Stamford Chamber Speech

Statement

Good morning. Thank you very much for that kind introduction, and thank you all for inviting me to join you today.

I want to talk with you about the economy today -- where we are, where we need to go and how I think we can get there. And I would also like to hear from you -- both your questions and your thoughts about the local and national economy and what we can and should be doing together to help create the right business climate for growth and job creation.

First, where are we? While there have been some glimmers of good news over the past few months, there is no sugar coating the fact that the economic recovery is not what we want it to be and hard work still lies ahead to get economic growth back on track, create high-quality jobs, and revitalize America's competitive position in the global economy.

In the context of considering additional measures to strengthen the economy, I think it is worth emphasizing that the current economic situation would have been much worse if the federal government had not taken aggressive actions in 2008 and 2009 to restore confidence in the financial system and put the economy back on a path towards recovery.

According to a recent study by economists Alan Blinder of Princeton and Mark Zandi of Moody's Economy.com, had it not been for President Bush's intervention to stabilize the financial industry through TARP and President Obama's injection of about $800 billion to support and jump-start the economy, GDP would have been 11.5% lower than it currently is, we would have lost another 8 ½ million jobs, and the economy would been sucked into a deflationary spiral that could have easily turned into another Great Depression instead of the Great Recession we are working our way out of.

But saying it could have been worse is no relief for those in economic pain today nor is it a plan for the future. So what can we do now?

There are two major challenges ahead of us, and we have to prioritize them. First and foremost, we must do everything we can to get our economy growing again, creating jobs. Second, we need to adopt a longer-term plan that will bring our federal budget back into balance. I believe that focusing on the first -- doing everything we can to create economic growth now -- will help make the long-term fiscal challenge of balancing the federal budget more manageable.

Congress has been back in session for a week and we have a few more weeks of work before the elections. I want to discuss with you now three specific measures that I am confident will help our economy grow again.

First, we just passed the Small Business Jobs Bill, which provides $12 billion of tax cuts for small businesses and other measures to improve their ability to access capital to invest in and grow their businesses.

The bill will encourage investments in small business by eliminating capital gains taxes on the sale of qualifying small business stock. It will help small businesses grow their companies and simultaneously strengthen the real estate and construction markets by allowing them to immediately expense up to $250,000 of the cost of leasehold improvements and qualifying restaurant and retail properties rather than depreciating those costs over time.

The bill will also dramatically increase businesses' ability to access capital by increasing the size of Small Business Administration loan limits and eliminating government fees on SBA loans.

Finally, the bill creates a $30 billion small business lending fund that will provide incentives to banks that use the lending fund to increase their lending to small businesses. I also want to stress that this lending fund will not cost taxpayers one dime and is in fact expected to generate a small positive return for the federal treasury.

Second, the surest way for Congress to help bring about a double dip recession is to allow taxes to be raised on anyone during this uncertain economy we are struggling through.

And that means I will do everything I can to make sure Congress extends the so-called Bush tax cuts. These cuts were originally passed at a time when the economy was strong. I supported most of them, but opposed a few of them because I thought we needed to pay the costs of the war we were fighting after 9-11, and we needed to stay out of debt. But now in our current economic situation, we cannot risk the economic headwinds that would be caused by tax increases. We need to keep as much money as possible in people's pockets and business's bank accounts.

I know that many people, including the President, have argued that the tax cuts should not be continued for people making more than $200,000 a year, but to me these are the people we need to be using their income to spend and invest to spur growth and job creation. The fact is that the top three percent of American income earners account for 25% of the consumption in our economy. Remember consumer demand is still the major driver of economic growth in America. I want the top income earners in our country to have the confidence and the money to spend and invest over the next year, rather than worrying about paying more in taxes to the federal government.

I think there is a path forward on extending the tax cuts that can also cut through the partisan gridlock and heated rhetoric that has been paralyzing Washington and keeping us from taking the actions that we need to get our country back on the right track. I have had promising discussions over the past several days with colleagues from both sides of the aisle who see a bipartisan path forward on a permanent extension of the middle-class tax cuts and a temporary extension of the tax cuts for the highest income brackets to make sure that nobody's taxes go up while the economy is still struggling to recover.

The government cannot ultimately get the economy back to robust growth. The private sector must do it, and raising taxes now will, I fear, make that impossible. Individuals and businesses also need certainty and predictability to make spending and investment decisions, so I feel strongly we should pursue a bipartisan solution to resolving this tax issue quickly rather than letting it fester as a political pawn.

The third measure we should focus on is export growth. Congress must do everything it can to encourage the growth of American exports. Exports create jobs, particularly here in Connecticut.

Just about the best news that we have had about our state's economy recently is that exports from Connecticut increased by more than 16% during the first half of 2010, compared to 2009 levels. We must be doing everything we can to encourage and support that promising trend.

We have that opportunity in three comprehensive free trade agreements that have already been negotiated with Korea, Columbia and Panama. The Administration has set a deadline to finalize a few remaining details of the Korea Free Trade Agreement by the G-20 Summit in Seoul this November. The President should make sure that goal is met and quickly submit the agreement to Congress for approval.

Connecticut's aerospace industry, in particular, and the many firms of all types that support that sector are poised to benefit greatly from finalizing those agreements and the reduction of other trade barriers throughout the world.

Let me give you just one specific example of how free trade agreements benefit Connecticut. After the United States entered into a free trade agreement with Singapore that went into effect in 2004, Connecticut's exports to Singapore increased 71 percent between 2004 and 2008.

If Connecticut businesses and workers can sustain our current rate of export growth, we will meet the President's ambitious and important goal of doubling exports over the next five years, and more important, support existing jobs in our state and create good new jobs.

Let me also repeat: While our immediate attention and actions need to remain focused on doing everything we can to get back on a path of solid growth in the near term, we also must deal with the long-term budgetary imbalances and mounting national debt that we face over the longer term or we will fall back into a deeper hole than the one we are struggling to come out of now.

In December, the President's bipartisan National Commission on Fiscal Responsibility and Reform is scheduled to issue its report and proposals to Congress about measures we can pursue to get our budget back in balance and our nation's debt under control.

I look forward to reviewing these recommendations, the rationale behind them, and working with colleagues from both sides of the aisle to bring the best recommendations up for prompt consideration by the Senate.

But the one thing that is certain is that we will have to make some tough choices. If we don't change our current fiscal course, just twenty years from now, every dollar the federal government raises in taxes will be used to pay for entitlement spending and interest on the debt.

That means every other part of the federal government -- national defense, environmental protection, food and drug safety, highway construction, air traffic control, law enforcement, courts, scientific research -- will either be paid for in borrowed dollars or dropped from the budget.

When Congress receives the Commission's recommendations shortly after the elections, we will have another chance to prove our ability to put partisanship aside and come together to solve America's most pressing problems. We cannot fix the serious fiscal challenges we face without taking political risks for the good of America's future.

Our economy needs a serious tune-up, but our political system needs a major overhaul. Your elected representatives and leaders in Washington need to stop putting their parties' interests before the national interests, or we will never get this great country of ours back on the right track.

Thank you and now I'm ready for some questions and comments.

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