Capital Formation Newsletter
November-December, 2006, Vol. 31, N0. 6

An Open Letter to the 110th Congress

Chairman Rangel Speaks at ACCF Forum

ICCF Hosts Forums in Asia

ACCF Association Council Meets

ACCF Scholars Advise Candidates

(PDF Version)

An Open Letter to the 110th Congress

December 2006

The American Council for Capital Formation extends its best wishes to the 110th Congress, the new Congressional leadership and the new Members of Congress.

As a participant in U.S. economic policy making for three decades, the ACCF understands the political challenges as well as opportunities for the 110th Congress and President George W. Bush. As Alexis de Tocqueville observed when he toured the United States in the early 19th century: “For a long while before the appointed time has come, the next presidential election becomes, so to speak, the all-engrossing topic for discussion.” De Tocqueville’s words are as true today as then. Therefore, the ACCF and its scholars have begun to work with the major presidential candidates for 2008 to plan for the economic agenda in the critical first 100 days of the next presidency. At the same time, much can and should be accomplished in the 110th Congress. If there is one over-riding message from the recent elections, it is that the public wants the Congress and the President to work together to address the serious economic and political challenges facing our country. Now more than ever, good policy will translate into good politics for the 110th Congress and the aspirants for the U.S. presidency in 2008.

The ACCF is proud of its track record of providing America’s policymakers and opinion shapers with the best research available to identify pressing capital formation challenges and propose realistic solutions. Although the U.S. economy and capital formation policies have changed over the last thirty years, ACCF’s mission has not -- to champion an economic policy agenda that encourages growth in the economy, job creation, competitiveness and a higher standard of living for all Americans.

The nation’s economic policy challenges are many. The U.S. tax system is out of sync with the 21st century and needs fixing. The U.S. retirement system, both its private and public components, face challenges as the baby boomers begin retiring. The problems with our health care system seriously impact American business and can no longer be ignored. Economics 101 tells us that we need a reliable supply of energy for strong and sustained economic growth. Strength in U.S. exports and world-wide economic growth require a liberal trade policy. Appropriate immigration policies that encourage “the best and the brighest” to contribute to the U.S. economy should be maintained and strong intellectual property rights, especially for American producers abroad, are needed.

The ACCF and its affiliated economic policy think tank see these challenges as significant opportunities to ensure the American dream in the years ahead. The ACCF looks forward to supporting presidential and congressional initiatives that will promote a strong economy. The ACCF Center for Policy Research, with a number of this country’s leading mainstream academic economists on its board of scholars, stands ready to provide the best economic analyses and policy options.

With three decades of recognized legislative experience and expertise on many of the issues on the nation’s economic policy agenda, we urge you to contact the ACCF if we can be of assistance in the months ahead.

Cordially,

Chairman Rangel Speaks at ACCF Forum

Just one week after the 2006 elections, Representative Charles B. Rangel (D-NY), who is expected to chair the House Committee on Ways and Means in the 110th Congress, spoke to ACCF supporters and their guests at an ACCF Capital Formation Forum on November 14. Chairman Rangel sketched out some of the top items on his policy agenda and offered his perspective on how the Committee might best address issues ranging from taxes to trade, education, healthcare and Social Security. Looking back over his 35 years in the U.S. House of Representatives, the New York Congressman said, “When I came to the U.S. Congress in 1971, Democratic and Republican members worked together. The idea then was that we knew and respected one another, but lately members haven’t enjoyed that kind of relationship. If we want to be successful, we must work with one another.” He added that he hopes to be able to set an example for other members of the House. Turning to some specifics, Chairman Rangel said he had been asked if he planned to raise taxes. “I don’t believe that retroactive tax increases make sense. I know that investors need some continuity in the tax code.” Also, the alternative minimum tax (AMT) is the

ACCF president & CEO Mark Bloomfield, left, welcomes incoming House Ways and Means Committee Chairman Charles B. Rangel (D-NY) to the ACCF forum.

Trade is an area where Chairman Rangel sees the need to make changes in the way the Ways and Means Committee works. For example, he believes that the entire Ways and Means Committee should be involved in trade legislation, not just the Trade Subcommittee. “I expect the private sector to advocate for free trade but I want a trade advantage for the U.S., not a level playing field. The business community must work with members of Congress to sell the idea that free trade works for America and American workers,” he also said.

Giving American workers access to health care is an important issue for Mr. Rangel. “I should be able to convince the business community that the 47 million working Americans who do not now have health care should have it. America should set a good example on health care for the rest of the world.” Congressman Rangel has long been convinced that the U.S. education system is not working for many Americans and that this situation is not only morally wrong but also threatens the security of the U.S. “We have to be able to offer a way out to those who are caught up in the violence in our cities,” he said.

Tax reform is among the top legislative priorities of the incoming Chairman of the Ways and Means Committee, but he believes there are a number of other tax issues that must be addressed first. He noted that while he is open to the idea of reform, some issues will be harder to tackle than others. He also hopes that he and other Democratic leaders will have opportunities to talk with President Bush about areas where there can be some agreement between Congress and the Administration in order to establish a basis on which to move forward. “The power of the Ways and Means Committee Chairman is limited by the power of the President to veto legislation,” he said, adding “I don’t want confrontation with the White House -- that just makes compromise more difficult.”

ACCF supporters and guests visit with Chairman Rangel at the ACCF forum.

ICCF Hosts Forums in Asia

The International Council for Capital Formation, the ACCF’s Brussels-based affiliate, sponsored symposiums and media briefings in five Asian cities to focus on “The Asia-Pacific Partnership on Clean Development and Climate: Its Role in Promoting a Positive Climate for Investment, Economic Growth and Emission Reduction.” Cities on the tour included Hong Kong, Tokyo, Seoul, Beijing, and Delhi. Dr. Margo Thorning, ICCF Managing Director, and Ambassador Alan Oxley, Founder of World Growth, co-chaired the events. World Growth is an NGO based in Australia.

Panelists at the ICCF’s forum in Delhi, left to right: Geoffrey A. Pyatt, Chargé d'Affaires, U.S. Embassy; Dr. Thorning; Vivek Bharati, Advisor, National Policy, Programmes and Projects, Federation of Indian Chambers of Commerce and Industry (FICCI); Ambassador Oxley; Ms. Victoria Walker, Political and Economic Counsellor, Australian High Commission; and Mr. Wang Qiming, Science Counselor, Embassy of the People’s Republic of China.

At the ICCF/World Growth forum in Delhi, Dr. Thorning told participants that “continued strong economic growth and improved living standards for its 1.1 billion people is a top priority for Indian policymakers. Another goal is increased energy efficiency and a clean environment. The new Asia Pacific Partnership on Clean Development and Climate (APP) can potentially accelerate India’s progress in achieving both goals.” Dr. Thorning also noted that the economies of the 6 APP countries account for about half of the world’s population and more than half of the world’s economy and energy use and thus have a major role to play in ensuring that future economic development is both clean and sustainable.

Panelists for the forums included experts from each host country. The symposiums and briefings in the five cities focused on strategies that can promote new technologies, encourage energy efficiency and enhance energy supplies while promoting economic growth. Countries in the Asia-Pacific Partnership on Clean Development and Climate (APP) -- Australia, China, India, Japan, Korea and the U.S. -- have decided to tackle these issues by developing new energy efficient technologies, encouraging technology transfer and promoting economic growth.

Dr. Thorning released a report at the forums that concludes that the Asia-Pacific Partnership, a trade and technology agreement among six nations, can exceed the Kyoto Protocol in reducing greenhouse gas emissions. The report, The Asia-Pacific Partnership: Its Role in Promoting a Positive Climate for Investment, Economic Growth, and Greenhouse Gas Reduction, is available online at www.iccfglobal.org. Articles on the ICCF forums appeared in numerous Asian publications, including the South China Morning Post (Hong Kong) and The Financial Express (Delhi).

ACCF Association Council Meets

"I hope to help shape legislation in the next Congress and be a ‘player’ on tax policy, not an observer,” Congressman Jim McCrery (R-LA) told ACCF Association Council members at their December 12 meeting. Congressman McCrery, expected to be the Ranking Republican Member on the House Ways and Means Committee in the 110th Congress, added that he is looking forward to the next two years and thinks there will be opportunities to get things done. Among the issues within the jurisdiction of the Ways and Means Committee that Congressman McCrery believes might be addressed by the new Congress are Social Security, tax policy, trade policy and health care. “If the Democrats want to solve the Social Security problem, everything should be on the table so that compromises

ACCF President & CEO Mark Bloomfield, and Rep. Jim McCrery (R-LA) at ACCF Association Council meeting.

Representative McCrery thinks that trade could be another potential area of cooperation between Republicans and Democrats, noting that a Congressional trade coalition would be helpful in moving the issue forward. He also suggested that health care policy is an area the two parties could tackle. Republicans and Democrats have common interests on health care, he said, adding that health care costs have become a big issue for domestic corporations.

“I think pro-growth tax measures can be enacted over the next few years. It is going to be fun and interesting. There will be times when we will have to play defense, but I predict that the Democrats will be circumspect in outlining where they want to take the country,” Congressman McCrery concluded.

The agenda for the morning session of the ACCF Association Council meeting included roundtable discussions on the post-election legislative environment, energy/climate policy, tax policy, retirement policy, trade policy and other capital formation policy issues of concern to ACCF members.

The ACCF Association Council is co-chaired by Red Cavaney, president & CEO, American Petroleum Institute, and Marc Lackritz, co-chief executive officer, Securities Industry and Financial Markets Association. The Association Council is comprised of 35 associations representing all sectors of the U.S. economy, including the manufacturing, financial services, real estate, small and entrepreneurial business, energy, utilities and farming sectors.

ACCF Association Council Co-Chair Red Cavaney, President & CEO, American Petroleum Institute, and Alliance of Automobile Manufacturers President & CEO Frederick L. Webber at ACCF Association Council meeting.

ACCF Scholars Advise Candidates

Two former chairmen of President Bush’s Council of Economic Advisers and members of the Board of Scholars of the ACCF Center for Policy Research will lead the economic brain trust advising Massachusetts Governor Mitt Romney. Professor R. Glenn Hubbard, dean of the Columbia University Graduate School of Business, and Dr. N. Gregory Mankiw, a scholar at the American Enterprise Institute, have agreed to join Governor Romney's political action committee and will play key roles in the Massachusetts governor’s presidential campaign, if he decides to run. In addition, Dr. Douglas Holtz-Eakin, former director, Congressional Budget Office, and a Center Scholar, has signed on with the exploratory committee for Senator John McCain’s potential bid for the presidency. Dr. Holtz-Eakin is the Economic Policy Chair for John McCain 2008.