March 26, 2012 A Year of Crucial Decisions

Volume 15 | Issue 1

America has come to a critical juncture, with its role as a global economic power at stake. Policy makers face important decisions – about t

Americans have important choices to make. Elections are only months away. Decisions made at polls will have long-term impact – and could determine the fate of US manufacturing.

We’re at a critical juncture. Right choices will accelerate growth and job creation. Wrong choices will leave us standing still or, worse, falling behind.

As the United States emerges from the severe economic downturn, manufacturing remains a bright spot.

As with every sector of the economy, manufacturing took a hard hit. During the most difficult recessional months, US lost more than two and a quarter million manufacturing jobs. But the country is now at the beginning of the slow process of restoring some of what was lost. In December 2011, 23,000 manufacturing jobs were added to the economy, and in the last two years, the country has added back about 330,000 cumulatively.

Moreover, the manufacturing economy remains strong, compared to competitors. For example, US manufacturing produces $1.6 trillion of value every year. Taken alone, it would be the ninth-largest economy in the world. And today, the United States produces 21 percent of the world’s manufactured goods. But second-place China nips at our heels, producing 15 percent.

Today, the state of manufacturing is “recovery.” But we can witness a “renaissance,” if our policymakers choose wisely.

Will Washington make wise choices? It shouldn’t be hard. The right choices will make the country more competitive and a less costly place to do business. Right choices include reversing the harm done in areas of tax, regulatory, energy and civil justice policies.

If the United States wants to maintain its mantle of global economic leadership, it must recognize that its federal policies must be focused on growth and competitiveness. And that means prioritizing manufacturing and ensuring its success.

The message is sinking in, as several indicators suggest. All US presidential candidates are talking about manufacturing and its importance to sustained economic growth. President Obama has made growing the manufacturing sector a priority for his administration. Senators and congressmen are joining the call for a strong manufacturing base as well.

So, as the critical election day of 2012 looms, candidates for office at all levels must make this basic choice:

• Will the United States choose dynamic policies that unleash the power of capitalism and lead to a road that produces a new era of prosperity and booming towns and cities filled with opportunity?
• Or, will the United States choose a different road that leads to the decline of a global superpower, with policies that pit Americans against each other, demonizing business, and threatening the very system of free enterprise that made a nation the strongest and best in the world?

ENERGY POLICY – AT A CRITICAL JUNCTURE
In the months ahead, the United States has a choice to make on energy. The President and Congress can hold back the development of existing and new sources of energy to power our nation, or they can embrace the country’s abundant resources.

For at least a decade, the United States has not had a coherent energy development strategy. Too often, policymakers legislate decisions that make energy less affordable – and that hurts individuals and businesses alike.

In January, President Obama denied a permit for the construction of the Keystone XL pipeline, which would bring oil from the oil sands in Canada to refiners in the United States. This one decision killed the promise of 20,000 direct manufacturing and construction jobs – and more than a 100,000 jobs related indirectly to the project’s construction and operation.

The administration had plenty of time to make a decision. The permit had been pending since 2009. This country built an interstate highway system in 10 years. I don’t think it is too much to ask that D.C. bureaucrats complete a review of a single pipeline in three years.

Despite clear benefits, the President said no, and now the reliable supply of energy and tens of thousands of jobs are on hold – indefinitely. Meanwhile, Canada may choose to look elsewhere – to a country that wants its energy supplies. There are growing economies across the Pacific that wants the oil. The United States has only so long before we lose this opportunity for good.

Policymakers also have a decision to make on the development of shale, which holds enormous promise for America’s future energy requirements. They can choose to let the development continue or to stand in the way.

Shale is a game changer for manufacturing and for our country – for chemical and steel companies, for the entire manufacturing economy. Shale development could lead to more than one million new manufacturing jobs, according to a new study from the National Association of Manufacturers and PricewaterhouseCoopers.

THE TAX ISSUE
Our elected officials also have a choice to make on taxes. At the end of this year, tax rates on individuals are set to rise unless Congress acts to reverse the increase. This tax hike would have a significant impact on manufacturers, 65 percent of which file as subchapter S corporations or other pass-through entities and thus pay taxes at individual rates.

Corporate tax reform should also be part of the discussion. It’s no secret that the United States has the second highest corporate tax rate in the world. Many in Washington acknowledge this fact makes investment in this country unattractive. They want to lower the rate.

Yet we continue to stand still, even as countries all over the world have figured out the benefits over lower corporate tax rates. Canada, for example, embarked on a series of rate cuts over the past few years and ultimately reduced its corporate tax to 15 percent.

In this country, advocates of corporate tax reform often call for lowering the rate to the average of OECD nations: 25 percent. While that is certainly an improvement over the current rate of 35 percent, the United States didn’t achieve its greatness by striving to be average.

We need to determine what rate will attract investment – domestic and foreign – and make that our target. Broadening the base, strengthening US competitiveness, ensuring everyone has a stake in the game when it comes to ensuring US success – these must be the goals of tax reform.

Those are but a few of the issues on a very long list, but the patience of Americans is running short.

Every candidate for federal office must forcefully and directly address each of these issues and let the American people know what he or she will do to bring down the cost of doing business in the United States in order to grow our economy, create jobs and make us more competitive.

For manufacturers, addressing challenges is not about politics; it’s about policy.

Will our nation’s leaders choose a path that diminishes America internationally and creates division among our people? Or will they choose a path that leads to prosperity at home and strength abroad through freedom, a vibrant system of free enterprise and continued American exceptionalism?

They have choices to make in Washington. And so do the voters of America this year.

Jay Timmons is president and chief executive officer of the National Association of Manufacturers (NAM) and a leading advocate for the nearly 12 million Americans employed in the manufacturing sector. NAM is the largest US manufacturing association. Its mission is to foster a stronger economy by enhancing the competitiveness of American manufacturers. To learn more about the organization, visit www.nam.org.

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