WASHINGTON—The world’s largest business federation is signaling cautious optimism about the nation’s economic recovery, putting down fears of a double dip recession, at least for now.
In the annual State of American Business address on Tuesday, Jan. 11, U.S. Chamber of Commerce President and CEO Thomas Donohue said he expects the economy to grow by 3.2 percent this year and “pick up steam as the year progresses.”
He is also estimating the net creation of 2.4 million to 2.6 million new jobs by the end of the year, although this number is still not likely to get unemployment below 8 percent.
After a rocky 2010, the relationship between the Chamber and the White House looked better. Of the chamber’s priorities, three of four appeared to align closely with principles advanced by the Obama administration: reining in the national debt, rebuilding America’s economic foundation, and doubling exports by 2015.
Tensions between Democrats and the chamber, which aligns itself with the interests of corporations, grew during the elections. President Obama, congressional Democrats, and their policies on health care and financial reform came under heated attack by an estimated $35 million worth of campaign ads funded by the business association.
Obama returned fire by accusing the chamber of funneling foreign money into campaign races through its use of laws that allow its sources of donations to be kept secret, an accusation Donahue vehemently denied.
Donahue said Tuesday it has never been personal with anyone in the government, emphasizing that disagreements are on matters of issues, or the law.
“We have supported them on an extraordinary number of issues, including, by the way, the stimulus question, which a lot of our members didn’t think was important,” he added.
The recent appointments of Gene Sperling, an economist who has worked with Goldman Sachs, to replace Larry Summers as head of the National Economic Council, and William Daley, a JPMorgan Chase executive, as the powerful White House chief of staff, were welcomed by the chamber.
“I do think the new people will be helpful. Bill Delay is a real pro. We have worked with him for many years. And Sperling has done this before and knows the people,” said Donahue.
As part of a strategy of the White House to patch relations with the business community and try to get the economy moving, Obama accepted an invitation to address the country’s most powerful business lobby on Feb. 7.
While the chamber has agreed to cooperate with the administration on a number of priorities, a sticking point will likely remain as Donahue maintains vigorous opposition to what he calls a “tsunami” of “excessive regulation” in recent years.
The chamber’s exception to parts of Dodd-Frank, and its unapologetic support of health care repeal is well known, and Tuesday’s speech renewed a commitment to oppose them, and many other regulatory systems.
Donahue told Devin Leonard at Bloomberg Businessweek that the chamber intends to challenge many of the regulations contained in the two pieces of legislation.
“You may not know we have our own law firm,” he told Leonard.
“It’s a public-interest law firm. We sue the federal government of the United States 150 times a year on regulatory issues,” and frequently win, he added.
Donahue insisted Tuesday he is not against regulations; he just has different ideas from Congress about how things should be done. “Our concern is to get it right,” he said.
“If we want to create enough jobs, we must ensure that our nation has the most vibrant, transparent, efficient, and well-regulated capital markets in the world,” Donahue said.
Signaling a significant commitment to national debt reduction, Donahue said the chamber would support strong debt-reduction proposals even if they don’t like all the details.
The president’s debt commission report, released last December by a bipartisan panel, contained a comprehensive package of measures involving taxes, sweeping spending cuts, and entitlement reform. “We want to be part of the solution, not the problem,” said Donahue.
Donahue also promised to support governors in challenging public employee union entitlements, putting blame on unions for forcing states to accumulate massive debt.
There is widespread support among lawmakers and the business community for R&D, infrastructure rebuilding, and a revitalization of education—the problem, Donahue says, is that nobody wants to pay for it.
The powerful business leader suggests that hundreds of billions of dollars in private capital could be leveraged if the government showed a commitment to rebuild and expand roads, bridges, rail, air transport, broadband capacity, water infrastructure, and power generation.
He cited regulatory, financial, and legal issues as barriers to investment.
Working on multiple fronts, Donahue announced a new project, headed by former Postmaster General of the United States Jack Potter, to open up global supply chains and logistics for American companies.
“We need to connect our entire economy in a seamless 21st century system of superior transportation, high speed information, and communication technology, and modern seaports, airports, and border crossings,” he said.
In an effort to spur growth in U.S. manufacturing and jobs for Americans, the Obama administration put forward a goal of doubling U.S. exports within five years, a strategy that requires access to overseas markets.
To advance this goal, Donahue announced the chamber would “pull out all the stops to help get votes” for the completion of Fair Trade Agreements, (FTAs) with South Korea, Columbia, and Panama—all three agreements were negotiated by the previous Bush administration, but were criticized by legislators and not enacted for not protecting American interests.
Close to completion is a renegotiated South Korea FTA, which is awaiting ratification by Congress. The other two agreements still await revisions.