The ChamberPost

Common Sense Health Reform - Please and Thank You

by Brad Peck

I spent yesterday morning with a good child visiting a good doctor at a good clinic so here is my message to Congress -- please don't screw that up. You can generate your own message to Congress here and join the many others who have already done so, as reported this morning in the Politico's Pulse:

The U.S. Chamber of Commerce launched a six-figure print ad campaign in nine targeted states thanking key senators for raising concerns about government-run health care and asking others to support common sense health reform. The ads urge voters to contact their senators through a Chamber website that has generated more than 50,000 letters, the Chamber says. Check out the ads here.

Education and Stimulus

by Brad Peck

The National Journal's new Education Experts blog fired up on Monday with the question: "What's The Best Use Of Stimulus Money?" Read all of the responses here, two snips below:

Margaret Spellings, Former Secretary, U.S. Department of Education

It’s true that some states are facing state budget woes, and stimulus dollars will inevitably be used to stave off serious cuts—the best example of this is California. But we should not excuse states from advancing reform on this basis. The biggest impediment to reform is—and has always been—political will, not money. Congress and the Administration have sent two messages with this unprecedented level of federal funding: fill in budget gaps, and reform education. There’s been lots of talk about how to fulfill both priorities at once. But the answer isn’t really about the money and what the fiscal situation looks like in each state. The reality is that Congress punted the issue to state and local policymakers to make these decisions, as almost all of the stimulus dollars are awarded by formula to states and districts. If local leaders have the political will to stand up to the status quo and really spend money on reform-oriented policies, then it’s within their ability to do so.

Arthur J. Rothkopf, Senior Vice President, U.S. Chamber of Commerce

There is no doubt that education stimulus funding will be used by the states that are in great financial difficulty to prevent large-scale teacher layoffs and to offset some of the draconian cuts in education spending created by the recession. At the same time, Congress intended through the "assurances" required of states before they are to receive State Fiscal Stabilization funds, that they agree to significant reform efforts. These assurances include creating a robust K-16 data system; developing college and career-ready standards, and the assessments to accompany these standards; improving teacher effectiveness and placing our best teachers in our most challenging schools; and intervening effectively in chronically low-performing schools. Secretary Duncan is doing everything he can to see that these reform measures are adopted but the jury is out as to what is actually happening on the ground...The states must be able to "walk and chew gum" at the same time. They need to use the stimulus funding to offset the effects of the recession and at the same time, bring about needed reforms in our public school system.

Invention and Inspiration

by James Sneeringer

A story caught my eye today and it was amazing how quickly I saw the connections to some of the big issues that the Chamber is working on right now. The blog TechCrunch recently posted about the MIT Eurekafest, an annual event held by the Massachusetts Institute of Technology to showcase inventions by high school students from around the country.

Some of the inventions addressed big problems, like clean drinking water in rural areas or sensing for the blind. Others addressed problems maybe not so big, but annoying nonetheless--like keeping track of computer cords. But the common thread is that every team combined creativity with strong technical skills to build a prototype that solves a problem.

These inventions highlight the importance of math and science education in the U.S. A creative idea is good, but unless the inventor is able to do the engineering to actually produce a working product, it won't solve any real problems. And once the prototype is done, what is the next step? One lonely filter is not going to clean much water.

The product needs to be produced. This takes even more engineering, but it also takes money--financing from investors to pay for the new factory, to hire staff, to buy raw materials and to pay for shipping and marketing. And the intellectual property of the new device needs to be protected so that the inventor has a chance to make their idea work.

It's not hard to see the Chamber's entire growth and prosperity agenda in the story of one student inventing a new kind of water filter. They will need energy to run the factory. They will need smart workers to build the product. They will look outside the U.S. to find customers. They'll fear becoming the target of a lawsuit. They'll have to manage a pile of regulations and paperwork.

The story of a high school student with a great idea is the story of free enterprise in America. Kids dream of having the opportunity to make a difference, to invent a new solution, and to change the world with it. Here at the Chamber we work on a lot of highly detailed policy, but this essential story is what inspires us. Maybe one of these kids will start the next GE or Google or FedEx. We'd like them to have the best shot they can get.

How Do Unions Really Feel About Arbitration?

by Ted Phlegar

Labor's top priority, the misnamed Employee Free Choice Act, has three core components; card check organizing, increased employer penalties and compulsory interest arbitration for collective bargaining agreements. While all of these provisions would be harmful to job creation and economic recovery, interest arbitration poses a special threat. Yet while the unions seem intent on forcing this process on employers, more evidence that they are not all that interested when it comes to their business.

No International Union has ever submitted its very future – its membership, its organizing jurisdiction, and its financial resources – to arbitration.

[Unite Here President John W. Wilhelm’s May 1, 2009 letter to SEIU President Andy Stern] 
 
I am responding to your latest in a long line of calls to solve the UNITE HERE – SEIU dispute through binding arbitration... No International Union would agree to put its future members, its jurisdiction, and assets in the hands of an arbitrator.

[Unite Here President John W. Wilhelm’s June 15, 2009 letter to SEIU President Andy Stern]

The Chamber has always said that EFCA’s binding interest arbitration provision gives an enormous advantage to unions, whose interest in a contract is primarily collecting dues, at the expense of employers, who would have to pay the bills. At least one union seems to understand this imbalance, and has offered up an apt analogy.

Suppose a burglar broke into your house, stole your property, and demanded ransom.  Then the burglar contacts you to demand that a third party be given the right to divide up the stolen property. Would anyone accept such an offer?   You and [Bruce] Raynor plotted to break up UNITE HERE, remove assets from the Union’s control, and organize in UNITE HERE’s traditional industry jurisdictions.  Having made this attempted burglary you now want to have a third party divide up the spoils.  Only UNITE HERE would be at risk in such an arbitration – SEIU would have no risk.  No victim of a theft would ever agree to such a proposition.  No International Union would agree to put its future members, its jurisdiction, and assets in the hands of an arbitrator.

[Unite Here President John W. Wilhelm’s June 15, 2009 letter to SEIU President Andy Stern]

Thomas Friedman is Wrong

by Brad Peck

And it isn't often that my computer types those words, but resignation is not revolution:

There is much in the House cap-and-trade energy bill that just passed that I absolutely hate. It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess. I detest it. Now let’s get it passed in the Senate and make it law.

Why? Because, for all its flaws, this bill is the first comprehensive attempt by America to mitigate climate change by putting a price on carbon emissions.

The other option of course would have been to create a better bill and not force a vote on a bad one. So what is the goal:

More important, my gut tells me that if the U.S. government puts a price on carbon, even a weak one, it will usher in a new mind-set among consumers, investors, farmers, innovators and entrepreneurs that in time will make a big difference...[Obama] is going to have to mobilize the whole country to pressure the Senate — by educating Americans, with speech after speech, about the opportunities and necessities of a serious climate/energy bill.

Or in the absence of a serious bill, this one apparently. Friedman is correct that we need to create a mind-set among all Americans in order to effectively reduce emissions of greenhouse gases. Indeed the Administration needs to mobilize the country to decide our climate/energy future, but trying to force through a "weak...complicated...appalling...mess" is not the way to do so. It is truly "pathetic that we couldn't do better;" but even more pathetic is the notion that we can't do better.  We can, and we must, have legislation which provides the energy we need and doesn't kick an already down economy.

Transatlantic Recovery Together

by Gary Litman

President Obama met with German Chancellor Angela Merkel last week. The Chancellor expressed her strong belief that in times of economic crisis transatlantic regulatory cooperation can set more efficient rules for the capital markets and reduce the costs of bureaucratic burden in the "real" economy.

Just recently, the European Council and the U.S. Administration have simultaneously unveiled a whole host of proposals in response to the economic downturn. As these proposals make their way through Congress and the European Parliament, they will ultimately lead to regulatory restructuring at many levels. Will companies find the new rules a helpful framework to restore confidence in the markets? Or will governments create a minefield of incompatible demands by turbocharged regulators on the two sides of the Atlantic?
 
Chancellor Merkel may be still fuming that her views on hedge funds were largely dismissed three ago. However, frustration is not a good guide for legislation. The turmoil in the markets has exposed their complexity, and the diversity of players and interests. Lumping everyone on the market together as one "evil" financial sector driven by animal instincts will just dampen the very markets that we all want to see revived.

There is some hope that the imperative of compatible rules is getting the recognition is deserves. Last week, the House Financial Services Subcommittee on Capital Markets demonstrated a real effort to accomplish regulatory cooperation. The Subcommittee held a hearing on systemic risk and insurance where Peter Skinner, a Member of the European Parliament and lead sponsor of European insurance law reform, testified about the need for regulatory cooperation in the insurance sector. He echoed the sentiment given at the US Chamber insurance regulatory dialogue earlier this year that responses from the EU and the U.S. must not be disjointed.

Skinner noted that "cooperation between the EU and the US... does not imply for the rules and the principles to be the same, but rather to be recognized as similar in terms of their effect and outcome. No joint approach means no cooperation and this means lessening the chances of a quicker economic recovery."
 
With emerging new laws and regulatory proposals affecting all aspects of the financial services industry, including insurance and reinsurance issues, it is critically important for a continued dialogue between legislators in the U.S. Congress and the European Parliament, as well as between federal agencies and regulators.
 
Transatlantic markets are central to economic relations between the US and EU and a strong and coordinated policy approach must be taken on both sides of the Atlantic. If the U.S. and Europe go their separate ways, recovery will be much slower. Politicians need to commit themselves to grappling with the international implications of their actions. Let's hope that Obama and Merkel take cooperation commitments beyond slogans and smiles. As both of them meet again in the G8 format next week, they can lead others to shoulder the responsibility for pulling out of the crisis together.

Confusion and Some Clarity on Health Reform

by JP Fielder

Randy Johnson on Washington Journal talks about employer mandates, government run universal health care and other health reform issues.

A Trinity of Issues for the SEC

by Tom Quaadman

Do bad things happen in threes? Well, today, the SEC is expected to approve a measure eliminating the broker discretionary vote, while taking a vote to issue, in the near future, regulations for say on pay votes for executive compensation of TARP companies, as well as revamped disclosure rules for corporate governance and executive compensation. Let's look at what the SEC is going to do and see if the saying holds up.

The elimination of the broker vote is disappointing at best and a move to embolden activist investors at worst. Currently, brokers can cast shares that they hold, if they don't receive instructions from the owners, for routine items.  Traditionally, uncontested elections of public company directors were considered "routine" matters, which brokers can vote on, but today's action makes the vote a "non-routine" matter, which brokers can't vote on. Eliminating the ability of brokers to vote uninstructed shares in uncontested elections will diminish the retail voice. Smaller mom and pop shareholders will be disenfranchised and large institutional shareholders will wield disproportionate power. Simply put, large activist investors get to jump to the head of the line. Instead, the SEC should take a holistic view of all market participants in examining and improving broader proxy voting participation. Putting a set of special interests ahead of small retail investors is just not how the system should work.

Back in February, the Chamber wrote to Secretary Geithner asking that say on pay be advisory, periodic and provide an opt-out through a super-majority vote by shareholders. Non-binding allows shareholders to express their opinion, but allow directors to retain the ultimate decision making authority. By periodic, we meant three years which is the average life of a corporate compensation plan. Allowing these votes to happen on a three year cycle reduces the costs to the company (and ultimately the investor and consumer). An opt-out clause would allow a 2/3 vote of shareholders to forestall any further say on pay resolutions for 5 years. We believe that these are sensible principles that will allow shareholders, directors and management to craft the best system for a company.

In the same letter to Secretary Geithner, the Chamber stated that corporate governance and executive compensation policies should be rooted in long-term shareholder growth and profitability, while not constraining reasonable risk taking and innovation. The Chamber believes that strong corporate governance is a cornerstone of our economy. Additionally, any new proposed disclosures must provide meaningful disclosure and not subject businesses to unintended consequences that will place them at a competitive disadvantage.

So for those keeping score, the broker vote decision is bad, while the say on pay and new disclosure rules are incompletes until we see the fine print. Bad things may happen in three's, but if things work out we may be singing Meatloaf's favorite line—two out of three ain't bad.

Natural Gas Resource Base

by Walter Shaub

As reported by the American Gas Association, the U.S. natural gas resource base is larger than previously estimated, with 1,525 trillion cubic feet (Tcf) in total natural gas resources as of the end of 2006—the equivalent of 82 years of production at current rates, according to a biennial report on long-range supplies of natural gas released June 18 by the Potential Gas Committee (PGC), Colorado School of Mines.

According to the PGC, this is the largest volumetric increase and percentage increase in the PGC's biennial estimates since 1968. Much of the resource growth can be attributed to U.S. onshore areas where success in extracting natural gas from shales and coal seams has resulted in revised assessments of existing resource plays and inclusion of new opportunities. This has been the case in numerous Mid-Continent production areas such as the Arkoma, Anadarko, Fort Worth and Permian basins. According to the report, additional growth in the resource base has also resulted from new data from the Gulf Coast, Rocky Mountain and Pacific areas.

The PGC report indicates the total size of the resource base has increased since the committee's last report at year-end 2004, even though 36 Tcf of natural gas have been drawn down since that time.

Factoring in the past two years of production, the PGC actually has increased its estimate of the U.S. natural gas resource base with each successive report over the last 16 years, primarily due to new geologic information, technology developments and changing economics. 

The PGC is comprised of members from the natural gas industry, government agencies and academic institutions. The Committee functions independently, but with the guidance and technical assistance of the Potential Gas Agency of the Colorado School of Mines. More details are available at website.

UFT, Green Dot Schools Reach Labor Agreement

by Domenic Giandomenico
 
Earlier this week, the United Federation of Teachers and the Green Dot Public Schools, one of the nation’s leading charter school organizations, reached a labor agreement. Terms of the agreement include an untimed "professional day", which requires that teachers be on-site during the student day, staff meetings, professional development, and preparation time.  In return, teachers receive a 14% pay premium over other public schools in New York City.

The agreement is notable for how it places value on the voice of the teacher. It has long been argued that charter schools are nothing more than a "union breaker" or a way to get around existing teacher contracts. This agreement should send a signal across the nation that charter schools and unions can co-exist. Simply by starting from scratch without an antiquated labor agreement, Green Dot Public Schools and UFT were able to reach an agreement that met the needs of each side while still giving Green Dot Public Schools the ability to recruit and maintain a high quality team of educators.