U.S. Chamber economic forecast: slowly improving with debt threat
January 11, 2013
The nation faces a balancing act between the need to spend more on infrastructure while finally addressing the ballooning national debt, which the nation’s top business lobbyist calls the biggest single threat to the U.S. economic future.
In his annual State of American Business address yesterday, U.S. Chamber of Commerce President and CEO Thomas J. Donohue urged Washington to finally tackle the enormous fiscal challenges and build a new prosperity that offers opportunity for all Americans.
“The imperative of economic growth should not be an afterthought. It must be Job One,” Donohue said. “As a nation and a people, we must finally face up to the single biggest threat to our economic future—and that is our exploding national debt, driven by runaway deficit spending, changing demographics, and unsustainable entitlements.
Congress and the administration must make this a priority, Donohue said, because economic growth will not be strong enough to solve all of our problems. “But without growth, we will not be able to solve any of them,” Donohue warned.
Donohue also called for a slight increase in the federal tax on fuel (currently 18.4 cents on gasoline, 23.4 cents on diesel, unchanged since 1993). He said it is time to “quit fooling around” and sufficiently finance and Highway Trust Fund, which has been supplemented by revenue from the general treasury each year since 2008.
“You don’t need a lot,” Donohue said during a press conference after his speech. “You do a little bit a year for a couple years and it’ll make a big difference.”
Buoyed by recoveries in the all-importing housing and automotive sectors, the nation is in recovery and will not fall back into recession, Donohue predicted.
The Chamber is forecasting growth of 1.5-to-1.75 percent for the first half of the year, gradually accelerating to 2.5 percent by the end of 2013.
In his address, Donohue unveiled the Chamber’s 2013 American Jobs and Growth Agenda. It’s a five-point plan to help generate stronger economic growth by producing more American energy, expanding American trade, modernizing our regulatory system, reforming immigration and slowing growth of runaway spending through cuts in entitlement programs and an overhaul of the tax code.
“The over-riding objective of this ambitious plan is to generate stronger economic growth in order to create jobs, lift incomes, and expand opportunity for all Americans,” he said. “America needs big solutions so it’s time to put the smallness of politics aside. We call upon all of America’s leaders in and out of government to put country first.”
Donohue, a veteran Washington power broker, says he has “no illusions” that putting our country on a sound and responsible fiscal course will be easy.
“Our government is divided and conflicted because the American people are divided and conflicted,” he says. “But we cannot ignore this crisis any longer. Nor can our leaders.”
With a stopgap two-year highway bill in place through 2014 with federal spending of $55 billion annually for infrastructure, Donohue did not take a hiatus from publicly calling for greater spending on the nation’s highways and bridges.
“Anyone who knows me or the Chamber, knows how deeply committed we are to rebuilding America’s infrastructure,” said Donohue, a former president of the American Trucking Associations. “If we don’t expand our infrastructure and make it more efficient and seamless, we can’t grow our economy. Congress and the president took some positive steps last year and we must build on them in 2013.”
Behind the scenes, the Chamber still is leading the charge to improve the quality of America’s infrastructure—transportation, energy, or water networks—all of which directly impact the nation’s ability to compete in the global economy.
In fact, the Chamber is hosting its first “national transportation infrastructure summit” in Washington next month. Rep. Bill Shuster, R-Pa., the new chairman of the House Transportation and Infrastructure Committee, is one of the invited speakers.
The Chamber feels that by modernizing our national infrastructure, the U.S. can improve commercial efficiency, increase its competitiveness in the global economy, and create much-needed jobs in the near term.
It recently reported that over two years, one dollar spent on infrastructure construction produces roughly twice as much ($1.92) in direct and indirect economic output.
Increasing public and private investment in roads, bridges and public transportation could save nearly two billion hours in travel time, and save every family over $1,000 per year in fuel and other savings.
Successful construction of the 351 energy projects identified in the Project No Project inventory could produce a $1.1 trillion short-term boost to the economy and create 1.9 million jobs annually, according to the Chamber.
Approximately 56 percent of all crude petroleum, 15 percent of all coal, and 24 percent of other fuel oils are transported over the nation’s inland waterways. The Chamber says that in 2010, more than 76 percent of America’s international exports reach global markets though marine ports.
Donohue called the nation’s latest official unemployment figures (7.8 percent) “mediocre.” He noted that only 63 percent of the U.S. eligible workforce is even participating. Donohue said he doesn’t see much improvement in unemployment through the year. All told, 23 million Americans are unemployed, underemployed, or have stopped looking for work. A record 47 million people are poor enough to be on food stamps.
“So while our economy may be growing, it is fragile growth and not nearly strong enough to create the jobs Americans need or to expand their incomes,” Donohue said.
As important as economic growth is, Donohue concluded, “We can’t grow our way out of this problem and we certainly can’t tax our way out.”
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