Tom Donohue: Free Enterprise is Key to Economic Recovery

Tom Donohue, president and CEO of the U.S. Chamber of Commerce, has big plans. In mid-October, his organization, which is one of the most influential advocates for business in the United States, will launch a "Campaign for Free Enterprise," a multiyear effort (at an estimated cost of at least $25 million annually) to educate Americans about capitalism and explain the importance of free enterprise. Sitting in his spacious office near the White House, Donohue said that the country needs to return to what he considers first principles or else face ruin. He also discussed the economy, healthcare, and President Obama. Excerpts:

What is the Campaign for Free Enterprise?

We will remind people of what built the greatest economy in the history of the world, created more employment, more jobs, more opportunity, more innovation—and it was the free enterprise system, based on free and open capital markets, based on free trade, and with the right to fail or succeed based on your efforts and your hard work. And it was the system that created more jobs than any other you could ever have seen anywhere in the world. So our message to the administration and to the Congress and to the business community and others is that we have got to measure everything we do in terms of, are we creating wealth and therefore jobs, or are we consuming wealth and therefore consuming jobs? And that's a major, major effort with us. By the way, this is not critical of the president. It is a litmus test that we all ought to look at as we make our decisions going forward. We need in the next four years more than 10 million jobs in this country to take away the unemployment and to employ new people coming into the workforce. Ten million jobs—and I can tell you this government, the Congress of the United States, other than hiring more people to work for them, they can't create any of them. And they're only going to be able to create them if we can drive this economic system.

What should be done?

It's a twofold problem. It's a huge recession with its unemployment and all of that, and it's growing deficits. There's only one acceptable way to get out of that, and that is to increase, at a massive rate, American exports around the globe, to where 95 percent of the consumers are, which means that this administration and this Congress have to get back into the trading components here. We've got to forget this "buy American" stuff. It's trade globally, because that's where all the jobs are for us. American jobs are created by selling stuff abroad.

How do you see the condition of the economy?

The market is doing better than it was—obviously, it's significantly up. And history tells us that markets improve before unemployment reduces and actually before the real economy follows. So we're happy with the markets. We hope they stay up there, but the big question around town and around the country is: What's going to happen with the real economy? In the last days, we've seen some improvement in existing and new home sales. We have seen some attractive numbers on inventory. In some places, people are beginning to hire some folks back. The real challenge is people are keeping their cash in their jeans. Folks have not begun to purchase discretionary [items]. I am an optimist just because I'm Irish, and I believe that we're going to bounce, bounce, bounce. And as we go into 2010, although I have a number of issues that worry me, I think we're going to see continued slow but steady growth.

What are your worries?

The worries are a deficit of the level that we are talking about, in the short term but more particularly in the long term, has a chilling effect on economic growth. . . . What are we going to see, what kind of restrictions on the capital markets, what kind of new regulation? And some regulation is needed. But this whole question of a consumer protection agency and all these systemic issues have got to be handled very, very carefully.

What are the American people looking for when they assess the economy?

The American people are not going to be happy until unemployment starts to go down, and that is going to drag behind everything else because historically that's how it works. Nobody's going out and hiring additional people until they know they've got the additional business.

How is the Obama administration doing?

It's a mixed bag. I think they moved quickly to shore up the financial system. They did that well. It's time for them now to exit that as quickly as they can. They did a smart thing in reappointing [Ben] Bernanke [as chairman of the Federal Reserve]. It doesn't matter whether you're a Bernanke fan or you're not a Bernanke fan; it's very hard in the middle of the steeplechase to change the rider. I think the administration would own up that they were not prepared for what the Congressional Budget Office had to say about climate [legislation] and about healthcare. This and the debate on it are not driving the economy forward. So that's the reason we're going to announce in mid-October this major effort, positive program—underline that—to remind the American people, to remind the business community, to remind the Congress and the Senate and the press and the White House and our trading partners of what built the greatest economy in the history of the world.