Jan. 29 (Bloomberg) -- President Barack Obama urged Congress to back two of the top priorities of U.S. multinational corporations: broader authority for his administration to negotiate trade deals along with changes to immigration laws.
The president, in his annual State of the Union address last night, called on Congress to allow an expedited vote on trade agreements as the U.S. tries to complete negotiations with the European Union and Pacific nations.
Obama’s trade comments, which didn’t endorse a specific proposal, drew rare support from Republicans who have been prodding the president to push harder for the trade deals. Many Democrats say they are skeptical of the so-called fast-track authority for trade deals because of concerns the accords won’t protect U.S. jobs and don’t give lawmakers enough say on them.
“We need to work together on tools like bipartisan trade-promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped ‘Made in the USA,’” Obama said. “Listen, China and Europe aren’t standing on the sidelines. Neither should we.”
Obama reprised tax, energy and transportation initiatives he has failed to move through Congress in prior years and then promoted less ambitious policies he can achieve with executive action or more narrowly focused legislation.
He will bring corporate executives to the White House later this week to discuss hiring long-term unemployed workers, and he announced partnerships with Apple Inc., Microsoft Corp., Sprint Corp. and Verizon Communications Inc. to connect schools to broadband technology.
Obama supports lowering the corporate tax rate and curtailing tax breaks, then using any one-time revenue generated by those changes to pay for bridges, transit and other infrastructure.
“Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad,” Obama said. “Let’s flip that equation. Let’s work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs right here at home.”
That plan has stalled in Congress, stymied by a partisan dispute over whether wealthy individuals should pay more and whether the one-time money should be used for rate cuts.
Congress should “start by getting serious about tax reform, quickly enacting immigration reform and passing trade promotion authority,” John Engler, president of the Business Roundtable, said in a statement. “Progress on these fronts will give an immediate boost to the economy and demonstrate that the president and Congress are serious about spurring investment and creating American jobs.”
Obama said he would begin a retirement-savings program for Americans without access to 401(k) savings plans at work. Under the initiative, workers would be allowed to regularly deduct a portion of their pay for deposit into an account. The money would be invested in U.S. bonds and the savings would be treated for tax purposes as a Roth individual retirement account.
“It’s a new savings bond that encourages folks to build a nest egg,” he said.
He also asked Congress to expand the earned income tax credit so more single low-income workers without children could benefit. In 2013, the maximum credit for a childless worker was $487, compared with $6,044 for a single person with three children, according to the nonpartisan Tax Policy Center.
The president, beginning his sixth year in office, called for increasing the federal minimum wage to $10.10 an hour. Republicans have shown little support for the plan, and business groups such as the National Retail Federation oppose it. That prompted Obama to announce an executive action to raise the wage to $10.10 per hour for federal contract workers.
On trade, Obama said he will work with Congress to pass fast-track authority to help secure trade deals with 11 other Pacific-rim nations and the 28-member European Union. If completed, the deals -- which would be the largest trade pacts in U.S. history -- would link regions with about $45 trillion in annual economic output, about 62 percent of the world total.
The privilege lets Congress sets guidelines for trade accords while preventing lawmakers from adding amendments to the deals. Members of both parties have said they oppose granting the president such authority, which expired in 2007, saying they want more input in the trade pacts.
Senator Ron Wyden, an Oregon Democrat, said he isn’t ready to back a fast-track bill written by Senate Finance Chairman Max Baucus and House Ways and Means Chairman Dave Camp. Obama wasn’t specific about a proposal he would like to see.
Wyden cited concerns over digital trade issues and the speed at which the process is moving. Wyden is next in line to lead the Finance Committee if Baucus is confirmed to be the next U.S. ambassador to China, which could happen as soon as next month.
A coalition of industry groups and companies, including the U.S. Chamber of Commerce, Business Roundtable, Boeing Co. and Wal-Mart Stores Inc. have been pushing for swift approval of the fast-track trade authority.
Senator Rob Portman, an Ohio Republican and a former U.S. trade representative, said he was encouraged by Obama’s statement on trade.
“Democrats need to know that he’s going to provide them with some political cover for that vote, and it’s critical for our country,” he said in an interview. “We haven’t had the ability to negotiate agreements for seven years and that’s put us on the sidelines.”
While a coalition of business and agricultural groups applauded Obama’s call for work on trade promotion authority, the measure’s critics said he downplayed it, yielding to public and congressional opposition.
“Corporate interests were fiercely lobbying for President Obama to dedicate serious time in this speech to pushing fast-track and the Trans-Pacific Partnership,” Lori Wallach, director of the Global Trade Watch program at Public Citizen and a fast-track opponent, said in a statement. “Instead, he made only a passing reference that largely repeated his past statements.”
Obama also said he will increase the number of U.S. workers tasked with recruiting foreign companies to invest in the U.S.
On immigration, Obama reiterated his call for Congress to pass legislation to change the nation’s “broken” system this year, allowing companies to better access labor resources.
“If we are serious about economic growth, it is time to heed the call of business leaders, labor leaders, faith leaders, law enforcement –- and fix our broken immigration system,” he said.
Business groups have signed on to the effort, most notably the U.S. Chamber of Commerce, which struck an accord with organized labor last year for a new guest-worker program that was included in a Senate-passed bill, and technology companies, which support changes to the H-1B visa program for highly skilled workers. The Senate bill has been stalled in the House.
Obama’s immigration comments were light on details as he tried to leave legislative space for a compromise.
“He handled it just perfectly, I thought,” said Senator Lindsey Graham, a South Carolina Republican who helped write that chamber’s bipartisan bill. “That’s just exactly what the president ought to do -- encourage us to act, you know, not get too deep into the weeds.”
House Republicans will meet at a policy retreat this week to discuss their principles for a piecemeal approach to the issue, in contrast to the comprehensive Senate bill.
“Our immigration system is in desperate need of reform,” Republican Representative Bob Goodlatte of Virginia, chairman of the House Judiciary Committee, said in a statement. “However, we don’t need another massive, Obamacare-like bill that is full of surprises and dysfunction after it becomes law.”
Obama endorsed a call supported by FedEx Corp. Chief Executive Officer Fred Smith to create an energy security trust, saying he’d fund the U.S. Energy Department account with $2 billion to pay for electric vehicles, hydrogen fueling for cars, biofuels and U.S.-produced natural gas.
He also gave a nod to one of President George W. Bush’s pet projects, biofuels. Bush frequently mentioned switchgrass, a renewable plant, as a potential source to make biofuel. Obama proposed “fuel-neutral” ways to make vehicles cleaner, extending a tax credit for including cellulosic biofuels that expired Dec. 31 and a tax credit for infrastructure to also supply hydrogen, natural gas and electricity to cars.
Obama urged Congress to pass legislation to curb abusive patent litigation that has received bipartisan support and is being pushed by some large technology companies like Google Inc. and Cisco Systems Inc. The House passed a measure in December and the Senate is considering a similar proposal.
The president’s call for new incentives for trucks that run on natural gas builds on a growing trend of companies buying such vehicles and building fueling stations for a cheaper alternative to diesel. United Parcel Service Inc. last year announced plans to buy almost 1,000 heavy-duty trucks for package delivery before the end of 2014.
The natural-gas truck push has also captured the attention of investors like T. Boone Pickens, whose Clean Energy Fuels Corp. is building a network of liquefied natural-gas fueling stations. Trucks that run on the fuel are being sold by Daimler AG’s Freightliner unit. Westport Innovations Inc. is a leading supplier of engines.
Obama alluded to regulations that will induce fuel-economy improvements throughout the truck fleet to reduce greenhouse gases. A first-ever round of improvements was ordered in 2011, projected to save 530 million barrels of oil by 2018. The U.S. Environmental Protection Agency and the Transportation Department are in the early stages of drafting the next round of targets, for 2019 and beyond.
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