The
Business Roundtable is an association of the chief executive
officers of leading corporations with a combined workforce of
more than 10 million employees in the United States. Our CEOs are committed
to advocating public policies that foster vigorous economic
growth; a dynamic global economy; and a well-trained and
productive U.S. workforce essential for future
competitiveness.
The Roundtable is committed to fostering sustainable,
long-term, non-inflationary economic growth to build on our
unprecedented decade-long expansion. The CEOs of our member
companies are committed to working with the new administration
to ensure that our nation’s prosperity continues.
We do not have all the
answers; indeed, we don’t even know all the questions. We do know that in
this New Economy of unprecedented technological change,
identifying the driving forces that will determine our future
demands cooperation between government and business
leaders.
We are committed to developing
Key Economic Policy
Initiatives – An Agenda for Early Action with
government at every level. In so doing, we are
mindful that the new administration will inherit an economy
characterized by:
·
All-time
high levels of productivity, with standard measurements no
longer adequate to predict the dynamic pace of
growth.
·
Full
employment as a reality, not an unattainable
goal.
·
New ways
of doing business (e.g., e-business) that will only
accelerate, challenging our very assumptions about the
potential for future economic growth.
In the next four years,
business and government will need to communicate even more
effectively and more rapidly to meet the challenges of the New
Economy. To
sustain this unprecedented growth, we know we must:
·
Implement
sound fiscal and trade policies that maintain our leadership
and credibility in global financial markets, enhance our
industrial base, and grow our global manufacturing
competitiveness.
·
Increase
the number of export-related jobs and increase the lifelong
accessibility of educational opportunities for all
Americans.
·
Restore
fairness, balance and predictability to our civil justice
system.
·
Streamline
and provide greater flexibility to what is too often an
excessively centralized and cumbersome regulatory
system.
·
Reverse
the slide in federally funded research and improve the
mechanisms for downstream development with the private
sector.
We look forward to working
with the new administration to develop a new partnership
emphasizing quick and positive response to challenges that are
increasingly difficult to forecast.
INITIATIVES FOR
EARLY ACTION BY NEW ADMINISTRATION
We
believe the new Administration, as with Presidencies past, has
an opportunity to establish a strong agenda for reform in its
early days in office.
The early days of a new Administration and Congress
have traditionally provided real opportunity for bipartisan
cooperation built on good faith compromise and
cooperation. In
this spirit, we offer an agenda for early action recognizing
both reform and responsibility are required by business and
government leadership to build Key Economic Policy
Initiatives – An Agenda for Early Action.
INTERNATIONAL TRADE AND
INVESTMENT POLICY
We need new international
trade negotiations to remove the remaining foreign trade
barriers to U.S. exports and investment and to prevent the
spread of new barriers.
Unfortunately, major multilateral, regional and
bilateral negotiations involving the United States are at a
standstill, while our trading partners are negotiating new
regional and bilateral agreements. The President should
reinvigorate the stalled WTO, FTAA and APEC negotiations and
pursue new bilateral initiatives where
appropriate.
·
Support “Fast Track”
Authority: The United States’ leading
role in the global economy has fueled the longest running
economic expansion in U.S. history. The President should
have “fast track” trade negotiating authority that allows
flexibility to negotiate and implement strong agreements with
our trading partners to further reduce global trade barriers
and grow the number of export-related domestic jobs.
FISCAL RESPONSIBILITY &
TAX POLICY
The
Administration's first budget submission must demonstrate a
clear commitment to fiscal discipline and budgetary
accountability. Overall federal
spending should be appropriately constrained, and surplus
federal funds should be dedicated to reducing the federal
debt. Any effort
to use budget gimmicks or unrealistic projections to disguise
actual expenditures should be rejected. A budget
framework based on sound economics and accurate forecasts will
boost the confidence of the global capital markets in the new
Administration's fiscal reliability.
·
Priority
of Tax Cuts:
To the extent
that federal budget surpluses are not used to reduce the
national debt, they should be converted into tax cuts that
sustain economic growth.
·
Individual/Corporate Mix of
Tax Cuts: Any
significant federal tax reduction should include a corporate
tax cut. Under a
policy-neutral guideline, taxes would be cut in the same
proportion as they have contributed to eliminating budget
deficits. This
translates into a $1 corporate income tax
cut for every $4 of cuts in individual income
taxes, the proportion that prevailed since the current
economic expansion began in 1992 and deficits disappeared in
1998.
A top
priority for U.S. tax policy should be simplification and
certainty: complex tax rules place an extensive and costly
compliance burden on American business, while often
undermining their global competitiveness. Such rules can foster
inefficiency and uncertainty in all aspects of a company's
operations, from investments in new equipment or research
projects to the conduct of overseas businesses. Moreover, the
compliance process itself consumes financial resources, which
could support more productive activities. Specific
recommendations include:
·
Support a Permanent R&D
Tax Credit:
Technological advances have
helped drive U.S. economic growth over the past decade and are
the direct result of a long-term private and public commitment
to increase investment in research. The income tax credit
for research has played a critical part in this economic
success story. A
permanent research credit is critical to continue this
momentum and to sustain the productivity improvements
necessary to ensure America’s leadership in the new economy
and to support today’s high standard of living for working
families, both now and during their retirement years.
·
Reduce
the Corporate Tax Rate: Lowering the corporate income
tax rate is the most effective form of corporate tax
reduction.
Today’s high rate is a relic of deficit-cutting and
obsolete politics.
A lower tax rate would affect all types of
corporations, big and small, in all lines of business and in
all parts of the country. It would make funds
available for economic projects that have the best prospects
for creating value and continuing growth. The corporate rate
was increased in 1993 from 34% to 35% to help eliminate the
deficit. At a
minimum, this 1993 increase should be
repealed.
·
Modernize
Tax on International Business Operations: The corporate income tax
should be modernized in its application to international
business. This
area of the tax law is out of date for the realities of global
economic competition.
The tax on international business should be lower and
simpler. Many
countries do not tax the foreign operations of their
home-based companies at
all. In
contrast, the U.S. tax burden on overseas operations of U.S.
business is substantial and is tied to overly demanding
compliance obligations.
The current active financial services exception to
subpart F scheduled to expire at the end of 2001 should be
made permanent to foster the continued international growth of
the U.S. financial services industry.
·
Eliminate Corporate AMT:
The corporate
alternative minimum tax (AMT) should be repealed. As a second income tax
that businesses must compute in addition to the regular income
tax, the AMT is redundant and a waste of private and public
money. More
importantly, the AMT is structured as a special tax on
investments in business equipment and structures. A plan for sustained
economic growth would encourage – not discourage – these
investments because they are the main source of growth in
labor productivity.
·
Foreign Sales
Corporation:
The WTO declared FSC was a prohibited export subsidy, and the
U.S. must withdraw the subsidy by October 1, 2000. Failure to comply
would invite severe trade sanctions on American products and
services, whether they use FSC or not. Currently, efforts are
underway to draft and pass legislation in Congress to create a
WTO legal tax treatment to replicate the tax treatment
provided to current beneficiaries of the FSC. It is important that
any replacement in fact replicates the results of the current
regime and does not create winners and losers among the
current beneficiaries.
This is a critical international competitiveness issue
for American companies.
SOCIAL SECURITY
REFORM
Social Security plays an
important role in the lives of all Americans and should
continue to provide an essential floor of support for
retirees, survivors and the disabled. The current system,
however, is financially unsustainable. The new administration
should take a leadership role in championing improvements in
the Social Security system that are consistent with free
market principles, including reasonable financing, adequate
funding, proper accounting and individual choice. Those improvements
should include mandatory individual accounts designed in a
manner that strikes an appropriate balance between
administrative feasibility and the need to minimize government
involvement.
EDUCATION
POLICY
The President, through
effective use of the "bully pulpit" and thoughtful shaping of
the federal government's limited role in K-12 education, can
promote student achievement of higher academic standards and
champion research and evaluation on best practices in
education.
·
Model
Practices:
Announce that the federal government, in its role as an
employer, will adopt model practices used by other employers
to promote higher student achievement, e.g., asking recent
graduates for their school transcripts.
·
Public/Private
Partnerships:
Stimulate improvements in math, science and technology
education by encouraging public/private partnerships to
support innovative and effective programs developed at the
state and local district levels.
·
Enhanced
Communications: Work with the nation's
governors, educators and businesses to stimulate the
development and use of the most innovative communications
technology to make information on best practices accessible to
educators and parents.
·
Independent
Research:
Make independent, non-partisan research and evaluation of best
practices in education a top priority.
ENVIRONMENTAL
PROTECTION & REGULATORY IMPROVEMENT
Congress and federal agencies
have jointly contributed to a regulatory system – especially
in the environmental arena – that is overly complex,
burdensome, opaque, inconsistent, and inefficient. Agencies are not
required to, and do not, uniformly and transparently
promulgate regulations that achieve maximum public benefits
with the least costs or burdens. The allocation of
responsibility between the federal and state governments often
doesn’t meet the needs of new or changing circumstances. Electronic
commerce and a global marketplace require business to
innovate, respond to consumer needs, and deliver products and
services with a speed and flexibility hitherto unknown in the
commercial marketplace.
Traditional command-and-control environmental
regulation is often antagonistic to these
objectives.
The new administration should
pursue environmental, health, and safety objectives through a
result-oriented framework that encourages technological
innovation and open global markets. Where regulation is
necessary, the new administration should favor risk-based
performance standards over mandates for particular
technology. Rules
should comply with criteria that dictate cost-effectiveness, a
preference for flexible regulatory mechanisms, and an
assessment of reasonable alternatives for significant
regulatory proposals.
State action should be preferred to address localized
environmental issues, and federal over-filing and duplicative
permitting programs should be eliminated. The basis for rules
should be grounded on better quality science
developed at the federal level. Adoption of
legislation advancing these objectives should be
encouraged.
The next Administration
should:
•
Adopt a
new Executive Order governing new regulations and regulatory
review that contains very specific directions that
agencies:
>
Pursue
market approaches before considering command-and-control
regulation
>
Adopt only
regulations that are cost-effective and whose benefits fully
justify their costs
>
Explore
and assess alternatives to any proposed regulatory approach
and fully disclose analyses
>
Provide
for enforcement of these standards by
OMB
•
Adopt a
new Executive Order on grounding regulatory decisions on sound
science, requiring that agencies developing health and safety
regulations:
>
Base rules
on scientifically objective, plausible, and transparent risk
assessments and characterizations
>
Ground
risk assessments upon careful analysis of the weight of
scientific evidence and best available, relevant, and current
scientific and technical information
>
Establish
government-wide guidelines for use of sound
science
•
Set out an
agenda marshalling federal agency efforts for a public-private
partnership for research on strategic environmental issues,
such as climate change technologies, industrial ecology, and
environmental impact of genetically modified
organisms.
•
Call for
reconvening a hybrid Administrative Conference of the
U.S./Advisory Committee on Intergovernmental Relations, to be
charged with the objective of reviewing all environmental
legislation and making recommendations on how best to devolve
to state and local governments the authority for addressing
localized pollution and waste problems and how market
mechanisms could better be used to achieve legislated
goals.
RESEARCH &
DEVELOPMENT
The
President needs to restore within the White House a
Presidential office committed to scientific research. This office needs to
have as one of its top priorities the improved coordination
between the private and public sector research
communities.
While the federal government should not be in the job
of picking winners and losers in the development of new
technologies, there should be better “delivery” mechanisms
between the pure research investments made by the public
sectors and the applied research investments made by the
private sector.
CIVIL JUSTICE
REFORM
Aggressive lawyer-driven
litigation has resulted in a civil justice system that too
often short-changes injured persons while imposing a $300
billion drain on the U.S. economy. This system undermines
our nation's competitiveness by slowing the development of new
products, raising prices for American consumers and hurting
the investing public.
The Administration should support elimination of
standard-less punitive damages that increase the legal tax on
our economy. A
system based on fair share, proportionate liability should be
a cornerstone of civil justice reform efforts. Legislative efforts
supported by plaintiffs' attorneys to sue employers over
health decisions should be rejected.
·
Federal Court
Jurisdiction:
Federal courts should have jurisdiction over interstate class
action lawsuits.
In many class action cases today, most of the
settlement money is paid to the plaintiffs' attorneys with
very little shared with any class members. Consumers pay again
when huge verdicts or settlements drive up the costs of goods
and services.
FEDERALISM
Carrying
out many programs and functions at the state and local, rather
than at the federal level, will promote accountability,
responsiveness, experimentation, and efficiency. At the same time,
globalization and technology enhance the importance of
national and international markets, suggesting the need for
greater uniformity; businesses can ill afford to accommodate a
patchwork quilt of state regulatory directives. This militates towards
a greater role for the federal government where regulation of
commerce is implicated.
Hence, as a general matter, the higher the cost to
industry of 50 different state regulatory systems and the more
the issue is interstate, the more the responsibility should be
vested in the federal government. The lower the cost,
the more localized the problem and the greater the need for
experimentation, the more the scale will tip toward state
authority.
Where
patchwork regulation will impede commerce, the shared
objective of a vibrant national and competitive international
business sector suggests that states should ordinarily refrain
from intervening.
These areas include regulating product safety or
labeling; applying state tort law to products manufactured in
compliance with federal regulation; sanctioning businesses
based upon foreign policy considerations; and adding
inappropriate requirements to federally regulated
transactions.
Likewise, recognizing the benefits of local regulation
of local problems, the federal government should ordinarily
defer to states for addressing local pollution abatement,
hazardous waste site clean-up, and reclaiming
brownfields.
Finally, where program administration has been placed
under state authority, fairness and efficiency would dictate
that federal agencies defer to the states on enforcement of
those programs.
CONCLUSION
The
member companies of The Business Roundtable are the fuel
helping to drive the American economy, which has provided
unparalleled opportunity for millions of Americans,
particularly over the past decade. We are all committed
to seeing this growth continue, and we have provided here a
blueprint for government action and focus that can help
America maintain its role as the world leader of peace and
prosperity. We
urge the platform to reflect these values and
policies.
July 21, 2000