Both Sides Agree U.S. Needs Jobs for True Economic Recovery
But Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, and Richard Trumka, president of the AFL-CIO, agree on the urgency of creating jobs to get the economy moving forward.
“No priority is more important than putting Americans back to work,” Donohue said Tuesday, January 12, at the chamber’s forum on the state of American business. “We aim to create a new dynamic in this country so that every time a lawmaker is prepared to take a position or cast a vote, he or she first stops and considers—is this going to strengthen free enterprise and create jobs, or will it undermine economic freedom and destroy jobs?”
The message was similar one day earlier when Trumka addressed the National Press Club in Washington.
“President Obama said in his inaugural address that we [need] to create new jobs [and] lay a foundation for growth. Now is the time to make good on those words. It is bad economics and suicidal politics not to aggressively address the job crisis at a time of double-digit unemployment.
“Budget deficits over the medium and long term will be worse if we allow the economy to slide into a long-term stagnation,” Trumka said. “Unemployed workers don’t pay taxes and they don’t go shopping. Businesses without customers don’t hire workers, they don’t invest, and they also don’t pay taxes.”
Donohue said that to create at least 20 million new jobs over the next 10 years, the U.S. needs to double its exports over the next five years and then double them again, rebuild the infrastructure in the U.S., invest in energy—particularly nuclear—expand credit and ease the uncertainty over tax increases as well as health, environmental, labor, legal and fiscal policies.
“Congress, the administration and the states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration,” Donohue said. “That would be a sure-fire recipe for a double-dip recession or worse. We could get back into a mess that makes this recession look like chump change.”
Although he said it flies in the face of strongly held views, Donohue urged that the federal government “seriously consider” maintaining all federal income tax rates at the current level “for the foreseeable future.”
“Taking this bold step would measurably reduce the uncertainties that call into question how quick or how strong our economic recovery will be,” Donohue said.
Among the uncertainties: expected massive tax increases, costly health care mandates, climate change legislation and EPA regulations that could significantly raise energy prices, and financial services legislation that “could choke off access to capital at a time when lending is already tight.
“Add all those uncertainties up and you have no idea what your costs will be,” Donohue said. “Wouldn’t you wait for some clarity, and some common sense, to take hold first” before jumping “into making new investments and hiring?”
Maintaining tax rates at current levels, he said, “would boost investment and jobs by leaving hundreds of billions of dollars in the productive economy.
“It would help small business and their employees succeed, since many small businesses pay their taxes using the personal tax rates,” Donohue said. “If we go ahead with these tax hikes, we will likely end up with even bigger deficits and greater economic misery.”
Trumka, while advocating stronger measures that would aid union organizing, also called for “an agenda for restoring American manufacturing.”
“We cannot be a prosperous middle-class society in a dynamic economy without a healthy manufacturing sector,” Trumka said.
Trumka also agreed with Donohue on the need for pension reform, and that U.S. investments in infrastructure, communications, education and training have lagged.
“We have underinvested in the foundations of our economy, including transportation and communication,” Trumka said. “And we simply cannot continue to skimp on the quality of education we provide to all of our children and expect to lead in the global economy.”
Donohue also advocated “major reforms” in education.
“No economy or society can succeed over the long run if it allows 30 percent of its young people to drop out of high school,” Donohue said. “This fundamental failure tears away at the fabric of the American dream and our nation’s promise of equal opportunity.”
Donohue called for the federal government to remove some of the legal and regulatory roadblocks that delay infrastructure projects, highway improvements and the development of nuclear power and other alternative energy projects.
“The chamber has identified more than 380 specific projects—more than one-third of them wind, solar and other renewable energy projects—that that have been delayed or even killed,” Donohue said. “It is time to end the unnecessary barriers that cost jobs” and prevent infrastructure improvements and projects that would diversify our energy supplies and increase our energy security.
He warned that that the U.S. needs “a bold and aggressive trade policy” or it risks losing jobs as other countries negotiate free trade agreements. “Other countries are busy making their own arrangements with each other and leaving us in the dust.”
The chamber has calculated that if the U.S. does not approve pending trade agreements with South Korea, Colombia and Panama that were negotiated during the George W. Bush administration, the U.S. will lose thousands of jobs—350,000 alone from not ratifying the South Korean agreement.
Indeed, the Obama administration has estimated that each percentage point increase in U.S. exports to Asia would add 250,000 jobs in the U.S.
It is Donohue’s view that neither climate change policy nor the unions’ efforts to obtain card-check legislation to improve its organizing will pass in 2010. He also said that the chamber will not let the Environmental Protection Agency go forward with its greenhouse endangerment finding announced last month that would allow the EPA to regulate greenhouse gas from stationary sources.
“We have a number of options available to us,” he said. “We will not let EPA go through with that. We will take appropriate action,” declining, however, to say whether the chamber would file a lawsuit. “Our preference is that Congress tackles climate change and greenhouse gases, not the EPA.”
When it comes to health care, neither Donohue nor Trumka speculated on when or if a final bill would emerge and what it might include.
But both had reservations about the two current bills that the Democrats and the Obama administration are trying to merge into a single bill that both the Senate and House can pass against Republican opposition.
Both health care bills would extend coverage to more than 30 million Americans through an expansion of Medicaid, put in place mandates that individuals must buy health insurance, provide federal subsidies to help lower-income people to purchase insurance, and end insurance industry practices of denying health coverage to people with pre-existing conditions.
“The chamber supports a health care reform bill, but, unfortunately, the legislation emerging is not reform,” said Donohue, because it “undermines the private, employer-based system while doing nothing to rein in costs. It is a prescription for fiscal insolvency and an eventual government takeover of American health care.”
Trumka also said the Democratic party is in danger of losing the majority it holds in both chambers and is inviting a repeat of 1994 when it lost its majority hold in the House.
“Politicians who think that working people have it too good—too much health care, too much Social Security and Medicare, and too much power on the job—are inviting a repeat of 1994,” he said.
“In 2010, our elected leaders must choose between continuing the policies of the past or striking out on a new economic course for America,” Trumka said. “Eleven days into the decade and one year into the Obama administration, our nation stands poised between the failed policies of the past and the hopes for a better future. This is a moment that cries out for political courage, and we’re not seeing enough of it.”