Chamber head cautiously optimistic about economy

The president of the U.S. Chamber of Commerce straddled the Democratic and Republican divide Tuesday, endorsing the GOP drive to repeal President Barack Obama's signature health care law, yet su...

The president of the U.S. Chamber of Commerce straddled the Democratic and Republican divide Tuesday, endorsing the GOP drive to repeal President Barack Obama's signature health care law, yet supporting the White House on immigration and new spending to spur the economy.

In a speech at chamber headquarters, Thomas Donahue struck a cautiously optimistic tone on the economy, saying the condition of American business is improving and crediting the White House for what he said was a more favorable tone toward the private sector.

"When it comes to the nation's economy, we begin 2011 in better shape than we found ourselves last year," Donohue said. "The state of American business is improving."

But Donohue predicted it will take some time to bring the unemployment rate down and noted that even under his forecast, the economy would create a modest 2.4 million to 2.6 million jobs by the end of the year, enough to only drop the unemployment rate, now at 9.4 percent, by one percentage point.

In fact Federal Reserve Chairman Ben Bernanke predicted last week that it would take four to five years for the unemployment rate to drop to an historically normal rate of about 6 percent.

The chamber and the White House had fierce disputes last year over health care and an overhaul of financial regulations. The chamber also mounted a $30 million midterm election campaign, most of it aimed at Democrats, that strengthened its image as an ally of the Republican Party.

Donohue, however, said the chamber and the White House had issues of common ground and said Obama's new chief of staff, former Commerce Secretary William Daley, and Gene Sperling, the new head of Obama's National Economic council, "will be helpful."

He called Daley "a real pro."

As for relations with Obama, Donohue added: "It's never been personal with us."

Donohue forecast economic growth of 3.2 percent in 2011, in line with other private and public sector views of the recovery and an improved pace over the 2.8 percent growth projected for 2010.

But Donohue cautioned that the health care law and increased government financial and environmental regulation could damage the business community's ability to create jobs.

Donohue also called for greater spending on public infrastructure, from roads and bridges to broadband capacity. Deficit conscious Republicans, who control the House of Representatives, oppose additional government spending. At a news conference after his speech, Donohue conceded that the chamber faced opposition from Republicans, but said a government commitment to improve infrastructure could unleash $200 billion in private sector investments.

"We absolutely believe that we ought to begin now to find ways to reduce spending in every way possible, while recognizing that you're not going to get in the short run a lot of deficit reduction until we get all these people back to work," he told reporters after the speech.

His remarks placed the chamber, the country's most influential trade association, at the center of Washington's economic debate, making it both partner and antagonist to both the administration and Republicans.

The chamber's top lobbyist, Bruce Josten, also acknowledged that despite the chamber's support for repeal of the health care, the Senate was not likely to follow the House to undo the law. Instead, he said, the vote would set the stage for specific changes sought by the chamber, including doing away with fines aimed at companies with 50 or more workers that don't provide coverage to their employees.

Donohue voiced concern about the regulations that will emanate from the new financial overhaul, particularly how a new consumer financial protection agency will use its authority. He said the chamber feared the agency would take steps that would make it harder for small businesses and consumer to get loans they need.

He also said the chamber wants the administration to continue to push China to increase the value of its currency, a move that would help U.S. exporters and bolster jobs in the U.S. He said he looked forward to Obama's upcoming meeting with Chinese President Hu Jintao and said he hoped the administration would explore ways to make it easier for U.S. business to do business in China, a big and attractive market for U.S. companies.

On immigration, Donohue called for legislation to legalize 12 million undocumented foreigners in the United States and for a guest worker program that would permit workers to cross the U.S. border and then return to their native homes. He said he didn't believe the legislation needed to create a path toward citizenship, one of the fault lines in the debate over immigration.


Associated Press writer Jeannine Aversa contributed to this report.

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