U.S. Chamber warns of ‘double-dip’ recession

U.S. Chamber warns of ‘double-dip’ recession

U.S. Chamber of Commerce President Tom Donohue warned Tuesday the U.S. faces a double-dip recession because of the taxes and regulations under consideration by the Democratic Congress and President Barack ObamaBarack Hussein ObamaDonald Trump Jr. emerges as GOP fundraising force Trump shows peace through strength works after Obama Wake up, Kanye West MORE.

In a speech that was deeply critical of the Democratic agenda, Donohue said the Chamber was preparing to become deeply involved in the 2010 midterm elections.


“Congress, the administration and states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration. It’s a sure-fire recipe for a double-dip recession, or worse,” Donohue said in a speech on the state of American business in 2010.

Donohue said the lawmakers should not let former President George W. Bush’s tax cuts expire at the end of year and lambasted Democratic efforts on healthcare and financial regulatory reform as well as climate change.

If the tax cuts are allowed to expire, “we will likely end up with even bigger deficits and greater economic misery,” Donohue said.

Many tax lobbyists expect Congress to extend the cuts for people with lower tax rates, but to allow higher rates to be re-imposed on those in the top bracket. Obama’s budget last year also would have allowed higher tax rates to reset for individuals who make at least $200,000 and couples with income above $250,000.

Donohue faulted Obama and Democratic lawmakers for not doing more to create jobs, stating that Chamber officials were troubled that policymakers in Washington “seemed to be focused on everything but the creation of jobs.”

Donohue criticized a separate tax on banks floated by the administration on Tuesday, and said that the rationale for any tax increases would be increased spending, not lowering huge budget deficits exacerbated by the recession.

“We are talking about a massive tax increase in a very weak economy — a tax increase whose clearly intended purpose is not to reduce the deficit, but to pay for more spending,” he said.

At a press conference after his speech, Donohue went further in blasting the proposed bank fee. “There are so many unintended circumstances when you try and gerrymander the economic system to try to meet your political objectives. It’s a bad idea,” he said.

He also promised the Chamber would be more involved in the 2010 midterm election than it has been in any other before, and will hold accountable lawmakers who vote against the group’s priorities.

The Chamber is predicting the economy will grow at a rate of about 3 percent in 2010. The business lobby has set out a goal of creating 20 million new jobs over the next 10 years.

The tough talk from Donohue comes after a year in which the Chamber and the Obama administration repeatedly butted heads. Apple and several other companies left the Chamber, citing the lobby’s position on climate change.

Both sides have tried to mend fences; White House Chief of Staff Rahm Emanuel in November spoke with the Chamber’s board of directors.

On healthcare, Donohue said the legislation under consideration by Congress would do nothing to rein in costs and was a prescription for “fiscal insolvency and an eventual government takeover of American healthcare.”

He said the House climate bill would raise energy costs and kill jobs.


Donohue also blasted the administration’s policies on trade, hitting it for not sending to Congress pending deals negotiated by the Bush administration with South Korea, Colombia and Panama.

“We need a bold and aggressive trade policy, something we don’t have today,” he said.

The trade association leader also disputed the prediction made Monday by AFL-CIO President Richard Trumka that the Employee Free Choice Act would pass in early 2010. The Chamber has been a major foe of the bill, which would make union organizing much easier.

“You are not going to get the votes to pass that legislation in this quarter or any quarter before the election,” Donohue said.

The Chamber leader expressed reservations about the jobs bill passed by the House in December that is now being worked on in the Senate. The administration and others want to pass the legislation in order to boost employment numbers, but Donohue said more time is needed for the first stimulus to finish out. In addition, the use of money left over from the Wall Street bailout effort other than to help banks troubles the business group executive.

“We’re not supporting a second stimulus program [like] we did the first time,” Donohue said. “The reason we did that the first time is that we were this close to a global depression and we thought we needed to send a message. We’re not sending another message.”