With the presidential election behind us, thoughts are turning to more pressing problems facing the economy.
I asked chief executives of some big publicly traded local employers, all from different industries, to outline their priorities for President Barack Obama’s second term.
Three issues dominated the discussions: the “fiscal cliff,” $600 billion in mandated tax increases and spending cuts set to take effect at year’s end; energy policy; and regulatory reform.
Four years ago, executives told me that the new president’s top priority should be healing the divisiveness in Congress. Four years later, that’s still on the list, raising concerns that intransigence will undermine efforts to address the fiscal cliff.
“The current fiscal and political impasse is a drag on economic growth,” said Jeff Smisek, CEO of United Airlines, adding that he’s hopeful “that the administration and Congress will work together and find real solutions.”
If they can’t, it will likely compound the cloud of un-certainty that has inhibited the economic recovery for more than a year.
“The challenge fundamentally is that business can’t plan, and people can’t plan,” said Ric Campo, CEO of Camden Property Trust, which develops apartment buildings nationwide. “We would be building a lot more apartments around the country and in Houston if we were more confident about future funding mechanisms and the economy.”
Also, politicians must learn to “bridge this partisan divide that’s become ugly beyond belief,” Campo said.
Any sign that the Washington gridlock is easing could boost the confidence of small businesses, which is essential to get the economy growing again, said Scott McLean, CEO of Amegy Bank of Texas, whose borrowers include area small businesses.
“Economic, regulatory and taxation uncertainty have a major impact on small-business owners’ decision to grow and ultimately hire employees,” he said.
Retooling the tax code
But after four years, business executives are looking for more than talk. They want to see lawmakers taking on tough problems such as revamping the tax system.
“U.S. tax policy needs to be overhauled to reduce complexity, and any changes to the tax code must promote competitiveness of U.S. manufacturers,” said Jim Gallogly, chief executive of chemical company Lyondell-Basell. “Lower corporate tax rates are critical to allowing U.S. manufacturers to compete effectively in global markets.”
Gallogly’s priority list also includes a comprehensive energy strategy that would promote domestic oil and natural gas production, especially through hydraulic fracturing in shale formations. The production boom unleashed by that process has lowered prices for natural gas, which chemical companies use as a feedstock and a fuel.
The lower prices have created “a competitive advantage for U.S. petrochemical manufacturers, leading to greater U.S. investment and industry growth,” he said.
Reform of regulations
McLean and Gallogly mentioned the need to reform government regulations. While regulations should protect public health and the environment, they shouldn’t impede innovation and job creation, they said.
“While it’s dangerous in all industries to not have enough regulation to keep the public and consumers safe, implementing unnecessary regulations can hinder economic growth,” McLean said. “When industries become overregulated and those regulations are constantly changing, it becomes difficult for businesses to cut through the red tape and make progress.”
Gallogly specifically mentioned environmental regulations, which he said need to be fair, consistent and predictable.
“Inconsistent and impractical regulatory practices will curtail new enterprises, significantly reduce investment in the United States and cost jobs,” Gallogly said.
Help for airlines
Smisek also called on Obama to promote regulatory and tax policies that would enhance the long-struggling airline industry.
“From my perspective, President Obama has a great opportunity to bolster economic growth by recognizing the tremendous value the airline industry brings to the economy,” he said. “We hope he focuses on a globally competitive aviation tax policy, a domestic regulatory policy that is effective and efficient and not punitive, and a consistent and fair funding of the government needs for air traffic control infrastructure.”
Many of the issues such as tax policy, regulation and the fiscal cliff are intertwined.
Companies can’t grow until they have greater clarity on the most important issues affecting them – taxes and regulation.
The president gets to keep his job, but as Houston-area executives point out, it comes with a daunting to-do list.
Loren Steffy, firstname.lastname@example.org, is the Chronicle’s business columnist. His commentary appears Sundays, Wednesdays and Fridays. Follow him online at blog.chron.com/lorensteffy, www.facebook.com/LorenSteffypage and twitter.com/lsteffy.