means preserving and renewing the fundamental strengths of our free enterprise system—a system that will recover and thrive again if taxes and regulations are reasonable, trading markets are open, and the entrepreneurial spirit to take a risk is encouraged.
Economic recovery and jobs must come first in 2009. The U.S. Chamber of Commerce stands ready to join with our new leaders and all Americans to revitalize the greatest engine of growth and opportunity the world has ever known—American free enterprise. Finding the Economic BottomThere will, however, be months of painful economic decline before we reach the bottom of the current downturn.
All four of the primary indicators that the National Bureau of Economic Research uses to time business cycles—business sales, industrial production, nonfarm payrolls, and personal income—have fallen below the depths reached during the last two recessions. The Chamber expects the fourth quarter of 2008 to show a GDP decline of at least 5%. GDP in the first quarter of 2009 will likely shrink by more than 3%. The economy should reach its low point around the middle of the year, but further problems in credit markets or other external shocks may prolong the recession into the second half of 2009. Joblessness will continue to increase, with the unemployment rate reaching 8.5% to 9% later in the year.
The housing market has been a persistent drag on the economy since 2006. Congress and the new president can address this with a targeted program to keep responsible mortgage holders in their homes and to clear the inventory of existing homes with temporary tax credits, thus speeding up the revival of new construction. For much of 2008, trade was the bright spot, with net exports accounting for most of the growth in GDP earlier in the year. We must continue to push for more access to foreign markets, fight isolationism, and complete a multilateral Doha trade pact. Corporate profits are softening as the economy slows. With product demand weak, businesses have little reason to invest, and, at some companies, internal cash flow appears to have been used defensively in stock repurchases. Simply put, families, businesses, and banks that are fortunate to have cash are sitting on it. We must restore credit, confidence, consumption, and responsible risk taking to restart growth in the U.S. economy. Priorities for the “First 100 Days”Economic recovery should be the nation’s foremost domestic priority in 2009. To achieve recovery, the nation should unite behind our new president and enact a significant stimulus package that not only stops the economic bleeding and keeps Americans working, but helps create the conditions for economic growth and job creation.
This package should include effective measures to unlock credit, create temporary incentives to reduce debt levels through an orderly deleveraging process in the economy, and spur investment and consumption. Quick-turnaround infrastructure projects in transportation, energy, and communications should be a centerpiece of the plan. We must bolster public and private sector safety nets to see our fellow citizens through difficult times. Government assistance programs should be fully funded. We must also take the necessary steps so that our businesses can keep people employed and continue to provide the best possible level of benefits to American workers. Our nation and others must resist the temptation to turn inward and enact isolationist policies. We must not forget that higher taxes and trade protectionism were the principal policy responses of governments following the stock market crash of 1929—and the result was the Great Depression. Our leaders should also take to heart the physician’s Hippocratic Oath to “first, do no harm” when considering policies that impact the economy and jobs. Should the new administration try to do too much too fast and pile a mountain of heavy burdens on top of companies, the whole system that keeps Americans employed, delivers health and retirement benefits, and generates revenues for government could topple.
Each proposal, regardless of its popularity or political appeal, should be examined through a jobs and recovery prism. If it adds to the burdens on struggling employers, it should be delayed, changed, or rejected. Along With Stimulus, Seize the Opportunity for ReformAs we work to pull our economy out of the ditch, let us also seize the opportunity to enact broad and deep reforms that address the most pressing problems facing our country. To ensure that all Americans have an opportunity to compete and succeed in the 21st century, we must do the following:
Subsequent sections of this report contain specific proposals to meet the challenges of recovery and our global competitiveness. They comprise the Chamber’s Agenda for Recovery, Jobs, and Growth, which we will vigorously advance throughout the year.
Business and the New American GovernmentDuring the campaign and since the election, President-elect Barack Obama has spoken forcefully about the need for action on many of the challenges that the Chamber has identified as critical to the nation’s future. Since the election, we have offered detailed policy ideas to the president-elect on these issues.
We will support enactment of a major stimulus package and expect to find much common ground on issues such as rebuilding America’s infrastructure, expanding our energy supply, improving our schools, and reforming the regulations governing our capital markets. Nevertheless, when necessary, the Chamber will challenge proposals advocated in Congress or by the new administration that would damage the economy’s capacity to recover, grow, and globally compete. For example, we will strongly oppose the elimination of secret ballots and forced arbitration in union organizing drives, new workplace regulations that would destroy jobs, unworkable environmental and health care mandates, and isolationist policies that shut off trade. We are building major new grassroots, communications, and political operations to fight for American enterprise on many critical issues. We will activate these systems to support our incoming leaders when we can and oppose them when we must. How can the Chamber make these commitments during a time of economic distress for so many businesses? We are fortunate to be a broad-based organization with a proven track record of success and an effective membership operation. This enables us to reach across all sectors and industries to attract the necessary resources for our efforts.
Consequently, at the Chamber we are growing—not retrenching. While carefully managing our costs, we are expanding our agenda and organizational capacities—not shrinking them. There’s no question that the new political landscape in Washington will make it more difficult for business to prevail on some policy matters. The struggling economy will make it harder for some members to support our work.
Yet since the elections, our members have been telling us loud and clear that if there was ever a time when a strong, aggressive, and well-financed U.S. Chamber of Commerce was needed in Washington and around the world, this is the time. America has always been a can-do nation—one that embraces change and relishes responsible risk. While responding to new conditions in a changing world, we must never lose these timeless strengths. Amidst our current difficulties can come a new resolve to get the country moving again; to lead change, rather than run from it; and, as important as anything else, to be the ones who are willing to take a risk, to try a new idea, to sometimes fail, but to get up off the floor to try again. In a tough economy and new political environment, we will heed our own advice and take the necessary risks in representing American business.
The reason is simple. Despite all its foibles, mistakes, and occasional excesses, the American business community is the one institution in our society that, throughout our history, has really worked. It’s the institution that continually reinvents itself, develops new industries and markets, and creates jobs and unrivaled opportunities for the American people. The public sector, as well as charities and many interest groups, consumes wealth—and we support that. But let’s not overlook the 25 million small, medium, and large businesses that actually create the wealth. During the current crisis, government has acted properly to prevent a systemwide economic collapse. Yet once markets are fully stabilized, credit and confidence have been restored, and positive growth has begun, government should return to its traditional role. Taxpayer dollars used to back financial rescue should be returned to the Treasury. The nation should renew its commitment to fiscal and budgetary responsibility. Above all, we must preserve and strengthen the American private sector and the risk-taking ingenuity of our businesses, entrepreneurs, and workers. If we fail to do so and resort to permanent government command and control, the economic system that has served us so well for so long could be irreparably damaged, and our children and grandchildren will pay an extraordinary price. Thomas J. Donohue President and CEO U.S. Chamber of Commerce Washington, D.C. January 2009 |
January 7 Press Briefing
January 8: Outlook 2009: The State of American Business The State of American Business 2009 Download a printable version (PDF) The State of American Business, by Thomas J. Donohue The Chamber Agenda for Recovery, Jobs, and Growth
About the U.S. Chamber of Commerce More Resources |
