AS PREPARED FOR DELIVERY
Sunday, September 30, 2012
CONTACT OFFICE OF PUBLIC AFFAIRS
Acting Commerce Secretary Rebecca Blank
Remarks at International Economic Development Council Annual Conference, Houston, Texas
Thank you, Chairman Jay Moon. And thanks to Jeff Finkle and everyone here at IEDC. It’s a pleasure to see Congresswoman Sheila Jackson Lee. And it’s a pleasure to be here in your city, Mayor Parker.
It is an honor to be here with a group of people who have been instrumental these past few years in helping our country dig its way out of a deep recession.
Someone said to me that you could name just about any economic development project in the country—and chances are that an IEDC member has worked on it.
You’re the ones who see first-hand how good policies translate into good jobs. And that’s exactly what President Obama has been focused on over the past three and one-half years.
Though more work remains, compared to where we were only a few years ago in our economy, we have come a long way.
It’s easy to forget how quickly our economy was spiraling downward in the fall of 2008. The financial system was on the verge of collapse. Housing prices had plummeted, as did the stock market. Consumers weren’t spending. Businesses weren’t investing. And jobs were disappearing at a breathtaking rate. We were losing 750,000 jobs every month—more than the population of Milwaukee.
We needed aggressive action. That’s why President Obama signed the Recovery Act less than a month into office. As I’m sure many of you know, one-third of that money went to infrastructure, one-third went to state and local governments, and one-third went to tax cuts for working families in your communities.
Without the Recovery Act, independent economists say we would have lost millions more jobs—and the unemployment rate could have hit 11.5 percent.
The president also reached out to directly support the private sector.
For example, lenders weren’t making loans to small businesses, so he increased the government-backing on SBA loans. That helped about 70,000 small businesses get $30 billion in financing at a time when credit markets were frozen.
And, of course, the president took the bold step of saving our auto industry at a time when others were willing to let it go bankrupt. This not only kept GM and Chrysler in business, but it preserved the many small and medium-sized businesses in the auto supply chain. Today, autos are back and stronger than ever with 1.3 million cars sold in August—the best month since the Cash for Clunkers program back in 2009.
As a result of all these actions, not only did the downward spiral stop, but we’ve now seen stable economic growth for nearly three years.
- In the past 30 months, the private sector has created 5.1 million new jobs.
- Even the housing sector, which was hardest hit, is now showing clear signs of recovery.
Now, we can all agree that our growth hasn’t been as fast as we’d like and that we still have work to do. It’s taken time to recover from the disaster that struck in 2007.
And in the midst of our recovery we’ve hit some strong headwinds, such as the Eurozone crisis and sporadic spikes in oil prices.
But despite all these challenges, our economy has grown and will continue to grow. Our challenge is to accelerate this growth. . . to make sure that it translates into greater prosperity for the middle class. . . and that everyone who wants a job has a job.
As you all know, generating greater economic growth is hard. You’re on the front lines, trying to do this in your own communities.
And today, I expect that most of you are thinking about the steps you need to be taking right now… as well as the long-term vision you have for the growth of your community.
This administration has that same dual focus—both short-term and long-term policies that need to be undertaken–and I’ll spend a few minutes on each.
There are three short-term actions that we need to take right now.
First, we need to make sure that America’s families have the confidence and the ability to spend money on things they want and need–not just buying groceries and paying bills, but also big-ticket items like home renovations or a new car.
When middle class families get thousands of dollars in tax cuts—as they have over the past few years—that money goes right back into the economy.
But unless Congress acts, some of the tax cuts that have helped middle class families will expire, taking money out of their pocket and making it tougher for them to make ends meet in 2013.
Altogether, the middle class could pay about $180 billion more in taxes next year. That’s $180 billion they won’t be spending on goods and services in your communities.
That has a ripple effect. When a family puts off buying a new car, it hurts the local car dealership, it hurts the factories that make cars and car parts, and it hurts those that ship inventory around the country.
So we need to extend the middle class tax cuts as the president has proposed–both to strengthen economic security for middle class families, and to keep our economy growing.
A second short-term step we need to take is to help state and local governments that are still struggling to fund necessary programs.
I know that all of you are acutely aware of the fact that many states and localities are struggling to balance their budgets. The president has called for an investment of $35 billion to help keep police officers, firefighters, and teachers on the job, while local and state governments continue to dig out from the recession.
And third, there is no better time to make investments in infrastructure than right now.
Interest rates are at record lows and many construction workers are still unemployed or underemployed. At the same time, many of our roads and bridges and rail-lines and ports are in dire need of repair and improvement. This is an investment that helps us right now, creating jobs, while it also provides long-term returns through faster and easier travel and shipping.
Before I move on, I should note that if Congress took these steps–part of President Obama’s American Jobs Act proposal–we could create a million jobs in the near future.
Now, let’s look a little further down the road, because there are some opportunities coming our way in the next few years, particularly regarding investment in the U.S., and we need to take advantage of them.
There has been a lot of discussion recently about whether American competitiveness is being threatened. I have about eight reports on this issue sitting on my desk right now.
While there are things that we can and should be doing better, we have many competitive advantages in the U.S. For instance, one area where I am very optimistic is the opportunity to increase the level of business investment in the U.S. in the next few years, particularly in manufacturing. We have a real comparative advantage in this area right now. I discussed this with some IEDC members when several of you were in Washington for our joint White House Forum two months ago – and I’d like to focus on it now.
There are two parts to this:1. We want U.S. firms to expand here at home and bring jobs back–sometimes referred to as insourcing or reshoring. 2. And we want foreign-owned firms to locate their next plant in America through foreign direct investment–FDI.
In my travels both at home and abroad, I frequently ask CEOs and business owners where they are thinking of making their next investment. I’m hearing more and more of them say that the U.S. is where they have to be.
They tell me a number of reasons for why the U.S. looks so attractive to them right now:
Reason number one: our energy outlook is bright.
- We are on track to meet more than half of our oil needs with domestic production by 2014, and we have seen a dramatic 14-fold increase in natural gas production. In fact, natural gas costs in the U.S. are one-fourth that of Europe.
- This is crucial for companies that rely on energy for production, including foreign-based manufacturers which have accounted for the largest portion–about 40 percent-of all FDI flow into the U.S. over the last three years.
Reason number two: We are gaining a more competitive edge with labor–in both costs and productivity.
- In recent years, as wages have gone up and the middle class has grown in countries like China, the labor-cost advantages to these countries has diminished.
- At the same time, U.S. manufacturing workers now produce about nine percent more each hour than they did before the recession.
Reason number three: Other countries’ economies are looking less robust than ours.
- After the global slowdown, this administration took hard steps to put our financial sector and our economy on a stronger footing.
- In contrast, the Eurozone remains in crisis and growth is also slowing in countries like China and India.
And the list goes on:
- The U.S. has a strong rule of law and a good regulatory environment, ranking fourth of 183 economies in the World Bank’s Ease-of-Doing-Business Index.
- The U.S. has the strongest level of intellectual property protection through a patent system that is becoming even stronger through the new patent offices that we’re now establishing in some of your cities.
- And, of course, America has the most skilled workers, the best universities, and the largest consumer driven-economy in the world.
In fact, on Tuesday, I was in Virginia Beach at the STIHL company manufacturing facility–a German-based company that makes outdoor power equipment like chainsaws and lawn trimmers. They have expanded their factory in Virginia Beach in recent years–and hired 50 more workers–both because they want to be close to their strong U.S. customer base and because their U.S. facility is more productive than any of their other plants around the world.
They’re not alone. This year, on the pages of major U.S. newspapers, we have seen dozens of feature stories about manufacturers–both U.S. and foreign-based–that are choosing to make their products in America. And we know that FDI flows into businesses in the U.S. have jumped substantially each of the past few years.
So our challenge is to build on these trends–to attract and retain as much investment as possible in the U.S.
The president gets it. He has called on Congress to end tax breaks for companies that ship jobs overseas and–instead–give relief to companies that bring jobs back. That’s common sense. It’s something we should all be able to agree on.
My team at the Commerce Department gets it, too. We’ve launched two major initiatives to strengthen U.S. investment.
First, SelectUSA. SelectUSA leverages the full power of the federal government to support insourcing, domestic expansion, and FDI. Steve Olson, our SelectUSA director will be speaking here on Tuesday at 7:30 a.m. I told him to bring coffee for everyone.
Many of you have worked with our foreign commercial service officers, who are stationed around the globe. They have traditionally focused on helping U.S. companies export. But this year, through SelectUSA, we trained many of them to also assist foreign CEOs who need information about how to invest in the U.S.
Our goal is simple: Link those CEOs with folks like you to get deals done. If you’re interested in learning more, please stop by the Commerce Department’s SelectUSA booth here.
A second initiative I announced on Tuesday: the Make it in America Challenge. The Departments of Commerce and Labor are teaming up to help communities that are poised to attract a major investment, but just need a little more help to get it done.
- Maybe the city needs a better road to an industrial site.
- Maybe manufacturers looking to relocate are asking for better information and technical assistance.
- Or maybe local workers need a tailored training program that will fill a particular skills gap.
We’re inviting communities and regions to send us proposals for how they can use funding to attract more investment into their area. We’ll evaluate those proposals based on their potential to use new resources to promote insourcing. . . to attract FDI. . . and most important, to create good jobs. We plan to spend $40 million and fund up to 15 of the best proposals that we receive in 2013. So, stay tuned as we announce a Federal Funding Opportunity in the months ahead.
And also stay tuned for more joint activities between SelectUSA and IEDC in 2013. I’m delighted to hear that Incoming Chair Paul Krutko has selected inbound investment as IEDC’s focus for 2013.
All of these efforts to promote investment in America are crucial because when a company builds a new factory here, the likelihood of jobs staying here long-term is very high. And that means a stronger middle class for generations to come. So let’s work together to take advantage of this moment.
I’ve focused on the short and near-term steps we must take to strengthen our economy and attract investment to our shores.
But I do want to look even a little further out–and mention two investments that are needed for American competitiveness over the long term.
First, we cannot waver from our commitment to American innovation.
The president is working to double federal funding for basic research and development, so that we maintain the U.S. strength in innovative research for decades to come. And the Department of Commerce is also working on a number of programs designed to speed the tech transfer process, helping innovators move their ideas from the lab to the marketplace.
Second, we also cannot waver from our commitment to investing in a skilled American workforce.
Fundamentally, it’s our workforce that makes American businesses so competitive. That’s why the administration has worked to strengthen community colleges, providing career ladders from coursework into the labor market and extending access to post-high school training for more students by expanding the Pell Grant program.
And we have partnered with top U.S. companies to spark the imagination of young people who are considering careers in engineering, mathematics, and science.
In the 21st century, we need a stronger pipeline of Americans who make it to the front lines of innovation.
In short, there are things we can and should be doing, both in the short-term and the long-term to accelerate the growth and competitiveness of our economy.
Let me end with an announcement. I’ve been talking about how we should plan for the future, but we all know that even the best plans can be overthrown when disaster strikes. At the Commerce Department, we think that it is important to tap experts like you not only after a disaster hits, but also to help communities be more prepared on the front end.
So, we recently asked ourselves some questions:
- What if we studied how to strengthen the economic resiliency of the Southeast region of the U.S–the region most at risk of hurricanes?
- What if we proactively developed action plans so that the local economy can bounce back more quickly if a disaster strikes?
- And what if we could promote more job creation and economic diversification overall in that region?
We asked for proposals from organizations that could help answer these questions and–I need a drum roll–I’m pleased to announce that the Commerce Department just awarded IEDC $1 million to do hands-on work in these communities so they can be better prepared. Congratulations IEDC and thank you in advance for all of the help and expertise you are going to provide.
As I close, I’ll just say that the federal government’s partnership with the IEDC community–all of you–has never been more important.
To get where we want to be, we not only need the ongoing hard work, creativity, and entrepreneurship that businesses in your communities have always provided, but we need to develop smart policies and make strategic investments that will empower people like you to grow your local economy from the bottom up.
So let’s work together to make the best possible choices.
If we do that, I’m confident that we will lay the foundation for stable, long-term growth that will bring more jobs and more prosperity to families throughout our cities, states, and our entire nation.