Lew Urges Tax Changes, Investment in Research to Boost Growth
U.S. Treasury Secretary Jacob J. Lew called for changes in the tax code, more investment in technology and stronger manufacturers to accelerate the growth of the world’s largest economy.
“To expand our country’s manufacturing base, we will make our tax code more competitive,” Lew said in remarks prepared for a meeting at the City Club of Cleveland today. “We are calling on Congress to make the research and experimentation tax credit permanent. This tax credit propels private investment in research and technology, and it helps unleash innovations in our country that lead to future industries, future jobs, and future breakthroughs in production.”
Lew earlier toured a manufacturing plant of blender maker Vita-Mix Corp. in Strongsville, Ohio, and met local business leaders to discuss President Barack Obama’s strategy to bolster the U.S. economy and reduce unemployment. He held talks privately last week on similar issues with economists and Wall Street executives including JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon and billionaire hedge-fund manager John Paulson.
The U.S. growth outlook improved after a stronger-than- forecast gain of 165,000 workers in April pushed the unemployment rate to a four-year low of 7.5 percent. Last week’s jobs data help lift stocks and Treasury yields, and the Dow Jones Industrial Average closed above 15,000 today for the first time.
“Our economy is much stronger today than it was four years ago, but we must continue to take action to help speed up growth and put more people to work,” Lew said.
Closely held Vita-Mix, which makes blenders used to make shakes and smoothies, vegetable soups and cheese fondues, plans to hire more than 200 people in the U.S. in 2013 after boosting sales by 52 percent last year, Anthony Ciepiel, chief operating officer, said in a phone interview yesterday.
The company, based in suburban Cleveland, benefits from the shift toward healthier diets and sells its products in 100 countries at retailers including Harrods Ltd., the luxury department store, and Union, New Jersey-based Bed Bath & Beyond Inc. (BBBY), according to Ciepiel.
“Smoothie consumption in the U.S. is going up dramatically,” Ciepiel said. “In the last 12 months, there were 2.8 billion smoothies made at home.”
Vita-Mix makes all its blenders in Ohio, where the unemployment rate fell to 7.1 percent in March from a 26-year high of 10.6 percent in February 2010. The recovery was driven by rebound in auto production and demand for workers from oil companies including Chesapeake Energy Corp. (CHK) that started exploring underground shale formation known as Utica.
“This could be a real game changer for Ohio,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. “You look at what happened in North Dakota and how North Dakota has so greatly benefited from its energy resources and there is a lot of hope that to some degree that’s going to be a major influence with the Ohio economy.”
While oil and gas exploration in North Dakota pushed its unemployment rate to the lowest in the nation at 3.3 percent, in Ohio mining represents 0.25 percent of overall employment. Manufacturing employs 12.8 percent, according to the Federal Reserve Bank of Cleveland.
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