Tag: chamber of commerce

Chamber of Commerce and Business Roundtable: Borg Enablers

Remember the Borg? You know, the Star Trek cyborgs who would encounter a ship, tell its occupants “resistance is futile,” then turn them all into Borg? Of course the Enterprise always resisted, and always survived. But what if Captain Picard had instead ordered, “Surrender. Then they’ll leave us alone.”

The crew response to that would certainly have been, “ol’ Jean-Luc is losing it!” At least, it would have been for the few seconds before everyone was converted into mindless drones. Yet that is just the sort of order a group calling itself the “Higher State Standards Partnership” is trying to issue to conservatives and libertarians when it comes to the Common Core. Yesterday, the Partnership – a front for the U.S. Chamber of Commerce and Business Roundtable – wrote in the Daily Caller that opponents of the Core should stop resisting if they want to keep schools from being assimilated by the federal government.

You read that right: After blaming the Obama administration for using the Race to the Top to meddle “in a clearly state-led, locally controlled education initiative,” the Partnership counseled Core opponents to end their resistance. Defeating the Core, they wrote, “would only bolster the hand of the Administration and invite federal control into our schools.”

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

President Delivers Same Zero-Sum Message on Jobs to U.S. Chamber

In his speech at the U.S. Chamber of Commerce yesterday, President Obama tried to make nice with U.S. business. While the speech contained some positive elements about promoting trade and a lower corporate tax rate, the president also pounded the tired theme that we are locked in a battle with other countries over a fixed number of jobs.

Notice how the president framed the otherwise good news of expanding domestic production:

Right now, businesses across this country are proving that America can compete. Caterpillar is opening a new plant to build excavators in Texas that used to be shipped from Japan. … A company called Geomagic, a software maker, decided to close down its overseas centers in China and Europe and move their R&D here to the United States. These companies are bringing jobs back to our shores. And that’s good for everybody.

The strong implication is that U.S. companies add jobs at home by closing production facilities abroad and thus “bringing jobs back to our shores.” This kind of win-lose, zero-sum accounting is out of step with the reality of our global economy. More often, when U.S. multinationals ramp up production and hiring abroad, they do the same at their factories and offices in the United States, and vice versa.

Take Caterpillar, the global equipment company based in Peoria, Ill. According to its recent quarterly earnings report, the company added 19,000 jobs to its global workforce in 2010, 7,500 of those in the United States. This is common practice among U.S. multinationals.

As I noted in my 2009 Cato book Mad about Trade, studies show that the jobs added by U.S. multinationals at home and abroad are strongly and positively correlated. More production and sales abroad typically require the hiring of more managers, accountants, engineers and production workers at the parent company’s facilities in the United States.

Despite the president’s rhetoric, the creation of jobs in today’s global economy is a win-win, positive sum proposition.

Embracing More of Trade’s Selling Points

As a primer for the new Congress, my friend John Murphy of the U.S. Chamber of Commerce posted the “top ten reasons why pro-growth trade and investment policies and agreements are good for America.” As usual, I agree with John’s points. And I concur that the time is particularly ripe for educating policymakers about the virtues of trade.

But with all due respect to John, his list is not so much about trade and investment. It’s really about exports (one of 10 points is about imports). Informing new members and reminding old of the benefits of exports to U.S. businesses and workers is clearly a worthwhile objective of the Chamber, the business community, and really anybody interested in economic growth. But in some respect there’s a preaching-to-the-choir element in that approach. You’re not going to find too many policymakers opposed to exports, and the administration has constructed a whole new bureaucracy devoted to the proposition that exports should double in five years.

Where the trade agenda has stalled (and where it always has problems) is on the rough terrain that–for lack of a better catchphrase–might be called “rationalizing” imports. That’s been the hard part of trade adovcacy over the years: “We had to cede some access to our markets, but look what we got in exchange!”

In pitching the very same bilateral trade agreements two and three years ago that the business community is pitching today, then-USTR Susan Schwab liked to remind Congress that the United States had an aggregate trade surplus with the countries with whom the Bush administration had concluded free trade agreements, as though that were the appropriate success metric. “We export more to them than we import from them; let’s call this a triumph!” But anyone inclined to accept that statistic as conclusive could simply visit the Commerce Department’s website and see that, at the time, our overall trade account was in deficit by about $800 billion. Thus, if “exports minus imports” is the measure by which we judge the benefits of trade, then America should shun trade entirely. That sales approach doesn’t seem to be in short- or long-run equilibrium. Mercantilist arguments only ensure that every step forward on trade requires a full-fledged battle. We need better–that is, more comprehensive–salesmanship of trade for the new Congress.

In 2002, then-USTR Robert Zoellick said of his new Doha Round proposal for zero tariffs on industrial goods by 2015 that it would “turn every corner store into a duty-free shop.” That was the right message—although apparently not for the timid White House at the time, which adhered to the sweep-imports-under-the-rug model.  In 2011, we should remember, embrace, and revive Ambassador Zoellick’s words in our advocacy of trade liberalization. In that spirit, I return to John Murphy’s top ten list and introduce a few tweaks (in bold).

  1. The United States is the number one manufacturing nation in the world, and that success depends on exports.  And since over half of the total value of U.S. imports consists of “intermediate goods” (products that are used as inputs for further value-added activity), manufacturing success also depends on imports.
  2. The United States is the world’s number one services exporter and has been since services trade data have been tracked.  And one of the reasons that foreigners are able to purchase American services is because they have been able to earn dollars by selling goods to American businesses and consumers.
  3. U.S. agricultural exports support nearly a million jobs in the United States.  And, agricultural and manufactured imports have made life’s necessities and conveniences more affordable to hundreds of millions of Americans.
  4. 95 percent of the world’s consumers lives outside the United States…as do 95 percent of the world’s workers, who produce many of the goods Americans consume as imports less expensively than Americans can, freeing up U.S. resources for investment, innovation, and consumption of the higher value products and services that Americans produce.
  5. FTA countries purchased more than 40 percent of U.S. exports in 2009. And imports from those countries have helped extend families’ budgets and reduced the costs of production for U.S. business relying on inputs from those countries.
  6. Since the creation of the WTO in 1994, U.S. exports of goods and services have doubled to more than $1.5 trillion. And real U.S. GDP has increased by 50 percent.
  7. Imports support millions of U.S. jobs in retail, research, design, sourcing, transportation, warehousing, marketing and sales…and in manufacturing. 
  8. U.S. exports to China have quadrupled over the past 15 years, and China is now the 3rd largest market for U.S. exports.  And U.S. imports from China, too often wrongly portrayed as evidence of U.S. profligacy or decline, have enabled U.S. industries that require access to lower-cost labor for economic viability to be born, to blossom, and to spark the advent of new products and industries.
  9. U.S. companies with overseas investments account for 45 percent of all U.S. exports.  And foreign companies operating in the United States employ 5.6 million Americans, support a payroll of $408.5 billion, provide compensation that is 33% higher than the U.S. average, account for 18% of U.S. exports,   pay U.S. taxes, support local charities, and act as investment magnets in communities across the country.
  10. Trade supports 38 million jobs in the United States–more than one in five American jobs.  And most Americans enjoy the fruits of international trade and globalization every day: driving to work in vehicles containing at least some foreign content; talking on foreign-made mobile telephones; having extra disposable income because retailers like Wal-Mart, Best Buy, and Home Depot are able to pass on cost savings made possible by their own access to thousands of foreign producers; eating healthier because they now can enjoy fresh imported produce that was once unavailable out-of-season, etc.

Of course, all of these selling points are economic in nature.  There is an even stronger moral argument for free trade, which is what all Americans – indeed all earthlings – should embrace.

Waiting for Realityman

The edu-documentary Waiting for ‘Superman’ continues to generate lots of noise about fixing American education. Unfortunately, like the film itself, most of the noisemakers ultimately ignore reality: The only way to make educators truly put children first is to require that they satisfy parents – the customers – to get their money. And that can mean only one thing:  transforming our education system into one in which parents control education funding and educators have to earn their business.

You would think that would be clear to members of the U.S. Chamber of Commerce. Think again: In a new report, the Chamber demonstrates that what’s really needed is not a visit from Superman, but for Realityman to give it a superpowered kick to the rear so that it will demand universal school choice, not the milquetoast tweaks of the government monopoly it meekly champions.

What follows are just a few examples of where the Realityman Signal shines brightly in the report – where the Chamber clearly sees the diabolical work of government monopoly, but ultimately fails to identify the culprit – calling out for our hero to save the Chamber.

First, the paper notes that “successful businesses use well-documented management and leadership practices that result in lean, accountable, flexible, high-achieving organizations.” Meanwhile, “these practices are often absent in school management. State [sic] and districts are not held accountable for their academic outcomes relative to their expenditures….”

No kidding: Businesses have to become ever-more efficient and effective or they’ll lose customers to better, cheaper competitors.  Public schools, in contrast, have no real competition and get paid no matter what.

Next, if you aren’t happy with the state of your schools, the Chamber advises getting “tough with candidates and elected officials…. Call candidates, conduct town hall forums and invite the press, write op-eds, and call your local newspaper reporters who work on education issues.”

Now, is this how most businesses work? If a firm isn’t happy with a supplier, does it call its congressman, hold fora, pen op-eds, badger reporters, all in the hope of eventually persuading the supplier to change? Of course not: If the supplier doesn’t improve, the firm just finds a new one and moves on!

Finally, the Chamber laments that “other industries are changing, adapting, and harnessing the power of new technologies, but our education system resists change.”

There’s a simple explanation for this: Public schooling isn’t an “industry.” WordNet defines “industry” as “the organized action of making of goods and services for sale [italics added].” But public schools don’t sell anything. They simply take, and because they don’t have to earn any business they have little incentive to adapt new technologies.

Surely most businessmen recognize the forces that push them to do their best. Why can’t they see the desperate need for the same forces in education?

Save us, Realityman!

Fear and Stasis

The Obama administration’s attacks on the U.S. Chamber of Commerce look a lot like a three-day story on its final day. The national media had its doubts, and even Democratic operatives decried the gambit.

Why did the administration go after the Chamber? The politics are not hard to figure out. Earlier actions of the Obama administration mobilized the Republican base. At the same time, the President and his party have been losing the support of independents for a year or so. Their only hope of limiting the electoral damage was to rally the Democratic base, who are discouraged and divided.

The Democratic base might agree about what they don’t like and fear: business, money in politics, and foreigners — or at least, foreigners spending money on politics. The attack on the Chamber of Commerce appealed to all three. The administration hoped that fear would engender hatred and hatred would bring people to the polls to vote against business and the GOP.

The most surprising part of the attack was the rather naked appeal to anti-foreign bias (see Bryan Caplan’s discussion of this concept here). Most people think of Democrats as friendly to undocumented foreign workers. But Democrats are first of all egalitarians; for them, the whole point of politics is to help the oppressed and harm the oppressor.  They do not favor undocumented foreigners because they believe people have a right to free exchange, borders notwithstanding. Instead, Democrats see undocumented foreigners as victims of oppression by American businesses. Foreigners who have enough money to spend on elections are oppressors in the egalitarian mind.

Obama promised hope and change. He and his party now want to maintain — so far as possible — the political status quo (that is, their control of Congress).  To do that they are trying to prompt fear and hatred among their most loyal voters. The new motto of the administration appears to be: fear and stasis.

Of course, the administration had no evidence the charges were true and argued that the Chamber should be seen as guilty until proven innocent. All in all, the whole affair suggests desperation and a complete loss of constraint in pursuing a political end. It suggests, I think, conduct that used to be covered by the word “Nixonian.”

Obama’s Attack on the Chamber of Commerce: Perfectly Consistent

Today POLITICO Arena asks:

Will President Obama’s campaign finance attacks on the U.S. Chamber of Commerce and others resonate with voters over the next three weeks?

My response:

With so many senior advisors leaving the White House so early in the term, you have to wonder who’s left to advise the president except, well – the president. And judging from his attacks on corporate campaign spending generally and the U.S. Chamber of Commerce in particular, you’re inclined to believe that that’s the case. After all, the attacks are perfectly consistent with the president’s larger agenda.

As others here at the Arena have noted, not since the New Deal have we seen so sustained an anti-business political agenda as has come from this president. Under such an assault, is it any wonder that businesses have created so few jobs, or that they’re fighting back? Yet for that, the president is criticizing them – with campaign finance claims that not even the New York Times finds credible.

This campaign finance angle has an especially unseemly air about it, however – see the Wall Street Journal’s editorial this morning about Democrats unleashing the IRS and Justice on donors to their political opponents. The effort to restrict the speech that campaign finance represents – promoted by the political establishment, especially Democrats – has always been at bottom about incumbency protection, not “good government.” We didn’t hear complaints when Obama abandoned the public financing system in 2008, for example, as “unconscionable” amounts of private money poured into his campaign. Obama may be barking now that the shoe’s on the other foot, but his bark rings as hollow as his agenda, which is why it’s not resonating with the voters, and is not likely to in the three weeks ahead.