AS PREPARED FOR DELIVERY
Friday, October 29, 2010
CONTACT OFFICE OF PUBLIC AFFAIRS
Commerce Secretary Gary Locke
Remarks at Silicon Valley Leadership Group, Santa Clara, California
I’m honored to be standing in front of a group of men and women who helped build an economic dynamo envied the world over – a place synonymous with innovation and entrepreneurship and jobs.
When my counterparts around the globe discuss economic strategy and the future of their economies, the vision we all want to implement looks a lot like Silicon Valley.
The problem – as far as this administration is concerned – is that we haven’t done a good enough job of fostering imitators right here in America.
Our country has neglected for too long the fundamentals that made America’s economy great. That’s why we are where we are – just turning the corner from a once-in-a-generation economic crisis – and why even in Silicon Valley, great ideas don’t always translate into great American jobs.
But before I talk about this administration’s efforts to fix those problems, I want to spend just a few minutes talking about just how far we’ve come.
Even before being sworn in as our 44th president, President Obama was welcomed with:
- A $1.3 trillion deficit, and
- An economy shedding 750,000 jobs a month.
It was the worst house-warming gift ever.
In fact, the job losses from this recession were worse than those experienced during the recessions of the '80s, '90s and early 2000’s. . . combined.
But our economic calamity didn’t start in the latter part of 2007. For America’s middle class, hope and opportunity had been eroding for years.
- America experienced the slowest job growth of any period of economic expansion since World War II;
- Incomes for the middle class flat-lined, and
- The cost of essential parts of middle class living – like health insurance and college tuition – skyrocketed.
Those facts help describe just how deep the hole we’re in is. . . and why it’s so hard to climb out.
But we are climbing out. And we’re doing it because President Obama and leaders in Congress took action to stabilize the financial system and pass a Recovery Act that cut taxes for 95 percent of working families in the U.S. – 12.5 million families in California paying $800 less each year – put three million Americans to work and created demand in our economy when local governments, consumers and businesses couldn’t or wouldn’t spend.
The Recovery Act also served as an opening salvo in a multi-billion dollar effort to build a new, stronger foundation for long-term growth and prosperity with:
- Investments in a 21st century infrastructure and manufacturing; and
- Funding for research and technology, like clean energy, emerging technologies and biotech that will strengthen our global leadership and lead to new industries and new jobs.
As an aside, some have said that the Recovery Act has actually converted the Department of Energy into one of the world’s largest venture capital funds.
Additionally, President Obama announced a National Innovation Strategy, which, among other things, calls for doubling the budgets of agencies such as the National Science Foundation, so they could better support basic research at our nation's universities.
The president’s proposed 2011 budget – now being considered by Congress – while freezing domestic discretionary spending overall, actually increases funding for civilian R&D by nearly six percent.
We will not, however, be able to sustain high-tech, high-wage jobs if we aren’t turning out world-class students. That’s why the president launched the Race to the Top competition to raise standards in our schools.
Part of the job of rebuilding America’s economic foundation also means helping more U.S. companies sell their goods and services to the 95 percent of the world’s consumers who live outside our borders.
The president’s National Export Initiative seeks to do just that: with a goal of doubling U.S. exports within five years while supporting several million new jobs.
It’s an ambitious target, but having doubled exports to China during my tenure as Washington’s governor, I know it’s possible.
The NEI will expand the U.S. government's export promotion efforts in all its forms – a huge part of what we do every day at Commerce.
It will also improve access to credit through the programs of the Export-Import Bank, especially for small- and medium-sized firms that want to export.
And under the NEI, we will continue to increase the government's focus on knocking down barriers that prevent U.S. companies from getting free and fair access to foreign markets.
Let me also say that the president is firmly committed to completing the work on the pending trade agreements with Colombia and Panama. Indeed, Ambassador Ron Kirk, our U.S. Trade Representative, has been in San Francisco working hard to complete the Korean FTA by the time the president travels to Korea in November for the G20.
We understand the benefits of trade for U.S. businesses, and we know that you’re operating in an unforgiving, globally competitive environment. As the son of a small business owner, who spent his days helping make the family business go, I’m especially attuned to the challenges you’re facing.
As I’ve traveled the country, one of the things I’ve heard over and over is concern about the competitiveness of America’s corporate tax system, including complaints that an effective tax rate of 25 percent on overseas earnings discourages bringing any of those earnings back to America for job creation, capital expenditures or R&D.
This administration is exploring multiple avenues to ensure U.S. competitiveness at home and abroad, including international tax issues. But as many of you know, the non-partisan budget analysts on Capitol Hill relied on by the Congress see most repatriation proposals as adding to the deficit on the theory that corporations would eventually bring all those earnings back to the U.S. and pay the full tax rates, and that any lower rate means lost revenues to the Treasury. We also need to ensure that any proposal provides a level playing field for U.S. companies operating domestically.
But the reality is the administration will continue to investigate ways to get at this problem. The president has told CEOs that he is willing to discuss the issue. And I want you to know that my door at Commerce is wide open.
It’s important, though, that we come to the table with solutions that are equitable, that ensure the competitiveness of American workers and businesses and that won’t explode the deficit.
We are looking for solutions that lower the effective corporate tax rate in a manner that supports investment and competitiveness for U.S. companies. One way to do that, as President Obama has said, is by simplifying, increasing and making permanent the R&D tax credit, and allowing companies to deduct in one year 100 percent of their investments in plants and equipment made through the end of 2011.
When it comes to new ideas, our only criterion is efficacy. It doesn’t matter if they come from the left or the right, the boardroom or academia. We simply will not rest until every American who wants a job can find one.
It doesn’t take a story, like the one on "60 Minutes" last week, to tell us how tough and unsettling times are for many in this country, including families here in Silicon Valley.
But we are making progress. We’re doing it by focusing on the fundamentals – fostering innovation, spurring small business growth and finding new markets for the great products American companies make, which are highly valued all around the world.
Today, after shedding jobs for 22 consecutive months, the private sector has now added jobs nine months in a row. And our GDP is up for five straight quarters.
Factory orders and consumer spending are up; durable goods orders are up; exports have increased nearly 18 percent so far this year over 2009.
Now is not the time to go backwards.
The policies of the past made it tougher for the middle class to get ahead, turned record surpluses into record deficits, and nearly precipitated a second Great Depression
Look, I’m no Pollyana. There’s a lot of work ahead of us. There’s no quick fix when millions are out of work.
But we’re closer to our goal today than we were yesterday. And by enabling this Silicon Valley to flourish and creating more Silicon Valleys around the United States, we will get to that vision we all have of America: a place where the only thing standing between a great idea and a great company is the willingness to work hard.
That is the vision President Obama and I are working every day to restore.