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Home / Washington Business - July/August 2005 / Q&A with John Engler: Congress Must Act Now |
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Q&A with John Engler: Congress Must Act Now |
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Written On: July/August 2005 |
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John Engler is president of the National Association of Manufacturers, the largest industry trade group in America, representing small and large manufacturers in all 50 states. Prior to joining NAM in October 2004, Engler was three-term governor of Michigan. He became Michigan’s 46th Governor in 1991, after serving for 20 years in the state legislature, including seven years as Senate majority leader. He was the youngest person ever elected to the Michigan State House of Representatives.
Editor’s Note: John Engler was the keynote speaker at AWB’s annual Spring Board Meeting on May 24. AWB talked with Engler about his tenure as Michigan governor and his goals as NAM President.
Q: Tell us about Michigan and how it compares with Washington.
A: Michigan has the nation’s eighth-highest population with 9.9 million, based on the 2000 census. Washington has 5.9 million people, which is 15th in population. We budget on a yearly basis whereas your state establishes the budget for a two-year period. Like Washington, Michigan has a strong manufacturing base. We also have an excellent education system and two strong flagship universities. We have Michigan and my alma mater Michigan State, and you have Washington and Washington State universities.
Q: I understand Michigan recently introduced the Priorities of Government process. Is it working?
A: Toward the end of my term we looked at what Washington was doing to address its revenue shortfall due to the recession. My successor, Gov. Granholm, faced a $1.7 billion revenue shortfall and invited Peter Hutchinson to come to Michigan to establish the Priorities of Government process much like he did in Washington in 2003 when Gov. Locke brought him to your state. Really, the process is all about tailoring government to provide the services people need in the most efficient way and jettisoning the rest. So I think it is working much like it did in Washington a couple of years ago, but it is a work in progress.
Q: What were your greatest accomplishments as governor?
A: I inherited a $1.8 billion state budget deficit in 1991, and we were able to turn it into a $1.2 billion surplus when I left office. During my tenure, I was able to sign 32 tax cuts into law, which saved Michigan taxpayers some $32 billion and helped create more than 800,000 new jobs, taking our unemployment rate to its lowest level ever. We created the Department of Environmental Quality, strengthened the Department of Natural Resources and elevated the Office of the Great Lakes to cabinet-level status.
We improved education and focused on high standards, more accountability and strengthened local control. Those moves help student test scores climb to record highs. We also invested in transportation improvements because we believed that good infrastructure creates jobs and economic opportunities.
Q: As NAM president, what does Congress need to do immediately to improve the economy?
A: America is waiting for decisions to be made by Congress. There can be no more excuses for delay. American companies now hold a record $1.2 trillion in cash reserves but balk at growth-oriented investment because of uncertainty stemming from inaction in critical policy areas. We must reduce business costs, encourage investment, create jobs and ultimately give the U.S. economy an estimated $1 trillion boost over the next five years. Among other things, we must increase energy supplies, rebuild highways, and modernize telecommunications with broadband.
Q: At the Detroit Economics Club, you announced a five-point plan which would encourage companies to invest. What is that plan?
A: It consists of the same five points I spoke to AWB members about in Spokane in May. It is very simple and Congress needs to act now:
1. Enact a national energy strategy to increase domestic supply, stabilize prices and encourage the development of new, clean sources of power. Economic impact over five years: $165 billion.
2. Approve Clear Skies legislation to streamline overlapping and contradictory EPA rules that hinder utilities’ investment in new technologies that would improve energy efficiency and reduce air emissions. Economic impact over five years: $21 billion.
3. End the nightmare of asbestos litigation by fairly compensating the real victims of asbestos exposure, eliminating transaction costs and reducing uncertainty. Economic impact: $65 billion more in victims’ compensation and $85 billion in industry savings.
4. Pass the highway bill to boost spending on repair of America’s roads and bridges. Economic impact over five years: $242 billion.
5. Modernize the telecommunication laws and speed deployment of broadband for voice, video and data. Economic impact over five years: $600 billion.
Q: Congress is considering an energy bill—what is critical for lawmakers to address?
A: Adequate, affordable and reliable energy supplies are essential to the growth of the U.S. economy and to our quality of life. Today, America faces tight energy supplies caused by a fundamental imbalance of supply and demand, particularly for natural gas. Future energy needs far outstrip present levels of production. NAM supports a comprehensive U.S. energy strategy that balances supply and demand without compromising environmental safeguards or imposing command and control mandates or taxes.
Q: NAM has been a leader in eliminating lawsuit abuse. Congress already passed class-action lawsuit reform, what are the chances for addressing asbestos this year?
A: We think they are quite good. There is broad and bipartisan agreement that asbestos litigation needs to be reined in. There are simply too many people who are not sick taking money that could be going to people who are sick and financially ruining companies with little or no liability. There are at least 8,400 active defendants, more than 70 bankruptcies caused by asbestos litigation, and at least 60,000 jobs lost so far. And for every 10 jobs lost due to an asbestos bankruptcy, a community will lose 8 additional jobs.
Q: What about transportation funding?
A: In Michigan, I pushed for increased highway funding. It is never easy asking for more in gas tax, but road construction is costly. Transportation is the lifeblood of any economy and NAM is concerned that any delay in the reauthorization of highway and transit funds would disrupt construction schedules and undermine economic growth. In Michigan, where we have severe winters, our construction season is short so Congress really needs to get on the ball and approve the highway bill.
Q: What needs to be done on broadband?
A: I have members tell me it is easier for them to communicate with customers in Europe and Asia than it is for them to communicate with one of their plants in a rural area. To be globally competitive, we need to transmit data quickly, securely and without interruption.
During the boom of the 1990s, telecommunications carriers invested heavily in fiber-optic cables for long-distance communications, to the point of creating overcapacity or “dark fiber.” Until recent favorable policy changes, carriers largely had not invested in fiber-optic cables between serving central offices and customer premises. Local broadband deployment can provide a major boost to information technology-based productivity, employment and consumer benefits in the coming years. South Korea, Canada and Sweden, all having national policies to promote broadband, have passed the United States in total relative local broadband deployment, and the United States now stands at number 13 worldwide in broadband penetration.
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