I appreciate that the Virginia Chamber has always represented the voice of business in Virginia. The Chamber also has not been willing to be viewed as a partisan entity, and you have supported folks in both parties who are working to get the job done.
I also want to thank the Virginia Chamber for standing with our gubernatorial administration back in 2004 as we worked to get Virginia’s balance sheet fixed. Our actions helped lead to Virginia’s designation as the nation’s ‘best managed state,’ the ‘best state for business,’ and the ‘best state for a child’s education.’
I think most of you know that I’ve spent most of my career in business, trying to meet a payroll. But you may not know that my first two businesses failed. If it hadn’t been for the opportunities offered by this country and our free enterprise system, I don’t’ know if I would have had a third chance.
It just so happened that my third shot came in the early 1980’s in the brand new cell phone industry, and I managed to eke out a nice living from that.
But I want you to know that I completely understand what it takes, and what it means, to build and maintain a successful business.
The Economy: Then & Now
And let me just say, since we are in a candid forum, that there are issues on which I disagree with this President. But it’s also important to keep in mind that America’s problems - the deficit we have dug, the lack of appropriate oversight, in a variety of areas - did not begin in January of 2009.
When we look at how we got to this position, there is plenty of blame to go around: Democrats, Republicans, the regulators and, if we’re going to be completely honest, many Americans who took out mortgages they could not afford.
For the last decade, our economy has been based on an inflated housing market and exotic financial instruments. Our economy stood on top of a financial house of cards that allowed governments, businesses and American consumers to get dangerously overleveraged.
When the music finally stopped, we almost had a complete financial collapse.
As someone who’ll match my business credentials with anybody in this room, it stunned me when I started digging in, and learned just how close we came to a complete financial catastrophe - a fiscal disaster that could have been exponentially worse than it ultimately turned out to be.
That has resulted in a wild 20 months here in Washington. Let me briefly touch on some highlights - the good, the bad and the ugly.
I actually believe that history will treat President Bush and Secretary Hank Paulson well for their courage on the TARP legislation in the Fall of 2008. As ugly as that bank bailout was, I think it was necessary. In retrospect, it could have been better defined. But when the house was burning down, they demonstrated remarkable courage in taking those actions.
I also think that history will conclude that President Obama and Secretary Tim Geithner were right that last year’s stimulus bill was necessary. I will be the first to acknowledge that it was probably the worst piece of political marketing in history, but I believe the stimulus prevented an even worse economic catastrophe.
The stimulus package fell into three buckets.
The first bucket - $280 billion - represented the third largest tax cut in American history. Families got it, businesses got it, home and car buyers got it. Most Virginia families, in fact, have seen almost $1,100 in payroll tax relief since last year.
The second bucket propped-up the states, and was crucial in preventing even deeper spending cuts and potential layoffs of teachers and deputy sheriffs. I remember being down in Richmond last January and a number of Republican legislators came up to me and said, ‘Governor, we’ll keep kicking you for all of this Washington spending, but please keep those stimulus checks coming!’
Because of the stimulus package, Virginia public schools have received nearly $2 billion. And it’s fair to say just about any highway or bridge project underway in Virginia today is the direct result of the stimulus program.
The third stimulus bucket probably represents good policy, but I’m not sure it was necessarily stimulative. This final third is funding a series of things that most of us in the room would consider to be worthwhile — things like the clean-energy industry, building-out the national power grid, expanded broadband access and health IT and work on high-speed rail. These are areas in which we as a nation have fallen behind, and these are smart investments –but they are not immediately stimulative.
I want to be clear: no one is happy about where our economy is today.
But it is important to remember where we were in the Spring of 2009. The Dow was at 6,500, we were losing 700,000 jobs a month, we were not sure if we would ever see any money paid back from the TARP and we weren’t sure when we were going to see positive growth in the GDP.
Well, here we are in September 2010, and the Dow is back to 10,500, we’ve had three quarters of positive GDP and job growth, and we’re getting 80-to-90 cents repaid for every dollar spent through the TARP bank bill.
Let’s Get Serious About Innovation & Competitiveness
So where do we go from here? Let me briefly pose some of the challenges to you.
America’s leading corporations have a combined two trillion dollars in cash sitting on their corporate balance sheets right now. But if you are a small business owner in America today, it continues to be extremely tough to get credit.
Last week, the Senate finished work on a package of new tools and significant tax breaks for small businesses - legislation that I’ve been working on for almost a year now.
It raises Small Business Administration loan limits and eliminates SBA fees. It builds-out what’s called the Capital Access Program, a small business lending program that’s proven effective in Virginia and 25 other states. It is estimated that a $1.5 billion investment in the Capital Access Program will leverage up to $30 billion dollars in lending to small businesses.
The small business package also provides about $12 billion in tax breaks for entrepreneurs and small business owners.
All of you know that small businesses are the lifeblood of any economy, and two-thirds of all jobs coming out of a recession come from small businesses. I think these new tools and tax breaks will be a help, at least around the margins.
The second thing I want to mention today is exports. We all know the statistics: yes, there are a billion people in China and a billion people in India, and they’re all competing for our jobs. But there are a billion people in China and a billion people in India that also want to buy our stuff.
Exporting may be the single biggest economic opportunity that we have.
We need to exponentially increase U.S. exports. The Administration is trying to do this. And my office recently hosted an export summit in Richmond to provide expertise and networking opportunities for almost 200 Virginia businesses.
The third issue I’ll mention today is the continuing need for our nation to adopt a portfolio approach to energy. I’m talking about renewable energy, like wind and solar. I’m talking about modern, safe nuclear power. Yes, it also means more natural gas and offshore oil production, once we’ve incorporated the lessons learned from the Gulf oil rig accident. A portfolio approach also includes clean coal technology and increased research and development into biofuels.
I happen to think the greatest job and wealth creator in this country over the next 25 years will be in the energy space. And right now, China is eating our lunch. I don’t believe the government should be picking the winners and losers, but I do believe we need to have a broad energy mix.
Fourth: we must work to strengthen our manufacturing base. You know, we could use fewer financial engineers and a few more real engineers that actually make stuff in this country.
There’s no reason we cannot have a strong manufacturing base once again in America. Germany has higher wages and higher taxes than us, yet Germany has climbed out of this worldwide recession based almost entirely on its manufacturing and its exports.
Here in America, the federal government has used just about all of the bullets we have available through fiscal stimulus and monetary policy. Now we must look for ways to provide more predictability and consistency to encourage corporate America to begin spending or investing some of the combined $2 trillion in cash that’s sitting on corporate balance sheets today.
I believe we need to look for ways in which we can adjust our tax policies to help jump-start research and development, encourage innovation and promote this new investment.
Over the longer-term, what looms out there is the federal budget deficit. Frankly, the rhetoric that both parties have offered — that we either are going to solve the deficit by soaking those people at the very top, or that we are going to get rid of our deficits simply by cutting waste and fraud around the edges - doesn’t make any sense.
And it’s time for some straight talk about Social Security. As recently as 1950, eight workers supported every Social Security beneficiary. In just a few years, we will be down to two workers for every Social Security recipient.
That’s not politics: it’s math.
Tune-Out the Hyperpartisanship
Even with all of these challenges, I still aspire to be a ‘bipartisan radical centrist.’
One thing that frustrates me is, as recently as three or four years ago, most of the major daily newspapers in Virginia had reporters up here covering Congress. They routinely reported on the work of Virginia’s congressional delegation for the folks back home.
Today, no Virginia newspaper has a presence on Capitol Hill. Everything you read and hear about Congress is mostly confined to the partisan noise you can find on cable TV at every hour of the day. And that’s true whether you choose to watch Fox News or MSNBC.
So you probably are not aware that, during last year’s health reform debate, I was one of only four Democrats to vote with 30 of the 40 Senate Republicans for medical malpractice tort reform. And while the overall health reform package was far from perfect, I can tell you it is neither as bad as the critics claim — nor as good as many of its supporters might say.
You also may not know that I spent more than a year working on Wall Street reform with a strong Republican partner, Tennessee Senator Bob Corker. Our assignment, as junior members of the Banking Committee, was to come up with a series of tripwires to prevent any financial firm from becoming ‘too big to fail.’ We also agreed on an orderly resolution process that ends taxpayer bailouts. And our piece of the Wall Street reform bill received 95 votes in the Senate.
I recognize I am the only thing standing between you and lunch, so I’d like to leave you with this final thought on the hyper-partisan tone here in Washington.
I often tell people that, if you watch Fox News, you ought to turn on MSNBC every once in a while. And if you watch MSNBC, you ought to sample what’s on Fox News from time to time. Recognize that there are alternative views out there, and it’s not always just about the loudest voices on either extreme.
I urge you, as members of Virginia’s leading business organization, to seek out and support those individuals — from both political parties — who readily acknowledge that neither side has all the right answers.
And you should try to support those of us here in Washington who are working to find commonsense, bipartisan consensus. Resist the urge to simply follow that crowd which instinctively says ‘no.’
I would welcome that kind of partnership with you. And I stand ready, as always, to work with you as we try to get our country back on the right track.
Thank you very much.
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