Olympia Business Watch

President's State of Union speech didn't address economic growth to create jobs or excessive regulations costing jobs

The fallout from Tuesday's State of the Union address continues. Tom Dononhue, president of the U.S. Chamber of Commerce, told the Fox Business channel it was a political speech "full of taxes and taxes, regulations and regulations, stimulus and stimulus. It doesn't address the two fundamental questions at hand and that is how do we drive growth into the United States to the extent that, number two, it creates jobs?"

"I heard a lot about how we were going to regulate things, how we were going to constrain things, how we were going to tax issues. But I didn't hear anybody say 'and here's what we're going to do to move forward, to liberate the free enterprise system in this country to put people back to work.' It was all about what government was going to do and what the president was going to do with the arm of government to see what he could do to put people back to work. But that's not gonna help," Donohue concluded.

Jay Timmons, president of the National Association of Manufacturers, responded: "The President deserves credit for highlighting manufacturing on a national stage, but presidential leadership requires more than speeches. President Obama had a chance to set a bold manufacturing agenda in motion, and he missed it."

"On regulations, for example, the President touted his Administration’s efforts to rein in some regulatory excesses and costs—$10 billion in savings over the next five years. But, Boiler MACT, Utility MACT, Cement MACT and the Cross-State Air Pollution Rule, to name just a few of this Administration’s rules, would impose costs that dwarf the savings highlighted by the President.

"And on labor, the President never mentioned the aggressive actions that the National Labor Relations Board took in the past year. If President Obama wants manufacturing to lead the economy, federal agencies cannot swoop in and tell manufacturers where they can do business."

Timmons concluded: "It’s 20 percent more expensive to manufacture in the United States than it is among our major trading partners — even after excluding the cost of labor. The best way to create an environment to increase manufacturing employment in America is to lower the cost of doing business through pro-growth tax rates, sensible legal policy, reasonable regulations and affordable and secure energy supplies."

The Association of Washington Business is Washington's state chamber of commerce and manufacturing and technology association as recognized by the U.S. Chamber of Commerce and National Association of Manufacturers, respectively.

Gregoire's staff lays out governor's final session agenda

Snow and ice did not deter the governor -- or rather, the governor's fiscal and policy leaders -- from kicking off AWB's 2012 Lobby Lunch series last week. 

Joining AWB members for lunch in Olympia last Thursday were Gov. Chris Gregoire's budget director, Marty Brown, and her legislative director, Jim Justin.

Brown, a longtime fixture in Olympia politics, did not mince words about the gravity of the challenge before lawmakers this session. While Brown believes the next revenue forecast will likely not be significantly different, caseload numbers are likely to shuffle the internal workings of putting together the supplemental budget. (State caseload figures are due out Feb. 10; the revenue forecast follows on Feb. 16.)

"This is tough. There is not an easy path to get this stuff done," said Brown. "There's a lot of uncertainty -- not so much in Washington state but...in the world economy. And our economy is not necessarily dependent on those things, but the consumer confidence that occurs with changes in Europe, activities of Congress, really is a key to our recovery."

Businesses are not back to full speed yet, Brown said, and any economic gains made through private sector hires are being offset by cuts in state and local governments.

"I don't see a real turn around, I don't see a real quick decision-making process here," Brown said, "but I also don't think [lawmakers] are going to stay long, either."

Given the legislative landscape, Justin characterized Gregoire's final policy agenda as a "fairly aggressive, broad" list of proposals for a 60-day session, offering thumbnail sketches of the governor's priority legislationn. The package includes 17 bills, though three of the six aerospace bills, Justin noted, were passed during the December 2011 special session.

Brunell: Buying American products creates American jobs

With continued high unemployment, growing deficits and a sluggish economy, it's easy to think that a solution is out of reach.

But that's not the case, AWB President Don Brunell writes in his weekly column. By choosing to "Buy American," individual consumers can make a real difference.

Buying American is not anti-trade, but rather about consumer choice, Brunell says. He notes the case of Anders Lewendal, a Bozeman, Mont. contractor profiled by ABC News for building a home using only American-made materials.

Lewendal says that using just 5 percent more American products in construction projects would create 220,000 jobs. And yet the cost of his "all American" home was just 1 percent higher than homes built with materials manufactured offshore.

Former Cheers actor John Ratzenberger has become the face of the Buy American movement, and he's sounding the alarm about the shortage of skilled American laborers and craft workers that results from buying products from overseas.

It's not too late to turn things around. The Buy American movement shows that opportunities abound, Brunell writes. Even in the most dire situations.

Gregoire asks business for help with tax simplification, education reform

Gov. Chris Gregoire called on the business community Tuesday to help pass her final legislative agenda, which includes an element designed to help small businesses: tax simplification.

Gregoire flatly disputed claims from the state's largest cities that they will lose millions of dollars in revenue if the state takes over collection of business and occupation taxes, comparing her proposal to the sales tax.

The state currently collects sales taxes and apportions money to local governments.

"These horror stories of how they're losing money? No they're not," Gregoire said. "We will give it back," she said, adding "I think it's the right thing to do for the small businesses of the state of Washington."

Gregoire also asked business leaders to support her proposed half-cent sales tax hike and to help persuade lawmakers to pass her education reform agenda, which she called a prerequisite for raising taxes. And she highlighted one way that her administration trying to lessen the regulatory burden imposed on business.

Sen. Kastama makes the case for a sustainable budget

Cutting programs and raising taxes might solve the state's immediate budget crisis, but it won't do anything to address the long-term problem.

Namely, expenses are rising faster than income.

Sen. Jim Kastama, D-Puyallup, explains the situation and -- and offers some solutions -- in a video to constituents. It's one of the best explanations we've seen for the state's seemingly never-ending budget woes.

He proposes eliminating some programs that have yet to be funded, addressing health care costs and making government more efficient. Whether or not you like those ideas, he makes a compelling case for doing something different.

"Even if we pass more taxes or make the cuts this year, the long-term projection in the state budget basically has to be dealt with, or else we will be in deficits every single year for the next five years," Kastama said.

Brunell: Thank goodness for farmers

With the holiday season nearly upon us, AWB President Don Brunell gives thanks to America's food producers, a group that leads one of the few bright spots in a persistently glum economy.

America's agricultural exports reached a record $127 billion this year and they are expected to grow another $2.3 billion in 2012, Brunell writes.

The sector got another shot in the arm last month, too, when Congress ratified new free trade agreements with South Korea, Columbia and Panama. Tariffs and trade barriers will fall as a result, and Washington state stands to be one of the biggest beneficiaries.

The trade agreement immediately wipes out a 24 percent tariff South Korea imposed on Washington cherries, reducing prices by 75 cents per pound.

It also phases out South Korea's 45 percent tariff on most apple varieties over the next 10 years and immediately eliminates that nation's 18 percent tariff on frozen potatoes.

"So while our nation and state struggle with record budget shortfalls and a skyrocketing federal deficit, it is good to start this year's holiday season with some good news," Brunell writes.

 

AWB Health Care Forum underway

James Capretta, a fellow with the Ethics and Public Policy Center, kicked off AWB's forum on health care reform today with an overview that described the numerous questions that remain unanswered about how federal health care reform will actually work, and how the government will pay for it.

Most people won't notice any impact as a result of the law until 2014, and the long delay between its passage and implementation carries important political and substantive implications, Capretta said.

Already, the Obama administration has pulled the plug on a long-term care provision of the law known as as the CLASS Act that was supposed to save $70 billion, he said.

Other elements that were supposed to help pay for the law are failing to meet expectations or are under threat, including planned taxes on medical devices and rich benefit plans known as "Cadillac" plans.

Medical device manufacturers are fighting the planned tax on their products, and labor unions want to repeal the Cadillac tax, which isn't scheduled to take effect until 2018.

McKenna, fresh from campaign kickoff, shares his 'New Direction' with AWB

On Tuesday, Rob McKenna reportedly served up "some familiar Association of Washington Business-style bromides" regarding government regulation.

That's how the Seattle P-I.com described part of the attorney general's breakfast speech kicking off his 2012 gubernatorial campaign, anyway.

On Wednesday, McKenna stopped by AWB's office in Olympia for a lunchtime visit with some of the state's business leaders, and he took aim at the remark.

"I just have to point out that people who write things like that have never been in a position to deal with the regulations that we're talking about here, as all of you have, as I have been as private legal counsel to small businesses and large companies," McKenna said. "This is not an abstract or hypothetical or idealogical issue. It is real and it has to be addressed in a real fashion."

McKenna makes it clear how he would address the problem in one of three white papers that lay the foundation for his campaign. The first of the papers, A New Direction for Job Creation in Washington State, offers a detailed list of proposals aimed at reducing unemployment.

They include an examination of regulatory policy, as well as competitive tax reform, ending the state monopoly on workers' compensation and liability reform.

But just as he did Tueday in his kick-off speech, McKenna spent much of his time Wednesday talking about education issues.

Brunell: Deadbeat Illinois serves as a warning

The budget crisis is so bad in Illinois that the state has simply stopped paying its bills, AWB President Don Brunell writes in his weekly column. And this is after lawmakers pushed through huge tax increases.

Why should we care what happens in Illinois? Because it's a warning to us all.

Illinois is by no means alone in its fiscal crisis. The recession revealed systemic weaknesses in cities and states across the nation -- weaknesses that were masked initially by a strong economy and later by federal stimulus money.

Still, the borrowing and spending continues. And it's largely our fault. "We all want cuts, but not to our program," Brunell writes. "We call for fiscal restraint from our elected leaders but howl when our ox gets gored."

The solution, he writes, is to once again audit tax incentives and eliminate the ones that aren't paying for themselves, attracting new investments or creating or preserving jobs. Next, lawmakers need to jettison non-essential services or turn them over to the private sector.

And most importantly, lawmakers must streamline Washington's costly, complex and overlapping regulations.

"Simply put," Brunell writes, "the cost of permits is out of whack in Washington state and it is killing employers in the private sector, non-profit groups -- even other essential services like first responders, hospitals and schools."

US gov't runs $1.3 trillion budget deficit in 2011

According to the Associated Presss today, the government ran a $1.3 trillion for the budget year that ended last month.  It is the third straight year it has operated more than $1 trillion in the red bringing the nation's debt to $14.8 trillion.

The 2011 budget deficit was the second highest on record. It's slightly ahead of the previous budget year's $1.29 trillion deficit but below the $1.41 trillion imbalance record in 2009. Our record debt is making it difficult for the U.S. government to borrow.

A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable. But those deficits now loom over tense negotiations in Washington.

Congressional lawmakers, led by Washington's Sen. Patty Murray (D), are under pressure to agree by Thanksgiving on where they can cut $1.2 trillion over the next decade. If they cannot, automatic cuts to Medicare, defense spending and other critical areas of the budget would go into effect in Jan. 2013.

As of this very minute, according to the federal debt ceiling clock, each U.S. citizen owes $47,508.  Even more troubling is that each taxpayer owes a whopping $132,165.