Introduction
Thank you very much, Gerry, and good afternoon everyone. That might be the most flattering introduction I’ve ever received. But Gerry and I are members of a mutual admiration society.
Gerry has not only been a great leader in business—he had an outstanding 40-year career at Caterpillar—but he’s also been a great leader of business. I’m sure many of you know firsthand how hard Gerry has worked to improve this city and region. But you might not be aware of the leadership role he’s played in the national business community.
One example—he was chairman of the U.S. Chamber’s board from 2006-2007. He brought to the national scene the same common sense, dogged determination, and effectiveness as he has to Peoria. He made a big difference, and continues to do so. We are lucky to have him.
I’d also like to thank Jim McConoughey for the invitation to be here today and to recognize our good friend Roberta Parks of the Peoria Chamber. Along with the Partnership’s family of companies, they are doing an outstanding job—and getting great results. Peoria is routinely ranked as one of the best cities in the country for economic opportunity, friendly business environment, and livability. The people in this room deserve a great deal of credit for that and I congratulate you.
Major Challenges Before Us
Today I’ve been asked to lay out a positive vision for how we can lift this economy out of a deep recession, create jobs, and build long-term, sustainable growth. Talk about a tall order!
Let me start with the obvious—we have our work cut for us. Our recovery is not going well. We need to create 20 million jobs in the next decade to make up for those lost in the recession and to keep up with a growing workforce. We’re falling far short. We’ll continue to do so until economic growth exceeds 3%.
Banks and consumers are in the painful process of deleveraging. And until banks start lending and consumers start spending, any hope for a more robust recovery is dim.
Some regions of the world are growing briskly, and we need to be exporting more to them, but our trade agenda is stuck in neutral. If you want to understand how vital exports are to the U.S. and Peoria economies, simply look at Caterpillar.
Washington may have helped boost the economy a little bit with the stimulus bill, but overall its public policy choices have made things worse, not better.
A chief roadblock to our recovery is the tremendous uncertainty caused by a tsunami of new regulations, mandates, and taxes. The health care and financial reform bills alone will result in billions of dollars in new taxes and fees, hundreds of mandates, and thousands of complex regulations.
Add to that a regulatory regime in overdrive. Federal agencies are proposing a stifling amount of new regulations dealing with everything from greenhouse gas emissions to workplace safety.
The list goes on and on. Instead of a government of the people, we are moving toward a government of the regulators.
Then there’s taxes. Hundreds of billions have already been raised, mostly on business, in the health care and financial reform bills. Laws expiring at the end of this year will trigger the largest tax increase in American history at the worst possible time.
So, businesses don’t know what’s going to hit them next. That’s why they aren’t willing to hire and invest. And that’s why we’re stuck with high unemployment.
So there’s no question this is a tough time. But you know what? We’ll get through it. We’ve had deep recessions and financial crises before … and we’ll have them again. This one might be deeper, longer, and more painful than usual, but we will pull through.
America’s Long-term Prospects
But this economic downturn has been different in one way—it’s causing many people to doubt America’s long-term prospects. The world is watching and wondering. Do we Americans still have it in us to act big and act boldly when the chips are down?
I’ve been thinking a lot about that. The question is this: Is America still a “can-do” country? Are we able to tackle the big challenges before us, and not just when they are right on top of us? Can we smartly plan and build for America’s future success? I believe we can … and that we must.
Anyone who doubts America’s ability to get its act together and build for the future … anyone looking for inspiration as to what we are capable of … need look no further than right here in Peoria and central Illinois.
A generation ago, things looked very different here. The picture was bleak. People were giving up on Peoria. Plants were closing. Manufacturers were scaling back or going out of business. Railroads were abandoning their tracks. Housing starts were at an all-time low.
But local elected officials, business groups, and Peorians heeded the wake-up call. They made smart decisions. They made tough decisions. They thought long-term. They worked hard to attract businesses, diversify the economy, expand the tax base, foster innovation, and increase the availability of capital. And it’s paid off. Peoria has weathered the recession better than most and its future looks bright.
Can we do the same thing on the national level? We have the assets … we have a highly productive workforce; the world’s best university system; deep strength in future industries, such as nanotechnology; and an adaptability and creativity that is second to none. The question is—Will we step up?
America’s future is dependent on many things, including the strength of our capital markets, access to affordable and clean energy, sensible legal, tax, and regulatory systems, and many others. I could deliver an entire speech on each of those topics—and if you invite me back, maybe I will!—but there are three I believe are absolutely critical: education, innovation, and transportation. I’d like to say a brief word about each of them.
Education
Here’s something we must do—go all-in on education reform … to build the best, most innovative, and most effective school systems in the world.
We know what the problems are. Now is the time for action. Now is the time for real reform … fundamental reform.
How will it happen? It begins by everyone doing their part. It begins by embracing the fundamental principles that built this great country … like innovation, adaptability, creativity, accountability, and responsibility.
On this issue, we have praise for the Obama administration. It believes the need for innovation and reform is urgent. And it’s putting money where its mouth is. It’s $4 billion Race to the Top grant program is a tremendous catalyst for greater innovation, accountability, and higher standards in American schools.
It says if you want a piece of this pie to improve your schools, impress us with the depth and scope of your reforms. Get some real results. Stop business as usual.
The White House has also spoken out in favor of charter schools, teacher merit pay, and a greater emphasis on STEM, or “science, technology, engineering, and math.”
I know the Partnership—through the efforts of the Peoria Chamber and Peoria Next—pushed hard for the city’s first charter school, and I applaud you for that.
So we believe the administration is on the right track and we proudly support many of their efforts. The challenge will be enacting these reforms in the face of likely political and interest group pressure. On that note, let me say a word about teachers’ unions. My message to them is simple: Join the reform effort.
I understand it’s their job to fight for the best possible pay, benefits, and working conditions for their members. And they do a pretty damn good job! But if they remain defenders of the status quo … if they refuse to allow the dismissal of teachers who are clearly failing our kids … if they stubbornly block reforms that improve our schools, give our kids a real shot at the American Dream, and prepare them for success … then they will be on the wrong side of public opinion. They will be on the wrong side of history.
Congress and the states can help as well. Congress should strengthen and improve No Child Left Behind, while respecting its fundamental features. States and districts must adopt sound business management techniques in their schools, including giving principals more authority over budget and personnel decisions.
In many ways, it is business that is leading the reform efforts. We need to work twice as hard. The U.S. Chamber’s affiliated Institute for a Competitive Workforce is actively working with our members to increase their capacity at the local, state, and national levels so that they can be better partners and advocates for change. We are using our bully pulpit to raise awareness for what works and what doesn’t. We are providing cover to those who are working to do the right thing.
We are immensely proud to be promoting an exciting new documentary called “Waiting for Superman.” It follows the stories of 5 children desperately trying to escape low-performing schools and get into charter schools. They are subjected to a lottery system. That the fate of so many children depends on the equivalent of the spin of a roulette wheel is a sad commentary on our K-12 education system.
The bottom line: There is a faint pulse of education reform coursing through the land—our job is to turn it into a strong heartbeat. There’s no better thing we can do for the future of our country.
Innovation
Part of preparing ourselves for future success is leveraging what we already do well. If Americans are anything, we are innovative. But we have growing competition. Our success will be determined by how hard we work today to develop the goods and services of tomorrow.
If we don’t lead the way in developing clean energy technologies, cures for terrible diseases, and productivity-enhancing software—just to name a few—then someone else will. And we will pay the price in jobs, prosperity, and reputation.
How can we bolster American innovation? First, we need to strengthen protections for our intellectual property.IP-based industries account for more than $5 trillion of the U.S. gross domestic product, drive more than half of U.S. exports, and employ more than 18 million Americans.
But these industries and their jobs are being threatened by counterfeiters and pirates who will stop at nothing to steal our ideas. So we need to improve enforcement of IP rights here at home and around the world. It means cracking down on online counterfeiting and digital theft. And it means working with international partners to conclude a comprehensive anti-counterfeiting trade agreement.
The Chamber has an affiliate devoted solely to this issue—the Global Intellectual Property Center.
Second, we need to realign our tax code to encourage innovation. The United States currently has the second highest corporate tax rate in the developed world, which creates a tremendous disincentive for companies to conduct research or to build new facilities here. It’s time for Congress to lower corporate taxes to make America more competitive with other leading economies.
Finally, we must reform our immigration system to ensure that the best minds from around the world can come here to contribute their ideas, create new technologies, and advance our economy. America has a fantastic tradition of openness—to new people, new ideas, and new ways of doing things. It’s a tradition we must continue.
Transportation Infrastructure
America needs to be prepared to compete and win in the knowledge economy of the 21st century, but we still need a sound physical platform to conduct the nation’s business.
The American Society of Civil Engineers assigns a our infrastructure system a “D.” That’s a disgrace. And while the U.S. Chamber of Commerce and others have been warning about the devastating impacts of these shortcomings, we’ve never been able to prove a direct connection between the performance of our transportation infrastructure and economic growth. Until now.
Two weeks ago, the U.S. Chamber unveiled a landmark study: the Transportation Performance Index. It proves—for the first time ever—a direct relationship between transportation infrastructure performance and GDP. In fact, each 1 point increase in our Index results in a 0.3% increase in GDP, or $42 billion.
Our study took an in-depth look at how well the U.S. transportation system is serving the needs of businesses and the overall U.S. economy. We found the system is not getting the job done. We are falling behind as other nations race ahead.
If we pursue business as usual for the next five years, the Index will fall by 8 points. That will cost the economy $336 billion in lost growth. But it doesn’t have to be this way. We also extrapolated a future in which higher investment levels were targeted at improving performance and saw precisely the opposite picture—the potential to add substantially to GDP.
What do we need to do to make that happen? Congress and the administration must pass pending legislation funding highways and transit, water, and aviation—as well as an important tax measure for railroads. Policy makers need to eliminate the red tape that endlessly delays and raises project costs. And, there has to be enough funding and financing to get the job done.
There’s one essential idea that is critical to infrastructure finance going forward—the private sector. There is north of $180 billion in private capital just waiting to be invested if only we swept away regulatory roadblocks and encouraged its use.
Rebuilding America would be great for our economy and help restore national pride and confidence.
Conclusion
You’ve no doubt heard the phrase, “Will it play in Peoria?”
Peoria’s economic plan is not only playing well here, it should go national!
There’s a common element running through all the things happening here in Peoria and all the things I talked about today—the spirit of free enterprise.
I believe the secret of America’s success has been—and will continue to be—this greatest system ever devised by man … that provides more opportunity, more freedom to take a risk and get rewarded, and the best shot at achieving your dreams.
In all the topics I’ve addressed today—education, innovation, infrastructure—government has an important role to play.In the case of education and infrastructure, it has a big role on the investment side. In the case of innovation, it must set the right policies.
We all understand that. But Americans must also clearly understand what really drives the growth and jobs we need—an understanding all too lacking in today’s Washington—and that is the private sector.
If given the opportunity … if given reasonable regulations and low taxes … if given certainty and encouragement … American business can lift this nation to new heights, where jobs are plentiful, opportunities abundant, and prosperity deep and widespread.
America is hurting right now, but we know the path to long-term prosperity. We just need the courage to take it. We need to step up.
We’ve got a few things going for us. We’re the most competitive, hard working, and entrepreneurial people in the world. No matter what Washington throws at us, that will never change.
We have a tremendous business community that knows more about innovation, adaptability, efficiency, and getting results than anyone in the world. What a powerful resource that is!
And we have groups like the Heartland Partnership, the Peoria Chamber, and the entire Chamber federation. People involved in their communities, committed to economic excellence and opportunity, and willing to roll up their sleeves and get to work.
When we look to the future, the country that has the best talent wins; the country that innovates will set the pace; and the country with superior infrastructure will have a key competitive advantage.
I couldn’t sum things up better than Gerry Shaheen, who said: “I believe that America’s best days are ahead, but they won’t come without constant change, flexibility, and innovation.”
That’s the task before us … and I know we will succeed. No one ever made any money betting against the United States of America.
Thank you for very much.
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