CEOs say 'a growing pie' should be US economic policy goal in 2014

AT&T's Randall Stephenson, chairman of the Business Roundtable, said US economic growth has been 'substandard,' and could be much higher. He called for tax reform and immigration reform to help drive investment.

Monitor Breakfast

The head of the Business Roundtable, a group representing CEOs of the nation’s largest companies, says growing the economy through faster investment should be at the heart of US economic policy in 2014.

Randall Stephenson, chairman and CEO of AT&T and chair of the Roundtable, told reporters at a Monitor-hosted breakfast Wednesday that “the only real way to address” the debate about federal budget deficits versus entitlements and social programs is “rather than a fixed pie, begin to think about a growing pie.”

Stephenson argued that recent US economic growth has been “substandard.” He said the typical CEO is currently expecting economic growth in 2014 “slightly north of 2 percent.” The executive added, “to be content with anything south of 3 percent or around 3 percent we just think it’s not logical. The potential is here for this thing to grow at a 4 percent clip,” Stephenson said.

Economic growth at that rate, he said, will not happen without robust private investment. “If you are not investing, you are not hiring,” he noted.

So the business group argues that four policy actions are needed to drive faster investment: fiscal stability, business tax reform, immigration reform, and expanded trade.

The business group see some signs of fiscal stability thanks to the recent budget agreement hammered out by Rep. Paul Ryan (R) of Wisconsin, the House Budget Committee chairman, and by Sen. Patty Murray (D)  of Washington, chair of the Senate Budget Committee. “We are very encouraged by the Murray-Ryan plan,” Stephenson said. “It is far from perfect, but I would not be critical because it has for the first time in quite a period given us some degree of ability to look forward for more than a quarter at a time.”

The group stressed the importance of corporate tax reform. “If you asked us to identify one issue that could stimulate growth, tax reform, business tax reform, is it,” Stephenson said. He cited studies showing that for every one percent drop in the business tax rate, Gross Domestic Product goes up half a percent within one year.

When asked about criticism that business leaders argue for tax reform but balk when it might cost them tax breaks, Stephenson made an unusual commitment. He said that if tax reform were adopted that stripped out tax preferences and lowered rates but resulted in higher taxes for AT&T, “I will stand up and pledge our support to that because it is such a good thing to do for economic growth and driving investment.”

Roundtable President John Engler, a former Republican governor of Michigan, spoke at the breakfast to argue for Congress giving President Obama trade promotion authority. So-called TPA would require Congress to vote up or down on deals expanding trade with the European Union and with Pacific region nations.

The chairs of the Senate Finance and House Ways and Means Committees have introduced such legislation. But a key Democrat, House Ways and Means ranking member Sander Levin of Michigan, said he is working on a rival measure with tougher provisions. Speaking of Democrats, Engler said, “there is little risk in giving their president … the authority to go into these negotiations and try to get the best deal for America.”

On immigration, the Roundtable favors a larger pool of visas for higher skilled workers and a path forward for undocumented workers already living in the US. “I have not heard of anybody in Congress suggesting that we ought to send 11 million undocumented workers home,” Stephenson said. So having the president establish a process for dealing with them “is just logical,” he added.