Publication Date: January 2010 U.S. Chamber Policy Experts Weigh In Economy Marty Regalia Senior Vice President and Chief Economist Free Enterprise: What is the outlook for jobs in 2010? Regalia: I think it’s likely that the economy will create between 1.6 million and 1.8 million jobs in 2010, assuming average GDP growth of 3.0% to 3.5%. We have a lot of ground to make up. We lost some 7.3 million jobs in the recession, and an additional 4.5 million to 5 million full-time workers were forced into part-time jobs. Also, some 1.3 million new workers will enter the labor market in 2010. What are your greatest fears about the economy in 2010? Regalia: There is about a 10% to 15% chance that we’ll experience a double-dip recession later this year. That could be caused by the collapse of the dollar, a spike in oil prices, an unexpected new war, or a collapse of the commercial mortgage market. Do you expect Congress to pass a jobs bill in early 2010? Regalia: Yes, I do. I think it will contain tax cuts for businesses that hire new workers, income tax cuts for the middle income and working classes, and infrastructure investment. I’m concerned about the effectiveness of such a package. A hiring tax cut won’t do any good if the economy isn’t growing, and the income tax cuts will probably be paid for by tax hikes on the wealthier, which will hurt investment. If you had to design a jobs bill, what would be in it? Regalia: I would invest in infrastructure, extend the Bush tax cuts, reduce the corporate capital gains tax rate and the payroll tax for a limited time, and implement a repatriation holiday during which U.S. multinational firms could bring their profits back into the United States at a reduced tax rate.

Labor Policy Randy Johnson Senior Vice President, Labor, Immigration & Employee Benefits Free Enterprise: Will we get a health care reform bill in 2010? Johnson: Perhaps, but it is difficult at this point to say what will be in it. The Chamber is fighting to include insurance reforms such as ending preexisting condition exclusions and providing for guaranteed issuance, eliminating lifetime caps on benefits, and creating an all-inclusive national insurance marketplace. We support comparing the effectiveness of treatments and medicines and moving from a fee for service reimbursement system to a fee for results system. Medical liability reform should be included but likely won’t be. We want a public option and employer mandates removed from the final bill. What’s on organized labor’s 2010 agenda? Johnson: I expect the unions to make another push for the Employee Free Choice Act, or card check, with some tweaks made to the bill in an effort to get 60 votes in the Senate. For instance, the unions could propose a bill that keeps secret ballot elections but allows mail-in ballots and quickie elections that don’t give employers sufficient time to state their case. What about immigration reform? Johnson: The administration and some key senators are planning to bring immigration reform to the floor in April or May. On this particular issue, we share much common ground with the administration and the unions. However, this will be a very tough battle. Aside from card check, what other labor-backed legislation might we expect? Johnson: We expect to see movement on bills to expand the Family and Medical Leave Act and other leave mandates, change definitions of independent contractors, expand plant closing laws, increase OSHA criminal penalties, and limit employer defenses under the Equal Pay Act, among others. The Department of Labor’s agenda includes an ergonomics regulation and reducing scrutiny of union financial disclosures. Do you expect any positive developments? Johnson: We are hopeful that Congress will provide relief from the unexpected funding requirements of defined benefit pension plans that resulted from the recent financial crisis. We also will support legislation that will allow small employers to automatically recover their attorney fees and other costs when they prevail in a case brought by OSHA.

Capital Markets Amanda Engstrom Senior Vice President, Center for Capital Markets Competitiveness Free Enterprise: What can small businesses expect on financial regulatory reform in 2010? Engstrom: We expect Congress to pass regulatory reform in 2010. It’s the role of the U.S. Chamber to make sure that what is passed is helpful in modernizing our markets as opposed to creating artificial burdens and barriers to legitimate market activity. The current crisis clearly points to significant failures, and we should take advantage of this time to make the appropriate reforms to the system, which allow for a modern, functioning, efficient structure moving forward. The big outstanding question will be timing, which changes by the day. I think it’s going to be a longer-term discussion, but my guess is that there will clearly be some resolution this year. But I expect that there will be years of rules and technical corrections to follow, so it’s important for small businesses to make their voices heard. They should get involved early and expect to be in it for the long haul. A proposed Consumer Financial Protection Agency (CFPA) was a big focus in 2009. Will it continue to be an issue in 2010? Engstrom: In terms of financial regulatory reform, CFPA will continue to be a significant challenge in 2010. Congress wants to create a new government bureaucracy to compensate for the financial crisis. It is proposing a one-size-fits-all solution, and for small businesses in particular, one-size-fits-all almost never fits them. This bureaucracy ignores the fact that small businesses often use consumer financial products to supplement business lines of credit to meet short-term capital needs. CFPA would deny small business owners a choice of financial products. Is there anything happening in the courts that small businesses should be aware of? Engstrom: A Supreme Court decision on the constitutionality of Sarbanes-Oxley will occur in 2010. Oral arguments were heard in December. The case raises the question of whether Sarbanes-Oxley will continue to exist as we know it.

Trade John Murphy Vice President, International Trade Free Enterprise: What is the outlook for trade in 2010? Murphy: While we have yet to see action, President Obama has repeatedly said that he wants to secure approval of the pending free trade agreements (FTAs). He spoke of approving the Korea deal sometime this year. He also said that the United States will engage in the Trans-Pacific Partnership, a new trade agreement in the Asia-Pacific region, which is a good move. On the multilateral World Trade Organization talks, U.S. Trade Representative Ron Kirk is doing all the right things in pressing China, India, and Brazil to bring more to the negotiating table. What’s lacking is a stopwatch and a road map. We can’t afford to wait—a Chamber study found that more than 380,000 Americans will lose their jobs if we fail to approve the FTAs with Korea and Colombia, while the EU and Canada charge ahead with their own agreements with those two countries. As for the road map, the administration needs to show how it thinks we can navigate the obstacles it says stand in the way of FTA approvals. The president has recently echoed Chamber comments linking trade and job creation. What should the president’s plan be going forward? Murphy: The Chamber has laid out a four-point plan for government action that would double U.S. exports in five years. It’s calling on the administration to negotiate and pass trade agreements that would reduce barriers and improve access for American goods and services; enforce existing agreements; double federal expenditures on export promotion to help small companies get the tools, training, financing, and partners they need to sell overseas; and coordinate leadership among government agencies overseeing export promotion.


Energy, Environment, and Technology Karen Harbert President and CEO, U.S. Chamber Institute for 21st Century Energy Free Enterprise: What will be the main climate change issue for 2010? Harbert: There’s a great deal of concern among our members that decisions made in Washington, D.C., will unnecessarily increase the costs of gas and energy. Medium-size and small businesses in particular want predictability, and they want to know what’s on the horizon. What they don’t feel they are getting is an honest discussion in Washington. What is the fundamental problem with proposed climate change legislation? Harbert: It takes sources of energy off the table. What we don’t have is a comprehensive approach that deals with the challenges associated with the environment and still allows us to have a reliable, affordable source of energy to fuel our economy, keep companies in business, and create jobs. So what is the answer? Harbert: We presented the Obama administration and Congress with 88 policy recommendations that would enhance energy security, help the economy, and improve the environment. The mantra that you are either pro-energy or pro-environment is a false premise. We actually need both. The real solution to climate change is transforming how we use energy. How do the 2010 elections affect climate change legislation? Harbert: The political reality is that the closer we get to the 2010 elections, the less likely climate change legislation will pass because members of Congress will be accountable for it. If they pass the legislation that’s currently before them, it will unavoidably increase prices, impact jobs, and cause industries to move with their feet. Now, if they were to put something more reasonable on the table early in the year, they might have a possibility of getting something done. For example, Congress could improve access to financing for clean energy technologies through a government-sponsored clean energy bank and improve America’s energy infrastructure to support new emissions-free power sources.


Energy, Environment, and Technology Bill Kovacs Senior Vice President, Environment, Technology & Regulatory Affairs Free Enterprise: From your perspective, what will be the biggest regulatory issue in 2010? Kovacs: It will be the fallout from the EPA’s endangerment finding in December 2009. The endangerment finding holds that greenhouse gas emissions, including the ubiquitous CO2, are a danger to human health and therefore can be regulated by EPA under the Clean Air Act (CAA). Standing alone, the endangerment finding does nothing; however, it is the foundation for all CAA regulation. And once any greenhouse gas is regulated, it touches off a huge regulatory cascade that will encompass tailpipe emissions and emissions from stationary sources such as commercial, industrial, and energy facilities; ships; planes; and most types of engines and boilers. EPA will eventually regulate all energy production from fossil fuels and all transportation, equipment, and facilities that use fossil fuels. There will be tens of millions of dollars expended to litigate the endangerment finding and ensuing regulations. What impact will the endangerment finding have on climate change legislation in Congress? Kovacs: The Chamber strongly believes that greenhouse gases should be regulated under a comprehensive federal statute and that the CAA is not the appropriate vehicle for regulating these gases. But once EPA finds endangerment and regulates greenhouse gases under the CAA, EPA will be very reluctant to support comprehensive federal legislation. Instead, EPA will want both legislation and regulation as well as additional state regulation. What regulatory issue is under the radar now but might bubble up in 2010? Kovacs: Net neutrality will be a big issue. This is the debate over whether companies that invested hundreds of billions of dollars in building out the Internet have the right to price, market, and manage their products and networks. Chemical reform will also be a major issue next year. The last time Congress addressed chemical reform was 1976, and many things have changed since then, including the development of nanotechnology, which is likely to be the focus of any such new regulation.