Will the President’s Blueprint Create Jobs?

Jan 25, 2012

Photo: Joshua Roberts, Bloomberg

Ahead of the State of the Union Address, we published a listener’s guide and highlighted the business community’s plan to grow jobs and strengthen the economy.

Below is how the president's speech rhetoric stack ups up against his record and the U.S. Chamber's jobs plan.

We asked: Will the president say anything on energy and infrastructure?

President Obama did discuss energy, claiming credit for an uptick in domestic oil and gas production, which occurred as a result of previous policies and private landowners. “Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75% of our potential offshore oil and gas resources,” he said. “Right now -- right now -- American oil production is the highest that it’s been in eight years. That’s right -- eight years. Not only that -- last year, we relied less on foreign oil than in any of the past 16 years.”

In reality, the president has proposed an oil and gas exploration plan that puts 14 billion barrels of oil and 55 trillion cubic feet of natural gas off limits. Onshore energy leases are down 44 percent under the Obama Administration.  In 2011, an all time low number of leases were issued. 

The president also called for streamlining of the permit process for new construction projects, and stated that he will soon issue an Executive Order “clearing away the red tape that slows down too many construction projects.” The Chamber has called for this as well and made it a key recommendation in its own jobs plan.

The president also pledged that his administration will take every possible action to safely develop the burgeoning natural gas industry. However, he also seemed to question the industry and technology that has brought us to this game-changing resource by saying that he’ll require “all companies that drill for gas on public lands to disclose the chemicals they use.”

On infrastructure, the president made the case for rebuilding America’s roads, bridges, power grid and broadband networks. “But you need to fund these projects,” he said. “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”

Unfortunately, the President failed to connect the dots and offer a solution to address, in part, these challenges: passing major infrastructure investment legislation. The Chamber and the Chamber-led Americans For Transportation Mobility coalition is launching the "Make Transportation Job #1" campaign, calling on our elected leaders to step on the gas and drive a multi-year highway, transit and safety bill across the finish line by March 31st. The campaign includes a letter signed by over 1000 organizations from all 50 states was delivered to Capitol Hill the day after the State of the Union address.

We asked: Will the president say anything new on how to expand trade, investment and tourism?

Instead of talking about expanding trade, investment, and tourism, the president announced plans crack down on trading partners such as China and create a Trade Enforcement Unit that will be charged with investigating unfair trading practices. 

The Chamber has long pressed for consistent and vigorous enforcement of our trade agreements. But the United States government already has a Trade Enforcement Unit that enjoys broad respect, a broad inter-agency mandate, and a prominent position in the Executive Office of the President. It’s part of the Office of the U.S. Trade Representative, which the president proposed two weeks ago to fold into a larger agency along with much of the Commerce Department and other trade agencies.

The Chamber this week joined with more than 80 business and agricultural associations to send a letter to the President opposing moving USTR into a huge new bureaucracy.

We asked: Will the president address regulatory and legal reform?

The president touted his record on reducing regulatory barriers. “I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense.  We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.”

Bloomberg News, based on a review of Office of Management and Budget data, indeed found that the Obama administration approved fewer regulations in its first 33 months than the Bush administration approved over the same period of time. However, Bloomberg also found that the Obama administration issued more significant federal rules, defined as those costing more than $100 million, than either the Bush or Clinton administrations during the first 33 months.

According to the World Bank’s Doing Business 2012 report, the U.S. now ranks 13th in the world in the ease of starting a new business and has been declining steadily since President Obama took office. The Chamber’s nationwide survey of small business executives released last week found that more than eight out of ten would rather have Washington stay out of the way than provide a helping hand. Entrepreneurship has reached a 17-year low in the U.S.

At the same time, the president defended the onslaught of regulations under his administration, including the EPA’s decision to impose regulations that will threaten electricity reliability and raise costs for consumers.

We asked: Will the president discuss how he’ll encourage innovation?

The president touted innovation, noting that “most new jobs are created in start-ups and small businesses.” He called for the tearing down of “regulations that prevent aspiring entrepreneurs from getting the financing to grow,” and the expansion of “tax relief to small businesses that are raising wages and creating good jobs.”

The president also had encouraging words about immigration reform, particularly recognizing that immigrants with STEM degrees should be allowed to stay in the country. “Let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, defend this country. Send me a law that gives them the chance to earn their citizenship. I will sign it right away.”

The Chamber agrees that our economy is grounded in entrepreneurship including small business start ups and that “an economy built to last is one where we encourage the talent and ingenuity of every person in this country.” Along these lines, the Chamber issued a report applauding the role of immigrant entrepreneurs as job creators. 

Will he promote fiscal responsibility and entitlement reform?

As of January 20, 2012, the U.S. national debt was $15.23 trillion - 43.2% higher than it was the day President Obama took office.

So what did the president say he would do to rein in government spending? The president said we need to “pay down our debt and invest in our future,” and noted that Congress and his administration have already agreed to more than $2 trillion in cuts and savings. “But we need to do more, and that means making choices,” he says.

Those “choices” include calls for not only hiking taxes on successful small businesses, America’s job creators, but also imposing a minimum tax rate for those earning over one million dollars and denying those taxpayers any deductions or credits.

Raising taxes on incomes over $1 million would harm businesses. According to IRS data, in 2009, there were 141,035 millionaires with income from partnerships or S-corporations, 39,662 with income from sole proprietorships, and 1,840 with income from farms. A millionaire’s tax would affect about 35% of business income.

On entitlement reform, the president provided fewer details. “The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors,” Obama said.

The president’s remarks made no acknowledgement that health reform efforts passed last year as part of his signature legislative accomplishment did little to deal with costs, nor did he acknowledge the increasing stress on Medicare as the baby boomers become eligible for the program.

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