President Obama urged business leaders to begin creating jobs and taking advantage of the tax breaks offered by his administration during a speech Monday at the U.S. Chamber of Commerce.
The Obama administration has been trying to reverse its image of being unfriendly to business, and has faced opposition from the chamber on some of its key pieces of legislation, including the health care reform and financial reform bills. The chamber’s headquarters are located nearby the White House, and Obama joked that he hadn’t been more neighborly in the past.
"I’m here in the interest of being more neighborly," he said. "I strolled over from across the street, and look, maybe if we had brought over a fruitcake when I first moved in, we would have gotten off to a better start. But I’m going to make up for it."
Obama noted that he had consulted with the chamber in the past, however, on matters such as how to deal with the financial crisis, but he acknowledged that he had his differences with the chamber as well. “Now, on some issues, like the Recovery Act, we’ve found common cause,” he said. “On other issues, we’ve had some pretty strong disagreements. But I’m here today because I am convinced … that we can and we must work together.”
Obama noted that the administration has been pushing for more investment in technology and small businesses, as well as tax credits to support research.
“That’s why we’re making investments today in the next generation of big ideas—in biotechnology, in information technology and in clean energy technology," he said. "We’re reforming our patent system so innovations can move more quickly to market. Steve Case is heading up a new partnership called Startup America to help entrepreneurs turn new ideas into new businesses and new jobs. And I’ve also proposed a bigger, permanent tax credit for all the research and development your companies do in this country. I believe that is a priority.”
Obama also pledged to do more on tax reform and regulatory reform. “As a government, we will help lay the foundation for you to grow and innovate and succeed,” he said. “We will upgrade our transportation and communication networks so you can move goods and information more quickly and more cheaply. We’ll invest in education so that you can hire the most skilled, talented workers in the world. And we’ll work to knock down barriers that make it harder for you to compete, from the tax code to the regulatory system.”
Obama said he wanted to work on lowering the corporate tax rate. “Now, another barrier government can remove—and I hear a lot about this from many of you—is a burdensome corporate tax code with one of the highest rates in the world. You know how it goes: because of various loopholes and carve-outs that have built up over the years, some industries pay an average rate that is four or five times higher than others. Companies are taxed heavily for making investments with equity, yet the tax code actually pays companies to invest using leverage. As a result, you’ve got too many companies ending up making decisions based on what their tax director says instead of what their engineer designs or what their factories produce. And that puts our entire economy at a disadvantage. We need something smarter, something simpler, something fairer. That’s why I want to lower the corporate rate and eliminate these loopholes to pay for it, so that it doesn’t add a dime to our deficit. And I’m asking for your help in this fight. I think it can be done.”
However, Obama urged business leaders not to stand in the way of health care reform, noting that the controversial law would provide small businesses with tax credits for health insurance. “The non-partisan congressional watchdogs at the CBO estimate that health care tax credits will be worth nearly $40 billion for small businesses over the next decade—$40 billion, directly to small businesses who are doing the right thing by their employees,” he said.
Obama noted that he has ordered a government-wide review of regulations with a view toward fixing “any rules on the books that are needlessly stifling job creation and economic growth.”
However, he asked for the business leaders in attendance to also do their part toward building economic growth.
“If we’re fighting to reform the tax code and increase exports to help you compete, the benefits can’t just translate into greater profits and bonuses for those at the top,” he said. “They have to be shared by American workers, who need to know that expanding trade and opening markets will lift their standards of living as well as your bottom line.”
Obama said that everybody should be able to benefit from rising productivity and corporate profits, and enjoy a higher standard of living. “And if we as a nation are going to invest in innovation, that innovation should lead to new jobs and manufacturing on our shores,” he said. “The end result of tax breaks and investments can’t simply be that new breakthroughs and technologies are discovered here in America, but then the manufacturing takes place overseas. That, too, breaks the social compact. It makes people feel as if the game is fixed and they’re not benefiting from the extraordinary discoveries that take place here.”
Obama applauded companies like Caterpillar, Whirlpool and Dow that were building factories and new facilities, taking advantage of tax breaks that encourage more investment in plant and equipment. He cited one software developer, Geomagic, which is closing its overseas centers in China and Europe and moving its R&D efforts back to the United States.
“So if I’ve got one message, my message is now is the time to invest in America,” he said. “Today, American companies have nearly $2 trillion sitting on their balance sheets. And I know that many of you have told me that you’re waiting for demand to rise before you get off the sidelines and expand, and that with millions of Americans out of work, demand has risen more slowly than any of us would like. We’re in this together, but many of your own economists and salespeople are now forecasting a healthy increase in demand. So I just want to encourage you to get in the game. As part of the bipartisan tax deal we negotiated, with the support of the Chamber, businesses can immediately expense 100 percent of their capital investments. And as all of you know, it’s investments made now that will pay off as the economy rebounds. And as you hire, you know that more Americans working will mean more sales for your companies. It will mean more demand for your products and services. It will mean higher profits for your companies. We can create a virtuous circle.”
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