The U.S. is not headed toward a new recession this year, but tax increases will hit small businesses hard, dampening growth and limiting job creation in the first half of 2013, U.S. Chamber of Commerce President and CEO Thomas J. Donohue said today.
“While our economy may be growing, it is a fragile growth, and not strong enough to create the jobs Americans need,” Donohue told business leaders in his 2013 State of American Business address at the chamber’s headquarters in Washington.
The nation’s largest business lobbying group estimates the U.S. economy will expand by 1.5 to 1.75 percent in the first half of 2013, gradually accelerating to 2.5 percent in the second half. The International Monetary Fund forecasts 2.1 percent U.S. growth for the year.
“Growth of 1.5 or 2 percent is simply not acceptable,” Donohue said. “It won’t produce the jobs Americans need or the revenues the government must have to reduce trillion dollar deficits” and the $16.4 trillion national debt, he said.
U.S. economic growth has been stuck at about 2 percent a year since the end of the recession in 2009, and most economists expect more of the same in 2013. That means little if any improvement in unemployment over the year, Donohue said.
To shift into higher gear, Congress and the Obama administration need to bridge the chasm that divides them and “get a very big deal that addresses the reality of debt and deficits,” Donohue told reporters at a press conference after his speech.
Congress and the White House should not allow the U.S. to go into default on its debts, but secure a deal that addresses the debt ceiling, the fiscal cliff, entitlements, taxes and especially spending, he said. “We have to turn down the spending curve.”
The U.S. also needs to expand energy production — creating millions of jobs — institute immigration reform and improve education and job training to help millions of Americans develop the skills they need to find work, Donohue said.
“We’ve taken 40 to 45 percent of the jobs out of U.S. manufacturing, and they aren’t coming back,” he said. “But a lot of those people can find work in the energy sector.” That work includes, as Donohue knows, rail and truck transportation and logistics jobs hauling supplies and petroleum and gas from shale fields.
He also touched on transportation infrastructure funding, reiterating the chamber’s support for an increase in the federal fuels tax, and the importance of global trade agreements, including a potential U.S.-EU pact and the Trans-Pacific Partnership.
“Foreign investment already directly or indirectly supports 21 million American jobs,” he said. “We should make a major effort to attract more global investors,” an effort that would be eased, he said, by increased U.S. energy production. "Money goes where it's welcome, where it's safe and where it can make a profit," Donohue said.
One way to attract investors and businesses: reduce regulatory burdens. U.S. businesses face a "flood" of new regulations. "There are far more regulations to deal with than ever before, and for that reason you'll see us in court more often than in the past."