Getting Past the Partisan Passions of Netanyahu’s Speech

National security need not become hyperpoliticized in today’s Washington

"Tuesday’s speech to Congress by Israeli Prime Minister Benjamin Netanyahu will be half foreign-policy event, half partisan spectacle, which raises a question: Is this a sign that national security, once thought to be at least slightly above the political fray, is becoming just another exercise in today’s polarized Washington?"

Answer: not necessarily.

By Gerald F. Seib of the WSJ

Let’s be honest. Foreign-policy debates have always been tinged with partisanship. And on the key questions of the hour—a nuclear deal with Iran and the battle against Islamic State extremists—there’s more crossing of partisan lines than current rhetoric suggests.

Still, there’s a danger that this week’s spectacle will inject a big new dose of partisanship into areas where it’s better left at bay. Once Mr. Netanyahu leaves town, it will be time for cooler heads in both parties to prevent that from happening.

The danger arises for two reasons, unique to the Netanyahu visit. The first is that this week’s event is out of the norm. It isn’t routine for a House speaker of one party to invite a foreign head of government to address Congress without consulting with a White House controlled by the other party. That’s particularly true when everyone knows the point of the speech will be to try to stop a presidential initiative—in this case the nuclear deal with Iran that the administration is trying to negotiate.

So this was inevitably going to be seen as a partisan act, as it would have been if the roles were reversed. It’s not hard to imagine what the Republican reaction would have been if a House Speaker Nancy Pelosi had invited a European head of state to address a joint session of Congress to question President George W. Bush’s request for authorization to go to war in Iraq.

The second reason this moment feels different is that the controversy affects American support for Israel’s government, an area that both sides have at least tried to keep above partisanship.

Add to those factors the sometimes “toxic” relationship between the Republican Congress and President Barack Obama and you have the makings of a broader partisan overlay, says Richard Haass, president of the Council on Foreign Relations and one of the few figures who maintains good lines of communications with both parties. The danger, he adds, is that “resentment from one issue carries over into the other,” getting in the way of, for example, Republicans’ working with Democrats on free-trade issues.

That doesn’t have to be the case, though. History provides ample evidence that the country can move beyond partisan splits on big foreign-policy issues. Republican isolationists battled Democratic President Franklin Roosevelt over providing aid to Britain before the U.S. entered World War II, for example, and the historic congressional vote on the Lend-Lease Act authorizing the aid fell largely along party lines.

When Congress faced a similarly dramatic moment in relations with Israel, in 1981 at the dawn of Republican Ronald Reagan’s presidency, the debate again had political overtones. The issue then was the Reagan administration’s decision to sell advanced Awacs radar planes to Saudi Arabia, a move Israel vehemently opposed. The sale was approved in the Senate largely along party lines, when Mr. Reagan prevailed on fellow Republicans to fall in line. (Irony of the week: Today, Israel probably is happy Congress approved that Awacs sale because the Saudis now are aligned with Israel in staunchly opposing Iran’s growth as a regional power.)

And congressional votes authorizing both wars with Iraq—the first sought by President George H.W. Bush and the second by the younger Mr. Bush—fell heavily along partisan lines.

More telling are the times when partisanship has been shoved aside in big foreign-policy debates. During the Cold War, arms-control treaties were pushed through Congress by leading foreign-policy thinkers of both parties, working in unison. Democratic President Bill Clinton relied on Republican votes to get free-trade deals through Congress. By the end of his presidency, Lyndon Johnson could count more on Republicans than Democrats for support of his policies in the Vietnam War.

And in 2001, the resolution authorizing use of force against al Qaeda passed both houses of Congress on a combined vote of 508 to 1.

The key is to get past the partisan emotions let loose this week and back to a national-security debate driven as much by conviction as party loyalty. That should be doable.

On an actual Iran deal, for example, Mr. Obama may find himself in the odd position of being supported by Republican Sen. Rand Paul—and opposed by Democratic Sen. Chuck Schumer. And on the equally important question of authorizing the fight against Islamic State, Republicans are more likely to back Mr. Obama than are many Democrats. Which isn’t a bad thing for the system.

Write to Gerald F. Seib at [email protected]

Invested in America – A Growth Agenda for the U.S. Economy

A Report from the Business Roundtable The U.S. economy continues to underperform relative to its potential at great cost to workers, businesses and taxpayers. While America’s leaders continue to totter from confrontation to crisis, economic growth remains stubbornly low, unemployment remains unacceptably high and wages remain stagnant for the vast majority of Americans. The CEOs of the Business Roundtable are deeply invested in America’s success. We understand that when America succeeds, our companies succeed. We believe that realizing the economy’s full potential should be the nation’s top priority. And we believe that fully unlocking economic growth and job creation will require policymakers to rededicate themselves to a singular purpose: restoring America’s status as the most attractive destination for investment.

America’s doors have traditionally remained open to the investment that it needs to realize its full economic potential. But something has changed in recent years. America’s public policies have become increasingly inhospitable to those who are willing to contribute to building a stronger economy. Our fiscal outlook has significantly worsened, reducing the predictability that taxpayers and businesses need to make long-term investment decisions. Our corporate tax rate is the highest in the developed world, discouraging businesses from locating and hiring here at home. Our trade agenda is being affected by failure to pass updated Trade Promotion Authority (TPA) legislation, stifling efforts to complete trade agreements and expand U.S. trade and investment opportunities abroad. And our immigration policy has failed to keep pace with the demands of a modern global economy, threatening America’s ability to attract the world-class talent that it needs to remain an open, innovative and competitive economy.

Solutions to these problems are possible if there is the will to act. Policymakers can reopen America’s doors to the investment needed to drive innovation, economic growth and job creation. To succeed, it is critical that our elected leaders focus their efforts. Priority should be placed on those measures that are meaningful, urgent and ripe for action. Accordingly, the Business Roundtable calls on policymakers to take immediate action on four priorities:

◗ Restore Fiscal Stability

◗ Enact Comprehensive Tax Reform

◗ Expand U.S. Trade and Investment Opportunities

◗ Repair America’s Broken Immigration System

By adopting this four-point plan, our nation’s leaders can lay the groundwork for a strong, balanced and sustained economic recovery. It is time to end the era of governing by crisis. It is time to rebuild a sense of confidence, predictability and optimism among consumers and businesses. It is time for Washington to join the business community in investing in America’s success.

Restoring Fiscal Stability

America’s long-term fiscal trajectory is irresponsible and unsustainable. Mandatory federal spending is rising steadily. Until policymakers act with decisive leadership, these failures will continue to escalate, risking our nation’s economic future and ultimately our social safety net.

While annual federal deficits have recently declined as a result of short-term sequestration policies, the long-term fiscal challenges have yet to be addressed. The overall debt level is already approaching alarming levels. Debt held by the public as a share of gross domestic product (GDP) has doubled in the past five years, rising from 35 percent in 2007 to 70 percent in 2012; government analysts project that it will increase to 100 percent of GDP by 2038.1 This trend is primarily driven by increased spending on federal entitlement programs. For example, mandatory outlays for major health care programs and Social Security are projected to rise from 9 percent of GDP in 2012 to 14 percent of GDP by 2038.2 In addition, as the economy recovers and interest rates rise, interest payments to service the debt will increase as well — leaving fewer resources for the discretionary budget that pays for critical investments in infrastructure, education, and research and development.

Washington’s failure to address long-term fiscal challenges has lowered overall confidence and is undermining investment in America. Despite record-high corporate cash holdings, companies are delaying or foregoing major investments. Evidence suggests that fiscal instability is a key cause of this trend. For instance, in a recent survey by the Business Roundtable, nearly half of CEOs indicated that they were less inclined to hire new workers due to fights in Washington over the 2014 budget and debt ceiling limit.3

This lack of predictability is holding America back from achieving sustained, robust economic growth. Macroeconomic Advisers estimates that fiscal policy uncertainty has reduced annualized GDP growth by 0.3 percentage points and destroyed 900,000 jobs since 2010.4 Similarly, Moody’s Analytics estimates that increased political uncertainty from 2008 to Q3 2013 significantly constrained business investment, reducing real GDP by $150 billion and eliminating 1.1 million jobs.5

The Business Roundtable calls on U.S. policymakers to adopt a more strategic approach to budget and fiscal policy that focuses on predictable and timely fiscal policymaking, thoughtful near-term spending reductions, and measures that strengthen the nation’s health care and retirement system. Specifically:

◗ Congress should pass annual budgets and appropriations bills on time. This would avoid disruptions to government operations and allow an orderly process for necessary borrowing.

◗ Congress and the Administration should constrain federal spending in a manner that reduces long-term spending growth rather than imposing abrupt and arbitrary reductions in near-term outlays.

◗ Congress and the Administration should strengthen Medicare and Social Security by:

Making both Medicare and Social Security more progressive by considering increased means testing of eligible benefits for higher income recipients and increasing the focus on preserving the safety net for low-income Americans.

Updating the method for calculating Social Security cost-of-living adjustments based on the Chained Consumer Price Index, which more accurately reflects the costs people pay.

Preserving the existing system for current retirees and those nearing retirement, while gradually increasing the age at which people receive full benefits from both Medicare and Social Security to 70.

Expanding competitive models of care within Medicare by offering beneficiaries the opportunity to choose among competing and comprehensive private plans and traditional Medicare.

Enacting Comprehensive Tax Reform

America’s unwieldy and outdated tax system is undermining the competitiveness of businesses large and small, holding back economic growth. Policymakers from both sides of the aisle agree that the tax code must be streamlined in a manner that promotes economic efficiency and growth, yet practical proposals have fallen victim to Washington gridlock. Comprehensive tax reform is essential to realizing the U.S. economy’s full potential.

Corporate tax reform is a key component of this overhaul. The global economy has changed considerably in the last several decades, and the corporate tax code has failed to keep pace. The United States imposes the highest corporate tax rate of any Organisation for Economic Co-operation and Development (OECD) country, at 39.1 percent.6 On average, American companies are also subject to higher effective tax rates than their foreign competitors. For example, a study by PricewaterhouseCoopers found that the average effective tax rate for companies with U.S. headquarters was 27.7 percent, compared to 19.5 percent for those with foreign headquarters.7 In addition, the United States is the only G8 country that still uses a “worldwide” tax system, which collects U.S. taxes on the earnings of foreign subsidiaries. The vast majority of OECD countries have modernized their tax systems to tax a company’s sales in foreign markets at local rates.

Burdened by high business tax rates and an outdated method of taxing overseas earnings, the U.S. tax system stifles the business investment that drives innovation, economic growth and job creation. The high corporate tax rate discourages investment at home and places U.S. companies at a competitive disadvantage in the global marketplace for investment and jobs. When comparing different forms of taxation, the OECD characterizes corporate income taxes as “the most harmful for growth as they discourage […] investment in capital and productivity improvements.”9 Furthermore, our antiquated system of taxation severely damages the international competitiveness of U.S. businesses, which increasingly rely on foreign markets for growth and investment opportunities.

Improving the competitiveness of our nation’s corporate tax system would deliver significant benefits. Several studies estimate that cutting the U.S. federal corporate tax rate by 10 percentage points would boost real GDP by a percentage point or more.10 Moreover, transitioning to a modern international tax system would allow companies to return foreign profits to the United States and reinvest them in domestic ventures. For instance, a recent study by economist Laura Tyson found that switching to a territorial tax system would incentivize U.S. multinational companies to repatriate $1 trillion in foreign earnings, boosting U.S. GDP by at least $208 billion and creating at least 1.46 million additional jobs.11 Capturing these economic benefits is essential to realizing the U.S. economy’s full potential.

The Business Roundtable calls on policymakers to adopt a competitive, pro-growth tax framework that promotes economic expansion and levels the playing field for U.S. companies competing in global markets. Specifically:

◗ Congress and the Administration should reform the tax code to enhance the competitiveness of all businesses to fully strengthen the U.S. economy, enhance job creation, and enable American workers and businesses to compete effectively.

◗ Congress and the Administration should reform the corporate tax code in a manner that is fiscally responsible and enhances growth, including (1) encouraging capital investment by setting the corporate tax rate at 25 percent and (2) aligning the U.S. taxation system with other countries by adopting a modern international tax system.

Expanding U.S. Trade and Investment Opportunities

Washington gridlock is holding back efforts to expand U.S. trade and investment opportunities abroad. In particular, Congress has yet to pass updated Trade Promotion Authority (TPA) legislation that would empower U.S. trade negotiators and help complete trade agreements. Repeatedly updated and passed since the 1970s, TPA outlines the nation’s goals for trade negotiations with other countries, establishes a framework for consulting with and seeking input from Congress and other stakeholders at all stages of trade negotiations, and allows the President to bring a completed trade agreement to Congress for an up-or-down vote. By failing to pass updated TPA, Congress weakens the hands of U.S. trade negotiators and undermines their ability to open new markets for U.S. goods and services while ensuring a rules-based, two-way trading system.

International trade and investment are important engines for U.S. economic growth and job creation. More than 30 percent of U.S. GDP is tied to international trade and investment.12 International trade alone supports more than one in every five U.S. jobs.13 U.S. engagement in the international marketplace will become even more important in the coming years, as more than 95 percent of the world’s population and 80 percent of its purchasing power lie outside the United States.14 If the U.S. economy is to realize its full potential, policymakers must aggressively pursue opportunities beyond the nation’s borders.

The successful completion of pending and future trade agreements is critical to that endeavor. The United States is currently pursuing a range of trade agreements, including the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TISA), and an expansion of the 1996 World Trade Organization (WTO) Information Technology Agreement. These agreements would expand U.S. exports, boost economic output and support millions of American jobs. Securing TPA is a critical step to realizing these economic benefits.

The Business Roundtable calls on U.S. policymakers to take action to fully capitalize on U.S. trade and investment opportunities. Specifically:

◗ Congress and the Administration should work together to pass updated TPA legislation as soon as possible.

◗ Congress and the Administration should aggressively advance and finalize high-quality trade and investment opportunities in the TPP, TTIP, TISA and expanded WTO Information Technology Agreement.

◗ Congress should reauthorize the U.S. Export-Import Bank to help U.S. companies compete for sales abroad and support the U.S. jobs that depend on those sales.

◗ The Administration should continue to implement reforms to outdated U.S. export controls.

Repairing America’s Broken Immigration System

America, once a beacon for diversity and innovation, is now turning its back on a wave of talent and entrepreneurship. While the forces of globalization and international competitiveness have never been stronger, current U.S. immigration policies discourage foreign students and essential workers from joining the labor force, imparting their expertise and contributing to the economy.

Policymakers from both sides of the aisle agree that the immigration system is broken. An estimated 11 million immigrants currently reside in the United States illegally, raising important concerns related to border security and law enforcement. Nearly two-thirds of this population have lived and worked in the United States for more than a decade.15 In addition, existing legal channels for attracting foreign workers are cumbersome, and the protracted process costs U.S. employers the chance to retain talented foreign students or persuade foreign nationals to relocate. The partisan politics of Washington have prevented practical solutions from being adopted. Our nation surely can find a way to manage border and security concerns while benefitting from the energy, innovation and skills that immigrants can bring to America.

Immigration fuels entrepreneurship, as immigrants are nearly twice as likely to start a new business as U.S.-born individuals.16 It produces widespread employment benefits, with studies estimating that each temporary work visa for a skilled worker or less skilled nonagricultural worker supports an additional 1.8 to 4.6 jobs for U.S. natives.17 And the impact of successful reform would resonate throughout the economy. For example, the Bipartisan Policy Center estimates that over the next 20 years, immigration reform could boost economic output by 4.8 percent, add as many as 8.3 million jobs and reduce the deficit by $1.2 trillion.18 Balanced, sensible immigration reform is a critical step toward realizing the U.S. economy’s full potential.

The Business Roundtable calls on policymakers to fix America’s broken immigration system and recommit our nation to attracting the brightest minds and hardest workers from around the world. Specifically:

◗ Congress and the Administration should improve security and better enforce immigration laws, in part by increasing resources for border security and requiring all U.S. businesses to use the E-Verify system.

◗ Congress and the Administration should welcome legal immigrant workers to contribute to America by increasing visas for higher skilled workers and establishing a new system for lower skilled workers.

◗ Congress and the Administration should find a solution to integrate undocumented immigrants into our society and allow those already residing in the United States to come forward, pay a penalty, and earn a legal status so they may work and travel freely.

Conclusion

Washington inaction continues to undermine the U.S. economic recovery. Despite recent progress, policymakers have largely failed to address long-term fiscal imbalances, significantly reducing the predictability that consumers and businesses need to make long-term investment decisions. The existing corporate tax system, marked by high tax rates and an outdated method of taxing overseas earnings, discourages U.S. companies from locating and hiring here at home. By failing to pass updated TPA legislation, policymakers have stifled efforts to complete key trade agreements and expand U.S. trade and investment opportunities abroad. And the failure to fix America’s broken immigration system is threatening the nation’s ability to attract the world-class talent that it needs to compete and win in the modern global economy.

Fortunately, these challenges are not insurmountable, and thoughtful, long-term solutions are well within Washington’s reach. Policymakers have the means to reopen America’s doors to the investment that it desperately needs to realize its full potential. By adopting a responsible approach to fiscal policymaking, modernizing the business tax system, expanding trade opportunities abroad and implementing sensible immigration reform, Washington can join the business community in investing in America’s success.

Business Roundtable (BRT) is an association of chief executive officers of leading U.S. companies working to promote sound public policy and a thriving U.S. economy. To learn more about the BRT, visit www.brt.org.