America’s unemployment rate has settled in around the distressing 10 percent figure, even as the U.S. economy increasingly shows sign of recovery. Not surprisingly, the public and politicians alike have united behind a pressing need to create jobs.
Manufacturers agree, but also offer the reminder that it’s the private sector that best creates sustainable growth and employment, the foundation of a strong U.S. economy. Achieving these goals depends on the ability of manufacturers in the United States to compete in the global marketplace.
If elected officials are serious about reducing double-digit unemployment, they must enact policies that maintain and improve U.S. competitiveness.
To reinforce these arguments with solid economic analysis, the National Association of Manufacturers (NAM) recently commissioned an in-depth study from the nonpartisan, independent Milken Institute. The result is a report, “Jobs for America: Investments and Policies for Competitiveness and Growth,” that should serve as guide for policymakers intent on jobs and the economy.
The study clearly demonstrates the jobs-creating value of Congressional action to reduce corporate tax rates, establish a permanent research and development (R&D) credit, modernize the U.S. system of export controls and make major investments in energy and transportation infrastructure.
Not only would these policies create millions of more jobs by 2019, they would enhance the long-term global competitiveness of manufacturing in the United States.
Using widely accepted economic models and assumptions, the Milken Institute’s economists reached these key findings:
- Reducing the U.S. corporate income tax rate to match the average of our competitors in the industrialized world (OECD countries) would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.
- Increasing the federal tax credit for research and development by 25 percent and making it permanent could boost real GDP by $206.3 billion, generate 316,000 manufacturing jobs, and raise total employment by a half-million jobs within a decade.
- Modernizing U.S. export controls could increase exports in high-value areas. By 2019, these policy adjustments could enhance real GDP by $64.2 billion (0.4 percent), create 160,000 manufacturing jobs, and expand total employment by 340,000.
Separately, the study also concluded a huge economic impact would result from government expenditures in 10 areas of infrastructure — highways and transit, broadband infrastructure, onshore exploration/offshore drilling, drinking water and wastewater infrastructure, smart grid, sustainability projects (natural gas and clean coal technology), nuclear energy, waterways and aviation (NextGen).
The proposed investments amount to $426 billion, creating 3.4 million construction-and R&D-related jobs. By stimulating economic activity in other sectors, the total impact would add up to more than 10 million jobs.
These policy recommendations will no doubt look familiar to readers of Industry Today. Manufacturers have long called for an agenda for growth that embraces a more competitive corporate tax structure, incentives for R&D, expanded trade opportunities, and investments in transportation, communications and energy infrastructure. And Washington abounds with credible studies, analyses and reports.
ANSWER IN THE PRIVATE SECTOR
President Obama’s budget released in early February reinforces the public’s concern. The president’s budget calls for almost $500 billion in new taxes on businesses over the next 10 years – and that’s even before the taxes wrapped into the health care and cap-and-trade proposals. This approach will simply make manufacturers in the United States less competitive globally.
Let’s keep the best of what government does, such as the multiyear investment in infrastructure, the foundation of U.S. economic activity.
But we must also unleash the private sector, encouraging manufacturers and others to create jobs right away while ensuring U.S. competitiveness in future decades. “Jobs for America” attests to the impact on employment and economic growth that smart, growth-oriented policies can achieve by creating a more competitive environment for manufacturers in the United States.
This is a growth agenda, one that can create millions of jobs as manufacturers lead the way into recovery and sustained economic growth. To achieve it, policymakers must legislate with our position in the global economy in mind. If they do, we can accomplish jobs for America first while ensuring competitiveness and growth.
John Engler is president of the National Association of Manufacturers, whose mission is to enhance the competitiveness of manufacturers by shaping a legislative and regulatory environment conducive to U.S. economic growth and to increase understanding among policymakers, the media and the general public about the vital role of manufacturing to America’s economic future and living standards. Visit: www.nam.org.