CENTER FOR AMERICAN PROGRESS THE NEED FOR A U.S. COMPETITIVENESS STRATEGY INTRODUCTION: JOHN PODESTA, PRESIDENT, CENTER FOR AMERICAN PROGRESS MODERATOR: SARAH ROSEN WARTELL, EXECUTIVE VICE PRESIDENT, CENTER FOR AMERICAN PROGRESS SPEAKERS: REPRESENTATIVE BARTON GORDON (D-TN) MARK ANDERSON, EXECUTIVE VICE PRESIDENT, THE WESSEL GROUP, INC. CHARLENE BARSHEFSKY, SENIOR INTERNATIONAL PARTNER, WILMHERHALE WILLIAM DALEY, MIDWEST CHAIRMAN, JPMORGAN CHASE & CO BRAD SMITH GENERAL COUNSEL, SENIOR VICE PRESIDENT, LEGAL AND CORPORATE AFFAIRS, MICROSOFT TUESDAY, DECEMBER 1, 2010 WASHINGTON, D.C. Transcript by Federal News Service Washington, D.C. JOHN PODESTA: Good morning and welcome to the Center for American Progress. I’m John Podesta, the president of the center. I’m pleased that you’re all able to join us here today and that the topic of U.S. competitiveness did not get rained out. (Chuckles.) So before we get started, I want to thank our panelists for participating in the discussion. I’m going to introduce them at the end of my remarks. Some of them have to – some of them had to make a special effort to get here – notwithstanding, even, the rain – and to squeeze this event into their schedule so I’m really appreciative of, particularly, of Bill making the trip. We’ll have Charlene Barshefsky here who is going to be a bit late but I think will be here by the time we begin our panel. Over the past two years, policymakers have naturally and necessarily focused on how to pull the country out of the great recession and get the economy growing again. The swift actions of the Obama administration allowed us to avoid the calamity of a second Great Depression; domestic growth has since resumed although the rate of job creation remains far too low. But even as we fight in the short term to restore jobs lost in the Bush recession, we must also turn our attention to the long-term challenge neglected by the previous administration, which is how to build a 21 st century competitive economy in which the American middle-class can succeed and prosper. The U.S. has excelled at competing internationally in the past. We built an enviably number of high-quality universities, a base of sophisticated scientific knowledge and enterprise, a skilled manufacturing workforce, open capital markets and a nimble venture-capital and finance system. We opened our doors to immigrant families like mine who came across the world bringing their talents and ingenuity to power our growth, and our entrepreneurial culture and optimistic character helped to make America the strongest and most competitive economy in the world. I don’t have to tell you that we are now at a critical juncture. On many key indicators from educational attainment to infrastructure to new inventions other countries are rapidly advancing while our own progress has faltered. Don’t get me wrong, I think we still enjoy significant competitive strengths but in this evolving economic landscape we must hone our competitive advantages more than ever in order to create the kind of good-paying jobs we need for the American worker to prosper. The administration has already executed many initiatives to advance American competitiveness including those aimed at supporting innovation and manufacturing, increasing exports and achieving higher levels of educational attainment. But in our view, the full potential of these efforts is undermined by the lack of a coherent and overarching framework that looks beyond daily crisis to focus explicitly on longer-term challenges. The first step to building such a framework is to move past the stale debates in which policy choices are denigrated as Soviet-style industrial policy that interferes with the market- picking winners. These alarmist arguments only distract from the reality. The United States always relied upon entrepreneurs, market discipline and the private sector to drive economic expansion and will always continue to do so. As even our founders understood when they wrote Patent and Copyright Clause into the Constitution, it’s the government which has an essential role to play as a catalyst of innovation, creating the conditions for a kind of private investment that generates widely shared growth and stepping into carefully addressed market failures when they do occur. But when it comes to competitiveness there’s no process by which the long-term goals are identified, catalytic role of government is defined and smart, responsible policies designed in its service. The responsibility for ensuring U.S. competitiveness is diffuse. The departments of Commerce, Treasury, Transportation, Energy, Labor, Education, the Office of U.S. Trade Rep. and dozens of other government agencies and departments all have some say in a competitiveness strategy. This is all in marked contrast to other leading nations which typically have a single, strong department responsible for championing competitiveness and interfacing with the business community. I know well that the White House faces many day-to-day issues and crises – this administration more than any in recent memory. That makes it difficult to devote the time to look over the horizon. Even in the best of circumstances, preparing for a future well beyond the next election cycle is simply very difficult. But the White House must have a U.S. competitiveness – must have U.S. competitiveness as a priority, develop a strategy and use every tool at its disposal to implement it. A coordinated, long-term planning just won’t happen without that kind of a strategy. Doing so will set us on a more solid economic path going forward. It will also create much needed immediate opportunities for the administration to engage substantively with the business and labor communities around policy priorities and specific initiatives on job creation and growth. That’s why Sarah Wartell, Jitinder Kohli and I propose in a paper we’re releasing today a more rigorous and structured long-term planning process to precede in parallel to day-to-day economic policy. A good planning process should include, first, an assessment of current conditions and future challenges. We propose asking the national academies to perform regular horizon scans so that as a nation we understand our long-term competitiveness challenges and opportunities. Second, an articulation of an overriding approach from the president in the form of a biannual national-competitiveness strategy. Third, specific policies including goals and measures of performance. Fourth, an interagency committee of the NEC chaired by a new NEC deputy that would develop strategy and more importantly monitor policy implementation. And finally, the meaningful participation of business and labor throughout the strategy process. We also suggest in the paper that this may be the right time to tackle the challenge of government reorganization. Our preliminary work shows a strong case for building a department for competitiveness perhaps by joining the Department of Commerce and the USTR and other trade-related agencies, perhaps, going further in including higher-education, workforce development and science. More work needs to be done in this area; we recommend that the president asks the national academies to take the lead. I want to note, we have previously recommended in a report we released about a month ago on the power of the president – that the Obama administration create a virtual statistical agency. In this paper, we develop some ideas for consolidation of economic, environmental and other statistical functions across the government which will be a more cost-effective way of providing the important data needed to make sound decisions. In sum, we argue that we have to put U.S. competitiveness at the top of the national agenda and begin taking immediate steps to ensure our long-term economic strength. And while good progress won’t guarantee – good process, I’m sorry, won’t guarantee our success, taking the strategic steps will go a long way toward creating an environment where success is far easier to achieve. Now, I want to introduce our panel; I’m going to give brief introductions. Their bios are in your packets and they deserve longer introductions but I want to get the panel started so I’m going to be brief. First, we have chairman Bart Gordon, the chairman of the House Committee on Science and Technology. I think no one deserves more credit than chairman Gordon for the America COMPETES Act and for focusing the Congress on the question of the competitive position of the United States. He saw that enacted and initially funded; the House passed its reauthorization earlier this year. The chairman, of course, is retiring after a long and distinguished career in the House. I think it would be a fitting capstone, Bart, to your tenure if the Senate would actually reauthorize this important legislation. (Laughter.) Two of my former colleagues will be joining us from the Clinton Cabinet. Here with us now is Bill Daley, the current chairman of the Midwest region of JPMorgan Chase, the former secretary of Commerce under President Clinton. I was fortunate enough to work alongside Bill while I was in the Clinton White House and to see firsthand how focused leadership and coordination can pay big dividends. He’s a good friend of mine; I appreciate that you made the time to get to Washington and be with us here today. Later, we’ll be joined by Charlene Barshefsky, the senior international partner at WilmerHale and former U.S. trade representative. While she’s probably best known as the architect and chief negotiator of China’s historic WTO agreement at the USTR; Charlene oversaw a steady growth in U.S. exports and was responsible for hundreds of negotiations and investment agreements with virtually every major country in the world. Fourth, we have Brad Smith who’s the general counsel and senior vice president at Microsoft.