Remarks of President Barack Obama – As Prepared for Delivery
Speech to the Business Roundtable
Wednesday, February 24, 2009
It is great to be back here with the men and women of the Business Roundtable. Over the last year, we have worked together on a number of issues – from economic recovery and tax policy to education and health care. And more often than not, we’ve found common ground.
This is important, because we meet at a time of great economic anxiety and sharp political divisions. We are still emerging from the worst economic crisis since the Great Depression. Eight million Americans have lost their jobs over the last two years. Home values in too many parts of the country have plummeted. Too many businesses are still reluctant to invest and expand.
What’s more, this recession follows what some have called a “lost decade” – a decade in which the average family income fell while the costs of health care and tuition skyrocketed; a decade in which a continued erosion of America’s manufacturing base hollowed out many communities and put too many good jobs out of reach.
No wonder, then, people are frustrated with both business and government. They’re angry at a financial sector that took exorbitant risks in pursuit of short-term profits, and they’re angry at a government that failed to catch the problem in time. They’re angry at the price they paid to prevent a financial meltdown they didn’t cause, and they’re angry that recovery in their own lives seems to be lagging the recovery of bank profitability. They’re angry at the lobbyists who use their influence to put their clients’ special interests ahead of the public interest. And although both parties are predictably scrambling to align themselves with people’s frustrations, neither the usual answers from the left or right seem to inspire much confidence.
So we have big challenges before us. And I think all of us know that we cannot meet them by returning to the pre-crisis status quo – an economy too dependent on a housing bubble, consumer debt, financial speculation, and growing deficits. That’s not sustainable for American workers, and it’s not sustainable for American businesses.
Instead, we need to build an economy where we borrow less and produce more. We need an economy where we generate more jobs here at home and send more products overseas. We need to invest and nurture the industries of the future, and we need to train our workers to compete for those jobs.
Nations around the world, from Asia to Europe, have already realized this. They’re putting more emphasis on math and science. They’re building high-speed railroads and expanding broadband access. They’re making serious investments in clean energy because they want those jobs.
These countries know what’s required to compete in the 21st century. But so do we. And as I said in the State of the Union, I do not accept second place for the United States of America.
We did not achieve global leadership in the last century by luck or happenstance. We earned it by working together to define our own destiny and seize the future. And to maintain our leadership in this new century, we must summon that same resolve.
A thriving, competitive America is within our reach. But only if we move forward as one nation; only if we move past the old debates and crippling divides between left and right; business and labor; private enterprise and the public sector. Whatever differences we have in this country, all of us have a stake in meeting the same goal: an America in which a growing prosperity is shared widely by its people.
So today I want to spend most of my time talking about the specific steps we need to take to build this more competitive America. But before I do, I want to talk about the relationship between business and government in promoting economic growth.
Contrary to the claims of some of my critics, I am an ardent believer in the free market. I believe businesses like yours are the engines of economic growth in this country. You create the jobs. You develop new products and cutting-edge technologies. And you create the supply chains that make it possible for smaller businesses to open their doors. So I want everyone in this room to succeed. I want your shareholders to do well, and I want your workers to do well. Because I firmly believe that America’s success in large part depends on your success.
But I also believe this: government has a vital, if limited, role to play in fostering sustained economic growth. Throughout our history, it has done so in three ways.
First, government has set up basic rules of the marketplace – from the enforcement of contracts and managing the money supply to maintaining airline safety standards and creating federal deposit insurance. On balance, these rules have been good for business, not bad. For they ensure honest competition, fair dealing, and a level playing field.
Second, only government can make those investments in common goods that serve the general welfare but are too expensive for any individual or firm to buy on their own. Our Armed Forces is the most obvious example. But government has also built infrastructure – roads and ports; railways and highways that enabled commerce and spurred entire industries. Government has invested in basic research that led to new crop yields for farmers and the Internet. Government has invested in our people, through land grant colleges and the GI Bill.
Finally, government has provided a social safety net to guarantee a basic level of security for all of our citizens. This last role has obviously been a source of great controversy over the last several decades. But I think most Americans and business leaders would agree that programs like Social Security, Medicare, Medicaid and unemployment insurance have not only saved millions from poverty; they have helped secure broad-based consensus that is so critical to a functioning market economy.
The Business Roundtable has always understood that in each of these instances, government hasn’t stepped in to supplant private enterprise, but to catalyze it – to create the conditions for entrepreneurs and new businesses to adapt and thrive.
But I take the time to make these points because we have arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of “government takeover” or even “socialism.”
Not only does that kind of rhetoric deny our history, but it prevents us from asking hard questions about the right balance between the private and public sectors. Too little investment in a competitive infrastructure or education system and we risk falling behind countries that are making these investments today. On the other hand, if we just throw money at poorly-planned projects or failing schools, we will remain in debt to those same countries for decades to come. If we do not pass financial reform, we can expect more crises in the future. But if we design the new rules carelessly, they could choke off the supply of capital to businesses and families. If we allow our safety net to be weakened, or lose a sense of fairness in our tax code, we can expect more anger and frustration from citizens across the political spectrum; at the same time, if an exploding entitlement state is gobbling up more and more of our tax dollars, there is no way we will retain our competitive edge.
Rather than hurling accusations about big government liberals or mean-spirited conservatives, we will have to answer these tough questions. And getting this balance right has less to do with big government or small government than it does smart government. It’s not about being anti-business or pro-government; it’s about being pro-growth and pro-jobs. And while there are no simple formulas or bumper-sticker slogans, let me discuss a few specific areas where we have to get this right.
Our first and most immediate task is to complete the economic recovery by taking additional steps to bolster demand and keep credit flowing. Along with our efforts to unfreeze credit and stabilize the housing market, the Recovery Act helped do this, and it’s one of the main reasons our economy has gone from shrinking by 6% to growing by nearly 6%. But we need to do more. We should make it easier for small businesses to get loans and give them a tax credit for hiring new workers or raising wages. We should invest in infrastructure projects that lead to new jobs in the construction industry and other hard-hit businesses. And we should provide a tax incentive for large businesses like yours to invest in new plants and equipment. That would make a difference now.
We need businesses to support these efforts. The Business Roundtable supported the Recovery Act, and for that I’m grateful. But I think one of the reasons businesses haven’t been as vocal about their support is a belief that extraordinary measures like the Recovery Act or our financial stability plan represent a lasting increase in government intervention. Let me assure you – they do not.
One year ago, we were looking at the possible end of General Motors. Today, GM has increased production and is paying us back ahead of schedule. One year ago, there was a chance we would lose most of the $700 billion we spent to rescue the banks. Today, most of that money has been repaid. The financial fee we’ve proposed is simply designed to recover the rest and close the books on government’s involvement.
And let me say a word here about compensation. Most Americans – including myself – don’t begrudge reasonable rewards for a job well done. What has outraged people are the outsized bonuses at firms that so recently required massive public assistance. Once that money is fully repaid, I don’t believe it’s appropriate for the government to be in the business of setting compensation levels. What I do believe is that shareholders should have a say in the compensation packages given to top executives, and that those packages should be based on long-term performance instead of short-term profits. That’s particularly important in the financial industry, where reckless risks in pursuit of short-term gains helped create a crisis that engulfed the world economy.
So the steps we took last year were about saving the economy from collapse, not expanding government’s reach into the economy. The jobs bills now working through Congress is similarly designed to be targeted and temporary, and I am pleased that a few hours ago, the Senate just passed a series of tax cuts for small businesses that hire more workers. This is an important step forward in putting more Americans back to work as soon as possible.
But the larger question is this: beyond the immediate requirements of recovery, how do we lay the foundation for a more competitive America?
I believe it starts with investments in innovation, education, and a 21st century infrastructure. To build the infrastructure of tomorrow, we’re investing in expanded broadband access, health information technology, clean energy facilities, and the first high-speed rail network in America.
To spur the discovery of services, products, and industries we have yet to imagine, we are devoting more than three percent of our GDP to research and development – an amount that exceeds the level achieved at the height of the Space Race. We’ve also proposed making the research and experimentation tax credit permanent – a tax credit that helps companies like yours afford the high costs of developing new technologies and new products.
To train our workers for the jobs of tomorrow, we’ve made education reform a top priority in this administration. Last year, we launched a national competition to improve our schools based on a simple idea: instead of funding the status quo, we only invest in reform – reform that raises student achievement, inspires students to excel in math and science, and turns around failing schools that steal the future of too many young Americans. I just met with the nation’s governors this week, and education reform is one of those rare issues where both Democrats and Republicans are enthusiastic.
And to achieve my goal of ensuring America again has the highest proportion of college graduates in the world by 2020, I’m urging the Senate to pass a bill that will make college more affordable by ending the unnecessary taxpayer-subsidies that go to financial intermediaries for student loans. It’s a bill that will also revitalize our community colleges, which this organization has recognized are a career pathway to the children of so many working families. And just as government needs to support young people eager to learn, I’m pleased to see that the business community has already begun to bet on the next generation of American talent. Just yesterday, seventeen high-tech companies announced plans to hire over 10,000 recent college graduates this year.
Finally, we’re investing in innovation that will lead to a more efficient, affordable, and consumer-friendly federal government. Many of you have harnessed new technologies to build thriving businesses and provide better services to your customers. There’s no reason government shouldn’t do the same, and give taxpayers a better bang for their buck.
With new technology, we’re creating a single electronic medical record for our men and women in uniform that will follow them from the day they enlist until they day they are laid to rest. We’re cutting down the time it takes to get a patent approved by cutting out unnecessary paperwork and modernizing the process. We’re working to give people the chance to go online and book an appointment at the Social Security office or check the status of their citizenship application – services countless businesses already provide.
In all of these areas – infrastructure, research, education, and government reform – we are making investments that will lead to new products and services that will help America compete on the world stage.
Of course, winning that competition also means we need to export more of our goods and services to other nations – something that supports more jobs here in America. Unfortunately, the federal government has not done a good enough job advocating for companies’ exports abroad.
That’s why in the State of the Union, I set a goal of doubling our exports over the next five years, an increase that will support two million jobs. To help meet this goal, my Secretary of Commerce, Gary Locke, recently announced that we’re launching a National Export Initiative where the federal government will significantly ramp up its advocacy on behalf of U.S. exporters. We are substantially expanding the trade financing available to exporters, including small and medium-sized companies. While always keeping our security needs in mind, we will reform export controls to eliminate unnecessary barriers. And we will pursue a more strategic and aggressive effort to open up new markets for our goods.
Now, I know that trade policy has been a longstanding divide between business and labor; Democrats and Republicans. But to those who would reflexively support every trade deal, I would say that our competitors have to play fair and our agreements have to be enforced. We simply cannot cede more jobs or markets to unfair trade practices. And to those who would reflexively oppose every trade agreement, they need to know that if America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. Other countries, whether China or Germany or Brazil, have been able to align the interests of workers, businesses, and government around trade agreements that open new markets and create new jobs. We must do the same.
That’s why we launched the Trans Pacific Partnership to strengthen our trade relations with Asia, the fastest growing market in the world. That’s why we will work to resolve outstanding issues so that we can move forward on trade agreements with key partners like South Korea, Panama, and Colombia. And that’s why we will try to conclude a Doha trade agreement – not just any agreement, but one that creates real access to key global markets.
A competitive America is also an America that finally has a smart energy policy. We know there is no silver bullet here – that to reduce our dependence on oil and the damage caused by climate change, we need more production, more efficiency, and more incentives for clean energy.
Already, the Recovery Act has allowed us to jumpstart the clean energy industry in America – an investment that will lead to 720,000 clean energy jobs by 2012. To take just one example, the United States used to make less than 2% of the world’s advanced batteries for hybrid cars. By 2015, we’ll have enough capacity to make up to 40% of these batteries.
We’ve also launched an unprecedented effort to make our homes and businesses more energy efficient. We’ve announced loan guarantees to break ground on America’s first new nuclear plant in nearly three decades. We are supporting three of the largest solar plants in the world. And I’ve said that we’re willing to make tough decisions about opening new offshore areas for oil and gas development.
But to truly transition to a clean energy economy, I’ve also said that we need to put a price on carbon pollution. Many businesses have embraced this approach – including some here today. Still, I am sympathetic to those companies that face significant transition costs, and I want to work with organizations like this to help with those costs and get our policies right.
What we can’t do is stand still. The only certainty of the status quo is that the price and supply of oil will become increasingly volatile; that the use of fossil fuels will wreak havoc on weather patterns and air quality. But if we decide now that we’re putting a price on this pollution in a few years, it will give businesses the certainty of knowing they have time to plan and transition. This country has to move towards a clean energy economy. That’s where the world is going. And that’s how America will remain competitive and strong in the 21st century.
We’ll also be more competitive if we address those costs and risks that are preventing our economy from reaching its full potential – outdated financial regulations, crushing health care costs, and a growing deficit.
Right now, we have a financial system with the same vulnerabilities that it had when this crisis began. As I said in the State of the Union, my goal is not to punish Wall Street. I believe that most folks in the financial sector are looking to make money in an honest, transparent way.
But if there aren’t rules in place to guard against the recklessness of a few, and they are allowed to exploit consumers and take on excessive risk, it starts a race to the bottom that results in all of us losing.
That’s what we need to change. We cannot repeat the mistakes of the past. We cannot allow another AIG or another Lehmann to happen again. We can’t allow financial institutions, including those that take your deposits, to make gambles that threaten the whole economy. We must ensure consolidated supervision of all institutions that could pose a risk to the system. We must close loopholes that allow financial firms to evade oversight and circumvent rules of the road. And we need robust consumer and investor protections.
I ask the members of the Business Roundtable to support these efforts. The lobbyists up on the Hill right now are trying to kill reform by claiming that it would undermine businesses outside the financial sector. That couldn’t be further from the truth. This is about putting in place rules that encourage drive and innovation instead of short-cuts and abuse. And those are rules that will benefit everyone.
Another undeniable drag on our economy is the cost of health care. Now, I appreciate the willingness of the Business Roundtable to work with us on health care reform, and when you’ve had concerns about specific measures or policies, we’ve listened and in some cases, made changes.
Still, I know there are many who have been skeptical of our reform efforts. In the wake of the extraordinary measures we took to rescue our economy, it’s been an easy political tactic to characterize any effort at health reform as a “big government takeover.”
But the truth is just the opposite. We have not called for the elimination of private insurance or our employer-based system. What we’ve called for is an insurance exchange where individuals and small businesses can pool together in order to get a better deal from insurance companies. In return for getting more customers, we would require insurance companies to stop discriminating based on preexisting conditions or arbitrarily jacking up premiums. We’ve also incorporated almost every serious idea from across the political spectrum about how to contain the rising cost of health care. As a result, our proposal would reduce the deficit by as much as $1 trillion over the next two decades.
These steps would provide more certainty for businesses, not less. Because there is no certainty in a future where premiums rise without limit; a future where companies are forced to drop coverage or cutback elsewhere. That can’t be good for business. Our proposal contains good ideas from Democrats, Republicans, and experts from across the spectrum. And tomorrow, I look forward to a good exchange of ideas at the Blair House. I hope everyone comes with a shared desire to solve this challenge, and I hope the Roundtable supports our efforts to finally pass this reform.
Now, one of benefits of health care reform is that by bringing down the cost of Medicare and Medicaid, it would significantly reduce our deficit. I know this an issue of great concern to many of you. Believe me – it’s been on my mind too.
I walked into office facing a massive deficit, most of which was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. And the lost revenue from the recession put us in an even deeper hole.
The steps we took to save the economy from depression last year have necessarily added to the deficit – about $1 trillion, compared to the $8 trillion we inherited. But I’ve also said that we intend to pay for what we added. My administration is doing what families and businesses all across the country are doing during these difficult times: we’re tightening our belts and making tough decisions. We’re investing only in what we need and sacrificing what we can do without. We’ve gone line by line through the federal budget, and identified more than 120 programs for elimination – a total of $20 billion in savings for next year. And starting in 2011, I’ve proposed a freeze on non-security, discretionary government spending for three years – something that was never enacted in the last administration.
I’m also grateful that Congress responded to my request and restored a simple budgeting rule that every family and business understands: Pay-as-you-go. And I’ve established a bipartisan, Fiscal Commission that will provide a specific set of solutions by the fall to deal with our medium and long-term deficit.
Of course, as many of you have reminded us, budget cuts aren’t the only step we’ve proposed this year to help bring down the deficit. Which brings me to everybody’s favorite topic: taxes. You’ll notice I saved the best for last.
I want to set the record straight on this issue, because it’s been one of the largest sources of tension between our administration and the business community.
During the campaign, I promised a tax cut for 95% of working Americans. I have kept that promise. We’ve provided over $150 billion in tax cuts to small businesses and families. We haven’t raised anyone’s income taxes by a single dime. This year, I expect to sign into law another $70 billion worth of business tax cuts for 2010 and 2011 – a more than ten percent cut in corporate taxes.
But I also made two other promises during the campaign. I promised that folks making over $250,000 a year would go back to paying the tax rates they did in the 1990s – a time when businesses did well and many millionaires were made. I’m not doing this to be punitive – I’m doing it because at a time of two wars and massive deficits, I just can’t justify continuing to give billionaires massive tax cuts.
The other promise I made during the campaign was to ensure that our tax code doesn’t provide relief and a competitive advantage to companies that move jobs and investment outside of the United States. Now, a number of you have made the point that we shouldn’t discourage anyone from keeping headquarters and operations in America and that we have to balance your need to compete overseas. So after listening to you, we’ve made some modifications in our proposal. But as president of the United States, my interest is to reward – or at least not disadvantage – companies who are creating more jobs and doing more business within the borders of this country. That’s not anti-business, it’s pro-America, and I don’t apologize for it.
On all of these issues – from education to health care to taxes – my first question can’t be “Is this good for business?” or “Is this good for labor?” It can’t be “Is this good politics?” or “Will this tag me as liberal or conservative?” It has to be, “Is this good for America? Does it help us compete? Does it grow our economy? Does it create jobs for the middle-class and those trying to join it? That’s my job as President.
But what I also know is that government can’t meet all of these challenges on its own. When it comes to education, we need parents who are willing to read to their children and help with their homework. When it comes to energy, we need consumers who are willing to buy more efficient appliances and automobiles, and conserve where they can. And when comes to an economy that works for every American, we need business leaders like you who understand that private enterprise comes with a public responsibility.
Andy Grove, who most of you know was the CEO of Intel, once gave an interview where he said, “Those of us in business have two obligations in my opinion. The one that’s un-debatable is that we have a fiduciary responsibility to…the shareholders who put us in our place…There is another obligation that I feel personally, given that everything I have achieved in my career, and a lot of what Intel has achieved in its career, were made possible by a climate of democracy, an economic climate and investment climate provided by our domicile, the United States.”
It is undoubtedly in the short-term interest of individual corporations to pay less in taxes and deal with fewer regulations. But it is in the long-term interest of all companies to do business in a nation that maintains the world’s best research facilities and universities; a nation with public schools that graduate highly-skilled, highly-educated workers; a nation with functioning railways and airports; a nation that is not dragged down by crushing debt.
If you pay your workers a salary they can raise a family on, they will feel more loyalty to your company. If we have rules of the road that guard against recklessness in our financial system, it will protect the interests of everyone from the wealthiest CEOs to the lowest-paid workers. If we give a child in the Bronx a world-class education, it doesn’t just benefit that child, it benefits the company that might hire him down the road and the country he lives in.
To put it simply, we are all in this together. We face some very big and difficult challenges as a nation right now. And the only way we’ll get through them – the only way we ever have – is if we align the interests of workers and businesses and government around a common purpose; if we all pick up an oar and start rowing in the same direction.
At a time of such economic angst, it is tempting, and perhaps easier, to turn against one another, and find scapegoats to blame. Politicians can rail against Wall Street or against each other. Businesses can fault Capitol Hill. And all of it makes for easy talking points and good political theater. But it doesn’t solve our problems. It doesn’t move us forward. It only traps us in the same debates and divides that have held us back for far too long.
We can’t afford that kind of politics anymore. Not now. We know the way forward. We know what the future can be. And I am confident we can get there. I am confident because we have the hardest-working, most productive citizens in the world. I am confident because our universities and research facilities are second to none. And I am confident because of the caliber of the leaders and businesses represented in this room.
We will not always agree on every issue or support the same policies. But I will never stop listening to your concerns and your ideas. Because we are in this together. All of us. And whether we rise or fall as nation does not depend on some economic forces beyond our control. It depends on us – on the ingenuity of our entrepreneurs, the determination of our workers, and the strength of our people. I will always believe in that strength, and remain hopeful about our future. Thank you.