The ChamberPost

Policies to Date Have Not Produced Sufficiently Strong Growth

by Blair Latoff

Our Chief Economist, Dr. Martin Regalia, issued the following statement today on data showing that U.S. economic growth slowed to an annual rate of 2.4% in the second quarter of this year from a revised first quarter growth rate of 3.7%:

The data for real growth released today confirms the belief that the economy is slowing sharply.

The data also contained revisions to the last three years' data. These revisions showed stronger growth last quarter than previously reported but much slower growth in the last half of last year. It appears that the recession was even worse than previously thought. Thus, while the recession was somewhat deeper than originally thought, the recovery was also much more tepid that previously thought and is slowing rather than accelerating.

These data are a clear indication that the policies to date have not produced sufficiently strong growth.

A Chamber Fixation

by Brad Peck

It is not clear who in the business community actually reads Steve Pearlstein’s columns in the Washington Post -- but it is clear that he thinks his anti-business friends will applaud any time he takes a smack at the U.S. Chamber. In this world of “page views at any cost” he seems fixated on driving “progressive” and organized labor readers by fixating on us whenever he gets a chance.

In today’s episode we find Pearlstein mocking the banners on the front of our building —the "J-O-B-S" banners that suggests that in this time of persistent unemployment perhaps we should be focused on policies which create jobs. Would seem to make sense, right?  But you have to remember this is the guy the other day who suggested we should go ahead and jack up taxes on the "rich" next year because it would "only reduce employment by 300,000 in 2012." Right, that guy.

Pearlstein then suggests “If Chamber President Tom Donohue wants to round up those responsible for the lack of job growth in this country, all he has to do is call a meeting of his board of directors. “

Oh, wait, I know this one.  You see we talk to our members a lot, big and small, sole-proprietorships to multi-national corporations and when we ask when we ask: "What will it take to create jobs?"  This is what we hear:

What are my taxes going to be next year?

What are my health care requirements going to be next year?

What are the capital markets going to look like next year?  Will I be able to get the money I need?

What are my OSHA rules going to be next year?

Are my workers going to be coerced into a union they don’t want?

What is energy going to cost?

Is the government going to encourage me into starting projects that they themselves are going to later kill or allow to get stuck in green tape?

In short, they are asking: before I plan for the future what are the new rules going to be governing every single aspect of my business? They don’t know the answers, we don’t know the answers, and Pearlstein sure as hell doesn’t know the answers; because no one knows the answers.

The other week Pearlstein chalked this up as typical business carping about regulation, and that Americans can easily respond “creatively, even profitably, to reasonable regulation.” Apparently he has succumbed to the notion that because Congress has passed big, important, historic legislation that they have somehow created a clear, concise, easy-to-follow roadmap to Big Rock Candy Mountain.

The reality is that Congress passes mostly ideas and then the ideas are turned into regulation later on, at the rate of 10 pages of regulation for every one statute. So remember back to what the health care bill looked liked stacked on a desk. Got it in your head?  Now put a stack ten times higher next to it, with pages that will be slowly filled in. There is business' health care map.  Now do the same with the financial regulation bill and just for the heck of it throw in Waxman-Markey.

A second reality is that some of the ideas that Congress passes are, brace yourself, bad. Like really bad, terrible even.  Let’s take the 1099 filing requirements in the health care bill. And for the sake of impartiality let’s quote the IRS’s National Taxpayer Advocate: There is “…concern that a new reporting requirement contained in the Patient Protection and Affordable Care Act may impose significant compliance burdens on businesses…the burdens may turn out to be disproportionate as compared with any resulting improvement in tax compliance.” See?  A bad idea.  So the Chamber says, hey, maybe we shouldn’t do the bad idea?  For this Pearlstein calls us whiny.

A third reality is that Administration policy is also all over the place. Here is EPA head Lisa Jackson last year talking about the problems with regulating CO2 emissions under the Clean Air Act: “Legislation is so important because it will combine the most efficient, most economy-wide, least costly, least disruptive way to deal with carbon dioxide pollution” See? Even the government itself thinks it’s a bad idea. So again, the Chamber says, hey, maybe we shouldn’t do the bad idea? 

We did it officially this time, and yesterday the EPA said “nah, we're cool with the least efficient, most costly, and most disruptive way.” (I paraphrase). In reality Jackson said:

“Defenders of the status quo will try to slow our efforts to get America running on clean energy. A better solution would be to join the vast majority of the American people who want to see more green jobs, more clean energy innovation and an end to the oil addiction that pollutes our planet and jeopardizes our national security.”

Ok, I am pretty sure the first draft of this read “Status quo, corporation, special-interest, swiftboat, Karl Rove, denier, denier, denier,” before they wordsmithed it up a bit. But let’s ignore the Ministry of Propaganda structure for a moment, when exactly did the EPA’s mission expand to include energy policy, labor policy, and national security? Even Pearlstein has to admit that when every single part of the federal government feels that they are the cop on every beat this is a serious problem. I don’t know about you, but when I turn the corner and see a street full of police, and it looks like some bad foo is about to go down, I turn right back around even if guilty of nothing at all. We think the economy may be turning a corner, but businesses and consumers have taken a look at the street in front of them and are thinking of turning back around. 

Back to Pearlstein: “It is only in the world of Chamber of Commerce propaganda that businesses exist to create jobs. In the real world, businesses exist to create profits for shareholders, not jobs for workers. That's why they call it capitalism, not job-ism.” It would be easy to suggest that perhaps Pearlstein would feel more comfortable if instead of creating profit businesses existed for society or community – what would those be called? – but, I will pass and let the President handle it:

“I believe government has a critical role” in creating conditions for growth, Obama told the more than 130 participants at the presidential jobs summit. But “true recovery will come from the private sector,"

And then comes the part of his column where the wheels totally come off. Pearlstein blasts the Chamber for not supporting the economic recovery measures from last year and that the only thing we should be saying is thanks instead of promoting our "free-market ideology” and pooh-poohing public-private partnerships.  But, um, here is Tom Donohue at our Jobs Summit:

Eighteen months ago, in the midst of the greatest economic crisis since the Great Depression, the business community worked with Congress and the president to rescue the economy and put Americans back to work. We supported programs to stabilize our financial institutions, bolster key industries, and help the unemployed. Working together, we succeeded in preventing another depression.

Sounds like we a) were pretty supportive; and b) appreciative.  Back to Donohue.

But…although our economy may be growing again, it is not growing nearly fast enough to create the jobs Americans want and need. In fact, if we continue on our current course, we may lose even more jobs and we could end up in a double-dip recession… Very simply, the Congressional majority and the administration took their eyes off the ball. Instead of continuing their partnership with the business community and embracing proven ideas for job creation, they attacked and demonized key industries. They embarked on a course of rapid government expansion, major tax increases, and suffocating regulations—going well beyond what had to be done to keep the economy out of a depression…[their policies have] injected tremendous uncertainty into our economy—and uncertainty is the enemy of investment, growth, and jobs. Banks, investors, companies, small businesses, and consumers are worried. They don’t know what is going to hit them next.

So yes Mr. Pearlstein, the U.S. Chamber is very interested in a public-private partnership. We want the private sector to grow, innovate and create jobs, and we want the public sector to reduce uncertainty and let them.

On EPA’s Failure to Reconsider Endangerment Finding

by Robin Conrad

Today the Environmental Protection Agency’s (EPA’s) denied the U.S. Chamber’s petition to reconsider triggering the Clean Air Act to regulate greenhouse gas emissions.

The U.S. Chamber, policymakers, numerous trade groups, state governments, and businesses throughout the country have collectively raised strong concerns about the significant negative impact EPA’s endangerment finding will have on jobs and local economies.

We are deeply disappointed with the EPA’s failure to reconsider its flawed decision to regulate greenhouse gases under the Clean Air Act. We intend to appeal the ruling.

The Chamber’s petition challenged the wisdom of regulating greenhouse gases under the Clean Air Act, which simply was never intended to regulate something as complex as the problem of climate change. Our petition never claimed that "climate science cannot be trusted," as the EPA misleadingly claims in its release. In fact, the Chamber’s petition for reconsideration was based on the EPA’s own admission that regulating greenhouse gases under the Clean Air Act would result in an "absurd" overregulation of the entire economy.

The Chamber strongly supports efforts to address climate change, and we continue to call for Congress to work through the legislative process, rather than having EPA misapply environmental statues like the Clean Air Act which was not created to regulate greenhouse gas emissions.

Robin Conrad is the executive vice president of the U.S. Chamber’s National Chamber Litigation Center

Already Hundreds of Gulf Jobs Set to Move Overseas due to Obama Moratorium

by Meg Bloomgren

Today’s Houston Chronicle reports that international oil field services company Baker Hughes is relocating hundreds of American jobs overseas as a result of the federal moratorium on offshore energy exploration. 

Baker Hughes CEO Chad Deaton made the announcement yesterday at Rice University that the company will relocate 300 of its 2,100 Gulf-based employees overseas and also move 25 percent of its assets.  Deaton warned that the moratorium and the real uncertainty caused by it could lead to companies moving operations from the Gulf indefinitely in the months ahead.  Deaton said that the moratorium could cost 20,000 jobs directly involved in offshore operations, and 200,000 indirect jobs in the coming years. 

This announcement further demonstrates that the Obama administration’s ill advised decision in late May to put America’s resources in the Gulf under lock and key will have long-term consequences for our nation.  In addition to thousands of jobs lost, the moratorium will mean more oil imports at potentially higher prices to consumers and less economic growth. 

Perhaps as troubling as the existing moratorium in the Gulf of Mexico is legislation being considered in both houses of Congress this week that would only add to the expected job losses caused by the moratorium. In its current form, H.R. 3534, the "Consolidated Land, Energy, and Aquatic Resources Act of 2010" (our Key Vote letter in opposition) would dramatically increase energy taxes and create regulatory conditions that make energy production cost-prohibitive, not just in the Gulf, but throughout the entire country, which would increase U.S. dependence on imported energy and jeopardize thousands of jobs across the U.S.

The U.S. Chamber along with a coalition of Gulf business groups is calling on the Obama Administration to immediately lift the moratorium on jobs and growth in the Gulf of Mexico.  Lend your voice to this effort and send a letter to President Obama and Vice President Biden today.

In Defense of Markets

by Brad Peck

Intrepid legal researcher Sheldon Gilbert sends me:

Law prof Nate Oman has an interesting post titled "Three Defenses of Markets The first two defenses are pretty standard – markets are good because (1) they allocate resources more efficiently than social institutions (the "efficiency" argument), and (2) they are a "locus of choice" (the "libertarian" argument). But Oman raises a third, really intriguing defense of markets that he calls the "pluralism argument" –

...commerce encourages courage, honesty, and fidelity. It encourages cooperation rather than predation. It allows people with widely disparate views of the ultimate ends and purposes of life to peacefully cooperate with one another. Commerce rewards the frugal and the farsighted, while punishing the wastrel and the spendthrift. Commerce produces wealth that then allows the pursuit of good things otherwise not possible. (On this last one, don’t think "economic efficiency." Think Venice and the beautiful art and architecture that its commerce made possible.)

If the Cargo is not Screened, It Does Not Fly

by Adam Salerno

Businesses Reengineering the Supply Chain for 100 Percent Screening

When Congress passed the Implementing Recommendations of the 9/11 Commission Act of 2007, the law mandated that 100 Percent Screening of cargo onboard passenger aircraft ‘commensurate with checked baggage’.  The deadline for that mandate is this weekend, August 1, 2010.  The law seeks to ensure that all 20 million lbs. of cargo is screened in advance of flights for explosive detection prior to transport.  As Douglas Brittin, the Director of Cargo Security at the Transportation Security Administration (TSA) says, “On August 1, if the cargo is not screened, it does not fly”. 

In today’s economy, a vibrant supply chain can ensure that companies have instant access to overnight delivery to nearly 85 percent of the world’s population.  While a changing world dictates new necessities to secure the supply chain, the need for expedited trade is an important priority that must be maintained.  The U.S. Chamber of Commerce recognizes this fact, which is why we support a multi layered risk based approach to security which maximizes effectiveness and minimizes impact on businesses.

As with any unfunded mandate, the private sector was tasked with financing this effort and working with TSA to ensure this goal is accomplished. The cost has been dramatic.  Most air carriers estimate their costs to be in the tens of millions of dollars range. That figure does not include delays or increasing lead time in the supply chain. To add complexity to the issue, the mandate also included all incoming cargo from around the globe be screened. In short, the law forced companies to completely reengineer their supply chain.

To push the mandate out of the confines of the airport, TSA developed the Certified Cargo Screening Program (CCSP).  CCSP allows other trusted shippers in the supply chain to participate in the screening process, by securing their facilities, and the chain of custody from manufacturing to the belly of the aircraft.  This too proved extremely costly for industry, but something that businesses in all modes of transportation have stepped up for.

Once the domestic deadline is hit, the focus will shift to international inbound flights. TSA needs to step forward at this point and begin to recognize foreign screening methods.  Again, because of the nature of the unfunded mandate, it is clear that TSA has not had the resources to pursue this goal yet.  However, programs like the German Aviation Security Program or the newly released European Union Framework 300, Rule 185 are comprehensive programs that mirror the basic fundamentals of the TSA program domestically.  Working with the international community to ensure that our programs are mutually accepted is essential to ensure that businesses are not duplicating an already burdensome process.  

It has been a long and costly road for industry, but with the August 1, 2010 deadline just days away, many are feeling cautiously optimistic that the deadline will be met. Thanks to the ingenuity of the freight forwarders, the airlines, and participants in CCSP, because without their time, effort, and serious investment, a dramatic halt of trade would have become reality. Their investment in security ensured that commerce will continue to move forward at the speed businesses rely on in the air environment.

Trade – Get in the Game

by John Murphy

Third Way has a new report out on How Export Barriers Cost America Jobs, with a specific focus on “non-tariff barriers.” It’s a thoughtful report, and it echoes many points the Chamber made last May in our State of World Trade. Here is their section on trade agreements:

There’s a new global arms race—for trade deals. As President Obama said recently, “if America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.” We must pursue new trade agreements with urgency. Our foreign competitors fully understand the economic and employment benefits of new trade deals, and they are actively negotiating a raft of attractive new market-opening agreements for themselves.

The number of free trade agreements has exploded over the past decade, and these agreements cover an ever-increasing portion of global trade. Almost 400 of these trade deals will be in force by the end of 2010, with many more in development. America’s major international competitors—including China, the EU, India, Japan and Korea—are all aggressively seeking new trade deals with major trading partners. Countries in the rapidly growing Asia-Pacific region have been particularly active in seeking better access and fairer treatment for their exports. In the meantime, America has largely been sitting out of the game. And in this game, standing still means falling behind. This places our companies and workers at severe risk of losing new—and current—export business to foreign competitors whose countries are smashing down barriers to their exports.

At the same time they are seeking fairer treatment for their exports, foreign governments continue to maintain and create obstacles to U.S. exports. These barriers will present increasing disadvantages for our exports as limits on other countries’ exports continue to fall away. Our foreign competitors seem intent on building shiny new expressways to speed their own exports, while continuing to throw up new speed bumps to trade from the United States. America can’t continue to go along for an increasingly bumpy ride.

CalPERS in 3D

by JP Fielder

Last week we sent a letter to the SEC expressing concerns with CalPERS’s plans to influence boards of directors should the SEC move toward a “proxy access” regime. Dubbed the Diverse Director Database (3D program), their plan is to recruit a pool of individuals who satisfy certain undisclosed criteria to be pressed into service as directors of American corporations in the event the SEC adopts this plan. It would effectively make boards accountable to special interest rather than to shareholders, and become yet another source of significant and non-transparent influence on the proxy voting system.

As the letter notes:

• While we believe that it is appropriate and beneficial for shareholders, particularly long-term shareholders, to be actively engaged with corporations, we do have serious concerns when shareholders advance interests unrelated to or adverse to the wellbeing of a company in a manner that lacks transparency to the corporation and to fellow shareholders.
• Directors, who are implicitly or explicitly beholden to an individual, or to a special interest group, may have a conflict of interest with the fiduciary standards that directors must adhere to.
• It is unclear what if any safeguards are in place under the 3D program to ensure that members in the pool of shadow directors adhere to their fiduciary responsibilities, if elected to the Board, and not act in the interest of a particular individual or a specific group.

The Chamber is urging the SEC to review its options for inspecting and regulating the 3D program and other similar programs.

Reading List - Natural Gas, Free Speech and Kindergarten

by Brad Peck

Beige Book Highlights Weariness of Consumers - Sigh.

The Case for $320,000 Kindergarten Teachers - So happy that my son's K teacher rocked.

Natural Gas is So Great. Now Let’s Regulate It Into Submission - For a party that prides itself on navel-gazing, it's amazing how little they listen to themselves.

The Hill’s Hide-and-Seek Hypocrites - see last comment.

and Arthur C. Brooks on the Battle Between Free Enterprise and Big Government via Reason.tv

Digging Up Bad Ideas

by James Gelfand

// Below is my National Journal Health Experts answer to "Will New 'Public Option' Fare Better?"

It's almost as if they want to give the GOP an excuse to make the election even more about health care than it's already going to be... maybe they really do believe that the bill is going to be a net positive in the eyes of voters.

There was no other provision during the legislative debate that was nearly as divisive, or as enraging to the grassroots, as the government-run "option". Even the Blue Dogs balked at the idea of this one (which uses Medicare rates "plus a little"). We know that a plan like this would make everyone else's health care more expensive, and thus end up being the only plan as people were forced to migrate into it... and once it is the only plan, time for all the problems you see in countries with single-payer (have your pick: waiting lines, government rationing, shortages, etc.).

We have been through all the rotten things about this proposal over and over on this blog. See here, or here, or here. It would be a deficit nightmare, as it becomes a gigantic Medicare program covering all Americans (even if forcing doctors to accept artificially low payments is a good way to game a CBO score).Perhaps this proposal is an attempt to rally the despondent base, but it seems more like a political gaffe. Remember the Kaiser polls that repeatedly showed that when you surround this issue with lovey-dovey rhetoric, people are neutral, but as soon as you mention possible consequences of a government-run health plan, people become vastly opposed?

I think the "Repeal and Replace" caucus is going to owe the Progressive Caucus a nice thank-you note for this one.