tv Newsmakers U.S. Chamber of Commerce economy - Neil Bradley CSPAN September 15, 2019 6:00pm-6:36pm EDT
u.s. chamber of commerce executive hold a news conference on trade and infrastructure. the senate gaveled into consideration the u.s. ambassador to the united arab emirates. at 7:00, neil gorsuch talks about his new book. greta: this week on "newsmakers," neil bradley, the chief policy officer and executive vice president of the u.s. chamber of commerce. thank you very much for being here. neil: thanks for having me. greta: we also have with us jeanna smialek with the "new york times" and chris rugaber with associated press. chris. chris: let's talk about trade. 40% of the fortune 500 has complained on earning calls and so forth about the impact of president trump's tariffs on chinese imports and other items. how big an impact, how much is this hurting companies? i am interested how you may compare it to the benefits of the tax cut in 2017, which reduced rates on business. have these tariffs got into a
point where there almost offsetting the benefits of the tax cut? neil: they are certainly dampening the benefit of the tax cut. there are two aspects of the tariffs on business that are impacting business. the first is the tariffs already in place and are at cost. the second is uncertainty of additional tariffs. that is playing out over the next several months with respect to china and even automobiles, with respect to tariffs on automobiles. and if you are running a company -- by the way, not just large companies -- if you run a company, you have difficult y planning, because you don't know the cost of goods you are buying to either sell to consumers in the united states or the cost of something you are making in the united states. that is a real problem. the other side of that is not just tariffs on our imports, it is tariffs posted in retaliation -- huge harm for the ag industry and increasingly manufacturers. jeanna: the university of michigan confidence numbers just came out.
what we saw was a real confirmation that consumers are starting to get nervous, and a lot of them are spontaneously bringing up the trade war. so how do companies think about that, when they look at this environment where consumers have still spending pretty robustly, but it seems like that could be showing some cracks. neil: when we think about the economy, there are two different stories. on the consumer side, a lot of strength. record generational low unemployment, wages rising 3%, lower inflation, people want to spend money. you go to the business side, you start a downturn in business investment for the first time in three years, manufacturing slipping into a recession. and it is not just large companies. one of the progressions we saw for the last nine months fortune 500, large companies, concerned about the tariffs.
we are now seeing midsize companies, those with 600, 700 employees, 1000 employees, who are saying it is affecting their business and their ability to plan. the next phase of that is it slips into small businesses and consumers. d what we are especially worried about the next few months is that weakness and uncertainty on the business side moves from large businesses to medium businesses to small businesses and consumers. that is a recipe for a recession. at the chamber, we think the next several months are critical. if policymakers make the right decisions, we can keep the economy growing. and wages rising. if they make the wrong ones, they risk pushing us into recession. chris: let's talk about some of those decisions that might be made. one is the federal reserve. the president has been tweeting about their decisions. there is a meeting next week in which, i guess, a rate cut is expected. do your members feel interest rates are their biggest problem? how does this play out? are there other decisions that
could be made to support the economy, in addition to the fed? neil: fed policy is important. i don't want to understate that. the fed is being judicious and making good decisions about how they support their economy. but when we talk to our businesses, it doesn't matter the sector, the size, the geographic location, they tell us it is not the cost of borrowing, not the cost of capital, not the interest rate -- what is going on, what is driving their concern is uncertainty in the policymaking process, especially with respect to tariffs, the trade war, and then just this general uncertainty about how washington will operate and what the rules of the road are going to be that is causing them to pull back on investment. greta: rules of the road for what? neil: certainly for trade, but also the regulatory environment. so we have benefited, for the past three years, from a big push in deregulation, but everyone is watching what is going on in the presidential debate and in the next year, and
there is a lot of uncertainty about where major aspects of the economy go. very different views between the political candidates and the political parties. if you are in the health-care space, you are watching and you are wondering what the system is going to look like in two years. if you are in the energy space, similarly you are watching regulatory actions by the administration, but also a lot of litigation, and a lot of litigation that is not going to play itself out until likely past the 2020 election. so you have to make some educated guesses and some assumptions about what the rules of the road are, and when there is this much uncertainty in the political environment, you tend to be a bit more cautious. and that is bad for the economy. jeanna: independent of domestic policy, we are also seeing this global growth slowdown. if that were to spill back into america and we would see a recession, how prepared are companies to deal with that?
neil: we are seeing global growth, and that is another headwind. by the way, we should also mention a lot of things outside our control that are also headwinds for american companies, whether that is the situation in hong kong or brexit and the e.u.-u.k. relationship. the u.k. is a pretty important partner, as is the e.u., for many american companies in terms of operations, sales, global footprint. a lot of uncertainty being generated there. in terms of preparedness for a recession, that is one of the reasons you are seeing a slowdown or a decline in business investment. as you are preparing for uncertainty, one of the things you do is you pull back on investment. this is also why we are at this danger point over the next several months. if you are generally preparing for what you believe could be a downturn, you will pull back from fixed investments, long-term first. you continue to support your employees in hiring and wages, particularly in a tight labor market. we should talk about how tight the labor market is, at some point.
and then you reach a point where you begin to pull back on your employees. and that is how you begin to tip the u.s. economy into a recession, and that is what we have to worry about. jeanna: interesting. you will never have to ask me twice to ask a labor question. neil: great. [laughter] jeanna: i am curious about what you guys are hearing about the labor market, and how companies are dealing with the scarcity of, especially, skilled workers. neil: one, they are raising wages, that is good. we like to see rising wages for american workers. but two, they are actually turning down jobs. we do surveys of event sectors of the economy. we were recently looking at the construction sector. and half of the construction industry self-reports they are turning down business because they don't have the skilled workers to complete the work that people are asking them to do. we just looked at the new labor department numbers that came out this week on job openings and compared it to the broadest
possible outlook of employees that are available -- everybody who is unemployed and looked for work and the last month, plus anyone who does not have a job and looked for work in the past 12 months, kind of the broadest way you can look at the available workforce. and it is 1:1. one job opening for every available worker. and that assumes they all have the right skills and are the right match and are in the right geographic location, which we know they are not. so there is a real crimp on the economy. it is also a record low in terms of that 1:1 that we are facing. if you look at the average over the last two decades, it is usually 3:1, so it is a three times tighter labor market right now for american businesses. chris: on that note, how might businesses have more workers to choose from? one avenue might be immigration. and so can you tell us where the chamber sees that issue and what steps you may take over the next year or two to affect the debate there? neil: we absolutely need more workers.
we need more high skilled and, frankly, more low skilled workers coming in through the immigration system. we are moving the wrong way on immigration, at the moment. we are limiting the supply of people coming into this country legally. that is important. we are not talking about illegal entry into the country. we are talking about the legal workforce. and we need to do more to expand legal immigration. it's a tough political issue. i suspect we are not going to make much progress until we get past the next election. the policymakers cannot continue to ignore it. of course, we also have a lot of american workers. i mentioned the broadest, 1:1, a lot of those people need skill training. businesses are stepping up and providing it, but they need partners, partners at the state level, the local level, who are helping them train individuals for the jobs they have. jeanna: i wanted to follow up on your wages point, actually. one thing that has been kind of interesting about this cycle is that, as you mentioned, by, a lot of measures, the job market looks very tight, but at the
same time, wages have increased gradually. they haven't shot higher. based on your on the ground view of this, from what you are hearing from members, what is holding wages from rocketing higher, as they have in previous cycles? neil: well, they are rising, but you are right -- if they are not rising as fast as in previous cycles. one of the things is total compensation. businesses do not just look at what is deposited in each of our bank accounts. they look at the total cost of employment. the total cost of employment, including health care, for example, is rising much more rapidly. so that is eating into a little bit of the wage support. and so i think we will probably actually continue to see greater wage growth, if we can keep the economy growing than what we have seen. it is just a slower acceleration
than we have seen, when other benefit packages were more restrained in the past. chris: taking a broader step back, earlier this week, there was a report from the census bureau about household income and poverty. and while it had good news in terms of reduction in poverty in 2018 from the previous year, it also showed that, basically, household income is about the same as it was 20 years ago, in 1999, even though the economy has enlarged, has grown 50% since then. so, just following up on the wages issue, is everyone benefiting from this economy? is that an issue for the chamber? is there more we can do to potentially spread these benefits more widely? neil: it is an issue for the chamber. it is something that we are concerned about. one of the factors both affecting household income and wage growth is what's the overall acceleration of the economy, right? we have had a record-long extension. also, historically weak growth,
by u.s. standards. so there is a little bit of math that works here, that the faster the overall economy is growing, not the duration of the expansion, but the size of the expansion, will propel wages higher and household income higher. there are also some other aspects going on in terms of household makeup, demographic changes, america getting older, our working-age population actually getting smaller, as a proportion. that is affecting some of those things. but at its core, things policymakers are trying to affect and things are we're trying to affect at the chamber, it is getting us back to 3% growth, which is kind of the recipe for unlocking rapid wage growth and higher household income. jeanna: to follow up on this, one thing that has been really interesting in the last couple of months is once we got revisions of a lot of 2018 data, it sort of confirmed that, despite tax cuts and some of these policies folks have been pushing for for a long time, you didn't see that supply-side step
up, sustainable change in the pace of growth last year and into this year. i am curious whether you think that is because the policy package was inadequate, whether supplies and benefits were over promised, or whether it is the trade war just offsetting the effect? neil: we have puts and takes. we got benefits from tax reform, which generally take a longer time to materialize than a lot of people would like to acknowledge. we were very cautious at the chamber not to promise immediate benefits. we think this is about long-term growth in the trajectory, not a short-term sugar high. you also have short-term costs, certainly in the tariff wars, et cetera. looking at the overall structure of our economy, we are in a place where you have got to get a lot of the policy right, and you have to get all the pieces working in the right direction. it is really important to get tax reform done, important to do regulatory relief, but if you don't have labor policy right --
and increasingly in a digital economy, if you don't have digital regulation right -- if you are not focused on the right immigration policies, intellectual property protection, if you don't get all of those pieces in place, you are not going to get the robust growth we have seen in the past. this isn't a situation where you can say, we did that one thing right, shouldn't everything be better? no. we need our elected officials to get almost everything right to get to the point of the growth that we want. greta: is there one policy area or an industry, one place, that could tip us back into a recession? neil: i don't think there is a particular industry that would do that. it is the overall sentiment, and it is the fear that it moves from lack of confidence on the business side into the consumer side. consumer spending still makes up 70% of our economy. the warning signs we are starting to see is that they are becoming more uncertain about the future. if they become more uncertain at the same time businesses become
more uncertain, that is where the real danger lies. there are certainly certain sectors we are watching -- manufacturing, which the most recent numbers, as you probably know, took us into recessionary territory for that industry. you know, you talk to anyone in the ag community, what is going on there -- four years of down prices. people in the ag world are really struggling. so we have individual sectors that are hard, but what would push the american economy is really the american consumer. greta: so you don't see a bubble anywhere? neil: i don't see a bubble right now, no. jeanna: so the opposite of greta's question -- are there any policies that you think would immediately serve to take away the recession risk? neil: most important, if i could leave one word, it is about certainty. and there are lots of different things that washington could do to restore certainty. on the trade space, it is not
that they have to resolve every trade dispute that we are currently in. it is really about halting the escalation in the tit-for-tat we are currently on. so removing the threat of continual escalation will provide a huge reassurance of the rules of the road for business. usmca, the u.s.-mexico-canada trade agreement, which is our, at the chamber, number one legislative priority at the chamber this fall -- congress enacting that without a lot of drama would provide reassurance that our trading relationship with our two biggest trading partners, canada and mexico, will continue to go smooth. if they can get an infrastructure bill done. it's one of those things that democrats and republicans both say they want to do. we are seeing, because of the manufacturing downturn, a lot of blue-collar workers not seeing the job opportunities they want. doing something on infrastructure finally and making a big investment as they are talking about in the senate we think would provide a shot in the arm to the economy.
greta: we heard the speaker of the house say this past week on usmca, democrats are waiting for enforcement language. what is she referring to? and is it something you can support? neil: so the speaker and a group of her colleagues in the house have been negotiating with ambassador lighthizer about four particular aspects of usmca, the most important of which is enforcement. just this week, they were trading proposals back and forth between congressional democrats and the administration. we think they are making progress. they are not there yet, but i suspect they will have a deal in the coming weeks. it will be one we will be able to support, and it is one that will deserve the support of, frankly, every member of congress. one of our messages, currently, to republican and democrats, particularly given the importance of usmca -- it's very difficult to say you are a progrowth, pro-business member
of congress if you are not willing to get usmca passed. chris: it sounds like you do have differences with the administration, certainly on trade and immigration and lack of movement on the infrastructure bill. and i know in 2016 the chamber certainly actively supported many republican members of the senate in particular. would you like to see more independence from some of those folks on the republican side of congress, more movement by them to change the dynamic on trade, immigration, and others? neil: i think the overall thing we would like to see from both parties is the resurgence in of the governing center. folks interested in getting things done. rarely in this town do you get 100% of your way. that never happens. it if you're waiting around, whether you are a republican or democrat, to get 100% of what
you want, you are going to be waiting a long time. that means pressing problems don't get solved. we used to have a center within both parties that were interested in never letting the perfect be the enemy of the good and finding compromise. that has vanished a little bit over the last few years. so we are interested in supporting candidates for congress, republicans and democrats, who are committed to that kind of responsible governing center. greta: has that changed in recent years, your political thinking toward the two parties? if so, how? neil: well, we have always been committed to pro-business candidates and elected officials, regardless of party. what has happened over the last several years, and we have all seen it, is the polarization. everything is moving to extremes. and the center that used to exist in both parties has, frankly, been hollowed out. it is a change for us to talk about it as restoring the center. for example, earlier this year, the chamber for the first time in 40 years, changed how we judge members of congress on their performance as members of congress.
it used to be simply how did you vote on a certain number of bills? now, we give members credit whether they reach across the aisle. if you are a republican, you get credit for working with republicans. if you are a democrat, you get credit for working with republicans. because we think we need incentives in the system to encourage collaboration. greta: we have about five minutes left. chris: one thing that came up last month was another business group here in washington, the business roundtable, changed a long time policy where they said businesses should focus solely on shareholder value. they decided to take a broader view and state businesses should also care about worker pay, training, environmental issues, and so forth. what is the chamber's take on that? can we expect a similar move by the chamber, perhaps? neil: we have always said that businesses who expect to make a profit, and particularly to be around for a while -- our members tend to make a profit and be around for a while -- are
businesses who take care of employees, customers, and the communities in which they operate. it is not terribly new to suggest businesses are interested in the welfare of their workers or the customers or their communities. smart businesses, businesses focused on delivering value for their shareholders, are doing all of those things. and they have been doing those things for quite a while. chris: but a lot of commentary around the business roundtable's move was the idea that they were responding to greater skepticism in the markets, particularly among young people. do you see that sentiment out there? are there other ways the chamber may address that? neil: there is some sentiment about that out there. listen, even though we have had record-long growth, it is fairly anemic. we talked earlier about wages not growing as fast. in that kind of environment, people do not want to hear that everything is perfect. because it's not perfect. a lot of folks are struggling to pay bills, and there are a lot
of policies we need to fix for that to grow. that doesn't mean rethinking our entire economic system. that doesn't mean moving away from a free market. frankly, i think what business leaders and our elected officials need to do is concentrate on how do we solve some of these problems. i think what our colleagues at the brt and you see ceo's every day on a host of issues saying, we need to find that center, find some compromise, and demonstrate that, as a nation, we are capable of tackling some of these problems, getting things right so that we can grow and prosper again. jeanna: that is interesting. and just pushing a little further with this idea, really the heart of the business roundtable decision chris was talking about was his idea that there was a ranking of priorities and fiduciary duty. this idea you have to take care of your shareholders, for a long time in the business community, has come first and has been the primary goal.
and brt is saying it should not be the knee-jerk, first priority. i would love to hear about whether that movement is also happening among your members. neil: this idea of ranking priorities and that we are going to get to a point where you have to choose one or the other -- i think that is probably taking both their statement and the discussion going on -- that is not exactly how most of our members and ceo's think about this. these are all interconnected. if you are a ceo or you are running a company, you are thinking about what do i need to do right now to grow in the next year, over the next five years, over the next 10 years? and all these things are interrelated. i need a workforce that is giving their best. i need to be operating with a customer base that wants to support the company and wants to buy what we are selling, and that is the way to maximize profits. i don't think you get into a situation where a ceo says,
well, it is johnny's paycheck or an extra penny on the earnings call. that's not the way these things think. it is a comprehensive, holistic approach to how you run a company and how you grow a business. maybe i would concede the business community hasn't done a great job of talking about that in the past, and we are trying to do a better job of explaining all the factors that go into running a good company that supports its employees and its communities, but that doesn't mean that companies haven't been operating that way. chris: you have mentioned, on trade, i think you mentioned some issues are still out there a little under the radar, such as potential tariffs on european autos and autos from elsewhere. how concerned are you about those being imposed? and what would be the economic impact of that? neil: the economic impact would be devastating. it is not just automobiles. it is also imports. and this is an important factor of the american economy.
it is not just manufacturing plants and auto repair shops, it is the dealerships that are in every one of our communities, all the jobs they support. a lot of ripple effects if you were to impose the tariffs the administration has under consideration. it is also just another matter of uncertainty. so if you are in the automobile business or affected by the automobile business, it is one thing that is not running your companies, that's not taking care of your employees or supporting your communities, that you are having to weigh. will the tariffs go into effect or won't they? what will the impact to be? how should we plan for that? anytime you are spending time as a business owner thinking about that and focused on that is time and energy you are not spending figuring out how to grow your company, hire the workers you need, and make the investment. the most dangerous aspect is the uncertainty. greta: more to come on that. neil bradley, thank you for being this week's newsmaker. neil: thanks for having me.
greta: and we are back with our reporters, jeanna smialek from the "new york times" and chris rugaber with the associated press. tell our viewers what influence the chamber of commerce has had in washington, d.c. and has it changed over the years? jeanna: they absolutely have pretty extraordinary influence in the sense that they are a voice for the business community. in the past, that has been crucially important, because for a lot of republicans and centrist democrats, they want to position themselves as pro-business, company-friendly candidates. as we were discussing earlier, we think some of that has weakened slightly in this populist era with a lot of polarization. the chamber tends to sit at the middle of the political spectrum, just wanting certainty. and really that has shifted in washington. there is a real appeal to populist, grassroots voters now, and much less of pressure coming
from these companies. chris: right. and i think it is not something perhaps even republicans want to be associated as much -- i'm doing what the big business group is telling me. it is something they won't necessarily -- and i think more voters are tuned into special interests and think tanks and the impact in washington. but they have a big, granite building right across the street from the white house, so they certainly have a lot of sway. greta: we heard from him at the beginning, when you asked about the trade war, is it having an impact, or dwindling the benefits of the tax cut? his answer was dampening the impact of those tax cuts. why is that? and what could be the long-term impact of that? chris: you are seeing big companies talk about not just tariffs on china but on steel
and aluminum for a year or more. everybody from carmakers to smaller companies are talking about millions and in some cases billions they are spending or had done so. cuts into their profits, and to the degree some are keeping costs off the customers, no some have passed on to the customer. but to offset that, it is cutting into their profit and eliminating benefits of the tax cuts. jeanna: even more importantly, it is stoking a lot of uncertainty for companies. when they are uncertain, they do not invest. particularly with the possibility of a recession, they do not invest. when they pull back on
investment, it has really important long-term effects. growth is not going to be a strong as it could. it is not just the current movement that slows down, although that happens. there are fewer machines to make labor more productive down the road. we heard neil bradley say one way to lessen this uncertainty or avoid recession is help the escalation of this uncertainty. how is that happening? who is escalating the uncertainty? chris: the president is escalating it a lot with tweet. s. -he will threaten tarifface increase -- increase.
i think there are some residents, i was interviewing a manufacturer of car seats and they were talking about given how much regulation is around a product, if they were to shift supply where they get things from china, it would take a long time to get in place to make sure it passes regulatory muster. it could take up to a year or longer. and with that timeframe in mind, any day a tweet could come change the trade policy. companies feel like it is hard to plan and hard to move forward. so, right, it's interesting, a lot of the escalation is from the tweets and comments, as well as there have been a lot of up and down with the tariffs that have been imposed. greta: and the potential of other tariffs.
jeanna: he said it would be devastating, which i think is a pretty interesting assessment of the potential impact of the tariffs. i think it's worth pointing out that if the tariffs took effect, they would go on at exactly the wrong moment in the business cycle. because germany is already on the brink of slipping into recession and if its auto sector found itself under additional pressure, you could safely bet that they will in fact hit a recession. and the european central bank just doesn't have a lot of policy room to bail them out right now. so we are at this sort of inflection point where looks like policy moves like that could be in size it. greta: we are out of time. thank you both for being a part of "newsmakers." >> thank you. [captions copyright national cable satellite corp. 2019] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] announcer: senator elizabeth warren is a new york city monday to speak to voters in washington square park.
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