U.S. Overview: Will the Economy Stay on Top?
Speakers:
Thomas Donohue, President and CEO, U.S. Chamber of Commerce
Douglas Holtz-Eakin, Director, Maurice R. Greenberg Center, Geoeconomic Studies and Paul A. Volcker Chair in International Economics, Council on Foreign Relations; former Director, Congressional Budget Office
Jeffrey Kindler, Vice Chairman, General Counsel, Chief Compliance Officer, Pfizer Inc.
Andrew Stern, President, Service Employees International Union

Moderator:
Maria Bartiromo, Managing Editor, "The Wall Street Journal Report," Anchor, CNBC


(Left to right: Thomas Donohue, Douglas Holtz-Eakin, Jeffrey Kindler, Andrew Stern, and Maria Bartiromo)

This was a very interesting discussion on the future of the U.S. economy in a global context, focusing on what problems the U.S. has to overcome now and in the coming years. Maria Bartiromo began the session by asking the panelists what were their top worries about the U.S. economy?

Note: The following notes were taken live during the session and are not meant to be considered direct quotations of the discussion...

Andrew Stern: "America is a gift." Each generation does better than the next, but each generation brings new challenges. American workers wages are flat or stagnant. Rich and poor gap is growing too fast and it threatens our democracy. Health care is a key issue.


Jeffrey Kindler: Again healthcare is key. Health equals wealth. Investing in preventive care and wellness. Tremendous inequality considering how many people in the U.S. are uninsured. Shared responsibility, not just CEOs and government organizations. We have to give people choices. "Today we have a sick-care system rather than a healthcare system." Getting the political will to address this problem.



Douglas Holtz-Eakin: Policy risks on different issues that span the entire gamut of the economic spectrum.


(Holtz-Eakin, Jeffrey Kindler, and Andrew Stern)

Thomas Donahue: The economy is strong, but his worry is competitiveness. Concerned with demographics. Aging population. 50 years ago health care was set to a 63 year old life span. Shift to longer living now has caused a fundamental issue of who are the people who are going to support our growing segmant. To Kindler: "You've made people live longer... I'm in favor of it as an old man."



Jeffrey Kindler: Largest growing demographic are the Centenarians (over 100).


(Jeffrey Kindler)

Thomas Donahue: Focuses on academics and schooling. Looking at how the system is failing our youth. 30% of our kids are not graduating from high school and as a result we are creating an unemployable population.


(Thomas Donahue)

Douglas Holtz-Eakin: Wants to make sure we look at this as a world phenomenon and how this aging demography is not a U.S.-only symptom, but something characteristic of the entire world. Question is how will we  handle it? Industries practicing in global competitiveness.



Maria Bartiromo: Asks for comments on how all this will be paid for.



Andrew Stern: 30 year revolution, quantum leap forward, everything is global and America doesn't have a game plan. No global government, never will be a global government, so we need a plan. There is no inevitable solution.

Maria Bartiromo: Asks Stern about what has been happening in France with the riots.

Andrew Stern: People are reacting to change. There's lots of change. France has enormous pressure. There are 50 million American jobs that are not leaving this country (truck drivers, health care workers, etc.).



Maria Bartiromo: Asks Thomas Donahue: "What do you say about that?"

Thomas Donahue: There are plenty of jobs that cannot be outsourced and we need people to take care of the elderly. 15 years ago people went home to find their rest and relaxation and now they go to work. We have to have reasonable paying jobs at all different levels ... Attainable benefits are needed and fair wages. Need work rules that keep our productivity.



Jeffrey Kindler: Concerned about the loss of our innovative edge. Less scientists. Direct link between science and engineering education to our innovation as a society. Without this our innovation could be lost.

Andrew Stern: Wants to declare the current system dead and reinvent our policy and political aspects. Why isn't it happening? "Ask Tom, he's the expert in Washington."

Thomas Donahue: Find a way that the private sector can move ahead and pull the government along. 65% of our deficit is about healthcare and pensions. "We're either going to deal with it [the system] or it is going to deal with us."



Maria Bartiromo:  Asks how politics filter in.

Thomas Donahue:  Says politics is about personal freedom. We need a more effective response to the needs of the citizens. "Politicians learn how to count before they learn how to think." We need workers. Notes that Churchill said that American Democracy will try everything that doesn't work and then they'll fix it.

Douglas Holtz-Eakin: All these issues make it hard to kick the can down to 2016 so whoever runs for the next President has to be proactive with a plan stretching that far if they hope to be reelected.

Andrew Stern: Points out that in his era change wasn't initiated by Washington. It was MLK. People lead change. Need a conference that declares the current system dead.

Jeffrey Kindler: Issue is how we spend our dollars; must spend on the front end of the system helping people get better. People fall off taking care of themselves, taking medicine, losing weight, working out, etc. Hopeful that politics are starting to drain out of it, because the problems are getting too big to ignore. Personal responsibility is tantamount in the case of cost because it costs a person $40 to take a pill to prevent a heart attack, but $40,000 to pay after the heart attack (and usually this isn't paid for by the individual).



Andrew Stern: There is a basic premise in America that everyone must receive a basic education, but there is no basic premise that everyone should have healthcare. Lots of differences between the different levels of healthcare needed by people of different demographics.

Douglas Holtz-Eakin: Disagrees. Thinks that there is no proof that this saves money. Mistake to deliver basic benefit. Difference between health insurance and health care haven't been clearly defined in America. Concerned about cost. Concerned about global issue. Concerned about helath care rather than insurance which he sees as a separate, albeit important issue.

Maria Bartiromo: Tom, what are your thoughts of America losing b/c of protectionist attitude toward outsourcing etc?



Thomas Donahue:  Outsourcing returns in more insourcing of money. Previous approaches have been "Dumb as a box of rocks." Trade and protectionism. Look at facts over emotion. Outsourcing has gone to a place none of us have ever been: productivity. Redesigning the rules of global commerce and we have to do so without being over protective.

Maria Bartiromo: Have we seen a negative impact b/c of protectionism?

Douglas Holtz-Eakin: No indication yet of a slowdown in incoming money. Need to reinvent money going out and coming in for this new world. Security is an issue.




Andrew Stern: 7 out of 10 middle americans work paycheck to paycheck. More people went bankrupt than graduated college last year. Protecting their family. Jobs leaving and being outsourced pay more than jobs being created in the U.S. and everyday people see that as they aren't receiving the benefit of the increased money coming in.

Jeffrey Kindler: Person who thinks it through doesn't end up being a protectionist. Protectionism is a result of job anxiety.

Douglas Holtz-Eakin: Any economy is built on the people spending the money. The people should bring the intelligence for how it should work, but there is a certain importance of the policy process to set the rules of the game for the people.

Maria Bartiromo: Should we be concerned about China and India growth?

Thomas Donahue:  He thinks we need to worry about our own inner competitiveness first. Current political situation is out of control. No real worry about China as China only has a 2 billion economy compared to our 14 billion.

Andrew Stern: China will be first major economic competitor to US in the long run. He thinks that at the 2008 Olympics we'll have a Sputnick moment, where we see their growing strength, but that we do not see it now.

Jeffrey Kindler: Notes that China still has to overcome many intellectual property issues that America has already overcome. Thinks we need to think about our own competitiveness. Diminishment of our innovation. China's biggest problem is stability.

Thomas Donahue:  We've told people how to run their countries for years, "we never thought they'd do it" and when they did it made us mad. Brings up the oil issue and says that it looks like we formed a committee to make ourselves look stupid, because we put restrictions on the oil companies but then we don't let them drill. That part of Alaska (where we could drill for oil but do not) "looks like Mars."  Everyone is doing stock buybacks with the amount of money being spent.



Andrew Stern: We're not going to drill ourselves out of this problem. Notes that we're addicted to oil.

Thomas Donahue:  If you're going to get off your addiction, you're going to have to go through treatment and withdrawal, and it's going to take a while...

Maria Bartiromo: "Gentlemen, I'm depressed, let's talk about something else..." Savings rate hasn't changed?



Douglas Holtz-Eakin: Savings calculation is a silly calculation. Silly measure. Shouldn't be used to make policy. Savings rate in the US has declined. That is a big deal. Culprit #1 is federal government. We need savings clarified through policy with a clear deal.

Maria Bartiromo: Final question: What's the single biggest opportunity the U.S. has that will help us reach the next level?

Thomas Donahue:  Not one opportunity, but two . . . , but understanding our shifting demographics is the biggest.

Douglas Holtz-Eakin: Education. Teach.

Jeffrey Kindler: Education science and engineering that will lead to innovation.

Andrew Stern: Our dream. The hope of the American dream. Building on our dream with the 21st Centuiry in mind.