President Obama’s CEO Summit is expected to include leaders from companies as diverse as Google, American Express and Dow Chemical, who will gather to discuss making America more globally competitive. Brookings experts Martin Baily, Darrell West and Bruce Katz preview the meeting and offer recommendations on what the working session should focus on to restore growth, innovation and jobs.
President Obama was right to reach agreement with Republicans to extend the Bush tax cuts for two years and provide additional stimulus measures, including extended unemployment insurance. The economy is now turning toward faster growth, albeit painfully slowly, and the agreement helps cement the recovery. The best reason for cash-rich companies to invest in America is because they see customers coming back and profits to be made.
As Obama meets with corporate leaders, however, he must do more to change his relationship to them. Many fear that continuing huge budget deficits will inevitably lead to higher taxes ahead as well as higher interest rates and even a threat to U.S. sovereign debt. Add in concerns about energy taxes, new regulation and the impact of rising health care costs and the climate among business leaders remains very hostile to the President.
Whether all these fears are justified is debatable. After all, the economy ran into a tree at 90 miles an hour so it is not surprising, nor is it the fault of this administration, that there are still severe injuries to heal. Regardless, the president must speak from his heart, not just from his mind, letting business leaders know that he will lead the effort to tackle the deficit and that he will design all of his policies with full recognition that America must remain the best location in the world to do business.
As President Obama meets with key CEOs and business leaders at the White House, I hope that one of the messages he will hear is that we must reform our immigration policy to allow U.S. businesses to hire and train the highly skilled labor force they need.
Our current immigration priorities and outmoded visa system discourage skilled immigrants and hobble the technology-intensive employers who want to hire them. These policies work against efforts to increase economic vitality and bolster our competitiveness in the global marketplace. In the long term, we need comprehensive immigration reform. In the short term, we should focus on increasing the “brain gain” for the nation to create new jobs and produce economic benefits.
The recommendations I would put on the table include:
- Change visa rules to give employers greater access to workers with the scientific and technological skills they need, including increasing the number and duration of “H1-B” visas for skilled workers.
- Tie immigration levels to national economic cycles to bring in more workers when we need them most for economic stimulus and job creation
- Use digital technologies to modernize the current visa system, easing the process for skilled applicants the world over, and tracking the results with greater efficiency and accountability
The partisan political debates over immigration and the largely false fears that immigrants are taking jobs away from Americans have clouded the facts, and contributed to the diminishment of the United States’ status as a leading innovator in science, technology and business.
Throughout history, this nation has been a magnet for talented, hard-working immigrants who want to succeed. Their efforts as entrepreneurs, engineers, scientists and technology pioneers have built world-renowned businesses, created jobs and prosperity, and stand at the very core of the American dream. We should strengthen the proud—and economically successful—policies that embrace such immigrants.
The challenge for the president and business is twofold: how to grow jobs in the near term while retooling the economy for the long haul. The United States cannot return to an economy characterized by excessive, debt-leveraged consumption. Rather, we want to move forward to an economy driven by exports, powered by low carbon and fuelled by innovation.
The playbook of our competitors is quite straightforward: invest with public and private capital in the things that matter (e.g., first class infrastructure to move people, goods, ideas, and energy) in the places that drive their economies—major metropolitan areas like Shanghai and Mumbai and Sao Paolo and Munich. (We recently examined proven strategies from around the world at our Global Metro Summit held in Chicago.)
We must do the same. The president’s National Commission on Deficit Reduction offered a logical solution: “cut and invest.” Dial down wasteful federal incentives that subsidize consumption. Dial up investments that catalyze production and spur innovation.
Best example: The single act of capping the federal mortgage interest deduction, by far the most consumption-inducing subsidy in the tax code, would generate $177 billion in savings over the next five fiscal years. That’s more than enough to make a sizable contribution to deficit reduction and capitalize a series of market shaping investments.
What to fund? We need nimble, market-oriented institutions to unleash private capital and make investment decisions based on merit and evidence rather than politics.
For starters, a National Infrastructure Bank would bring private firms to the table to make transformative investments in our export infrastructure: multimodal facilities at our major ports and improvements to our freight rail networks. Establishing a network of “Energy Discovery Institutes,” perhaps, would quicken the cycle of green invention, financing, commercialization, and production. Or support for small and medium sized manufacturers so they can accelerate technological innovation and sharpen their competitive edge.
Private capital and private entrepreneurs are sitting on the sidelines ready to be deployed.
America cannot just cut its way to the next economy. Government and the private sector together need to invest for the long term, with deliberation and discipline.