D. Hendricks
The president and CEO of the U.S. Chamber of Commerce in Washington, D.C., said he thinks he knows of a key ingredient that can help solve the federal government's fiscal cliff problem: Good-old energy from the U.S.A.
Thomas Donohue, described as “the voice of business in Washington” by former Mayor Henry Cisneros, was in San Antonio on Friday to speak at the NAFTA20 conference in San Antonio.
So I talked with Donohue about the fiscal cliff, the combination of looming tax hikes and spending cuts that threatens a new economic recession if Congress does not meet year-end deadlines.
Nobody wants a recession and a return to 9 percent unemployment should all the tax hikes and spending cuts occur, Donohue said. “We need one big economic deal to avoid going over the cliff,” he said.
Donohue's proposal is fairly simple. Congress and Obama should build into their agreement, whatever it is, a plan to develop more domestic oil, natural gas and clean coal.
“We now have 1.75 million people employed in the energy industry. The industry provides billions of dollars to state and local governments where they operate as well as paying a good deal to the federal government through income taxes,” he said.
Developing even more domestic energy supplies, he said, would add revenues to “the big economic deal we should make. People would find it easier to get there.”
Put another way, the federal government should expand the economy and tax revenues by backing the energy industry, thus creating energy security and independence while reducing future federal deficits.
Money also could be saved by shaving the defense budget since U.S. energy independence would mean we could afford to cut back on some of our military commitments.
Military spending should not be cut too much, however, Donohue warned. The U.S. Defense Department already has reduced it annual budget by about $500 million last year, he pointed out.
With further cuts, “we would lose jobs in the private sector,” he said.
Well, OK. The energy component sounds as good as anything else. We can cross our fingers and hope it works. But even Donohue knows of a problem with his own proposal: time.
Congress won't be able to fashion the proper legislation to boost domestic energy production by the end of the year. Legislation needs to go through U.S. House and Senate committees “where the experts are,” he said.
“In other words, 10 guys cannot get into a room and make this deal,” he said.
The Congress artificially created the cliff, however, and Congress can move the deadlines, but even then economic damage could be done.
A sense of urgency needs to be maintained about federal deficits, Donohue said. “The press is watching, and the ratings agencies are watching,” he said.
Uncertainty coming from any delays in resolving the U.S. fiscal problems could deepen Europe's economic crisis, he added.
Will U.S. Chamber members blame the Democrats or the Republicans if the country falls off the fiscal cliff into a damaging recession?
“It depends on how it happens,” Donohue said. “If they are smart, they'll blame everybody.”
Donohue has that right.