business roundtable letters - fullbinder
TRANSCRIPT
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Effective Leadership on the World StageCEO Memos to Congress
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EffectiveLeadershipontheWorldStageCEOMemostoCongress
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ContentsAboutBusinessRoundtable
MaintainingU.S.LeadershipintheWorldEconomy
U.S.Corporations:DriversofEconomicSuccess
BusinessRoundtableInitiatives
InitiativeCEOChairsandStaffContacts
Endnotes
ConsumerHealthandRetirement
EmployeeRetirementIncomeSecurityAct(ERISA)
HealthCareReformLegislation
HealthInformationTechnology
MedicalLiabilityReform
Pensions
CorporateLeadership
CorporateGovernance
Education,InnovationandWorkforce
EducationReformLegislation
InnovationPolicy
WorkforceCompetitiveness
InternationalEngagement
TradeandInvestment
U.S.CorporateTaxRateTaxationofForeignEarningsofU.S.Corporations
ExpiringBusinessTaxProvisions
IndividualTaxesonDividendsandCapitalGains
BudgetDeficitsandSpendingControls
SustainableGrowth
BuildingEfficiency
BuildingaGreenerEnergyInfrastructure
ClimateChange
DomesticEnergySupply
ElectricGridModernization
WindandSolar
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AboutBusinessRoundtableBusinessRoundtable(www.businessroundtable.org)isanassociationofchiefexecutiveofficers(CEOs)ofleading
U.S.companies.BusinessRoundtablemembersincludemorethan160corporationswith$5trillioninannual
revenues.Combined,BusinessRoundtablemembers:
Employnearly10millionpeopleinstablejobsandprovidehealthcareforthemandnearly35millionfamilymembers;
MaintainU.S.technologyleadershipbyinvesting$90billioninresearchanddevelopment(R&D)everyyearnearlyhalfthetotalprivateR&DspendingintheUnitedStates;
Contribute$7billiontocharityeachyear,nearly60percentoftotalcorporategiving; ComprisenearlyathirdofthetotalvalueoftheU.S.stockmarkets;and Generate$114billionindividendstoshareholders(in2006)andpay$179billionincorporatetaxes
morethan40percentofallcorporateincometaxespaidtothefederalgovernment.
BusinessRoundtableunitesthesetopCEOs,amplifyingdiversebusinessperspectivesandvoicesonsolutionsto
someoftheworldsmostdifficultchallenges.Combiningthoseinsightswithpolicyknow-how,Business
RoundtableinnovatesandadvocatestohelpexpandeconomicopportunityforallAmericans.
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MaintainingU.S.LeadershipintheWorldEconomyTheU.S.economytodaydrivesworldgrowth,innovationandprosperity.Andasrecenteventsreinforce,the
healthoftheU.S.economyisinextricablylinkedtotheeconomichealthoftherestoftheworld.IfAmericaisnot
doingwell,therestoftheworldisaffected.
Americacanandmustmaintainaleadershiproleintheworldeconomy.Inaninterconnectedandincreasingly
competitiveglobalenvironment,themembersofBusinessRoundtablebelievethatitisnowmoreimportantthan
evertocommitourselvestothecorevaluesandpoliciesthathavetraditionallymadeAmericaseconomystrong:
Soundfiscalpoliciesthatkeepusonapathofgrowthandprosperity,includingaregulatoryandtaxstructurethatcomplementsgrowth;
Openandcompetitivemarketsbuiltuponmodernandefficientinfrastructureandrobustandtransparentfinancialmarkets;
Innovationdrivenbyourentrepreneurialculture,vigorousinvestmentinR&Dandaworld-classeducationsystem;
Ahighlyproductive,skilledworkforcewithaccesstothehighest-qualityhealthcaresystemandlifelonglearning;and
Acommitmenttoenvironmentalstewardshipcombinedwiththedevelopmentofsustainable,secureandreliableenergysupplies.
Werecognizethatwealsomustcontinuallyre-evaluateourpoliciestoensurethattheyreflectemerging21st
centuryissues.
TheCEOsofBusinessRoundtablearecommittedtopreservingU.S.economicleadershipandtothepeoplewho
keepoureconomymodern,competitiveandthrivingtheU.S.workforce.
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U.S.Corporations:DriversofEconomicSuccessProvidingaFoundationofStability,GrowthandProsperity
Themorethan160corporationsthatmakeupBusinessRoundtablerepresentthecapstoneoftheAmericaneconomy
andthecornerstonesofthecommunitiesinwhichweoperate.Weemploymillionsofworkersinstable,well-paying
jobs,providinghealthcareandotherbenefitstoouremployees,retireesandtheirfamilymembers;contributingtime
andresourcestophilanthropiccauses;andkeepingAmericagrowing,prosperousandeconomicallysecure.
ServingasaHistoricandVitalRepositoryofMiddleClassSavings
Despitethecurrenteconomiccrisis,historicgrowthtrendsofAmericascorporationshavemadecorporateequitiesan
ever-growingpartofthesavingsandretirementaccountsofmiddleclassAmericans.HalfofallU.S.householdsown
corporateequities,bothindividuallyandinpensionandotherretirementfunds. 1Atypicalinvestorismiddleclasswith
ahouseholdincomeof$65,000.2Thesehouseholdsmustbeabletotrustinthehealthandsecurityoftheirassets.
BuildingtheInfrastructureofthe21stCentury
Today,Americascorporationsarebuildingtheinfrastructureofthe21stcenturyeconomy,enablingtheUnitedStatestomaintainitseconomicleadershipinglobalmarkets.Everyyear,Americascorporationsmakeinvestmentsthathavebeen
comparedtothebuildingofthetranscontinentalrailroadinthe19thcentury,whichunitedournationandenabledthe
UnitedStatestobecomeaworldpower.Whoelsebutlargecorporationscouldinvestthehundredsofbillionsofdollars
itcoststolayfiber-opticcableandraisecelltowersacrosstheAmericancontinent,buildnewjetlinerstocompete
againstforeigncompetition,andbringtomarketnewlife-savingdrugs?
Americascorporationsleadtheworldininnovations,productsandtheadoptionofnewtechnologies.
JustafewexamplesfromBusinessRoundtablemembersinclude:
Chevrons5-mile-long,36-inch-widedrillthatpushestechnologytothelimittoreachnewsourcesofoil7,000feetbelowtheseaand20,000feetbelowtheseafloor. 3
Dupontscornseedsthatprotectthemselvesfrompestsandresistherbicidestoboostfarmersproductionandimprovecropquality.4
GEsdesalinationplatformsthatreclaimmorethan2billiongallonsofwateradayforathirstyworld.5
Siemens7,000windturbinesthatproducesome7,000megawattsworldwide. 6TheBiglowCanyonWindFarminOregonprovides141turbinesthatproduce23megawattseachwithatotaloutputof324megawatts.Thisisequivalenttoareductionincarbondioxideemissionsofapproximately500,000tonsperyear.
TexasInstrumentsvisualprostheticimplantthatgivesasemblanceofgenuinevisiontotheblind.7
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Ineverysectorofoureconomy,Americascorporationsareleadingwithinnovation,investmentandtheadoptionofnew
technologies.ItisinlargepartduetothiscontributionthatAmericatodayattractsmoreforeigninvestmentthanany
othercountry,maintainstheworldsleadingshareinmanufacturingoutputandcontinuestoenjoyoneofthehighest
standardsoflivingintheworld.8
SeizingOpportunitiesProvidedbyWorldGrowth
AccordingtoastudybyGoldmanSachs,theworldsmiddleclasswillexpandby1billionpeopleby20209and
by2billionby2030.10
Theadventofglobalizationhascoincidedwithandcontributedtoaperiodofsustainedgrowthintheworld
economythathashelpedstrengthengrowthathomeandiscreatingunprecedentedopportunitiesforAmerican
businessandworkforce.ThisriseinglobalprosperitycreatedademandforAmericanproductsandservicesina
worldinwhichAmericancorporatebrandsstilloverwhelminglydominate.Sevenofthetop10globalbrands,14of
thetop20and52ofthetop100areownedbyU.S.companies. 11
MeetingtheChallengesofaChangingWorld
Americatodayfacesrealchallenges.ThesubprimelendingcrisisandensuingturmoilonWallStreetandMain
Streethaverevealedhowdeeplyinterconnectedweallareandhavetestedoureconomyasithasonlyrarelybeen
testedbefore.BusinessRoundtablebelievesthatoneofthegreateststrengthsoftheAmericaneconomyisits
resilienceinthefaceofsuchshocksandthatwewillreturntoourhistoricpathofstronggrowthandrising
prosperity.Americanindustrywillbeavitalpartnerinthatrecovery.
Evenso,Americawillfacetheongoingchallengeofanincreasinglyopen,globaleconomy.Thereisnoquestion
thatglobalizationiscreatingmassivestructuralshiftsthatarehavingaprofoundimpactontheAmericanworker
andAmericanenterpriseingeneral.ButastheeconomistRobertSamuelsonhassaid,Itisnomorepossibleto
undoglobalizationthanitwaspossible,inthe19thcentury,toundotheIndustrialRevolution. 12Competingona
globalscaleisnotachoice,itisafactoflifeinthe21stcentury,andwebelievethatAmericanenterpriseisupto
thechallenge.TheprosperityoftheUnitedStatesisfundamentallyinterconnectedwiththeglobaleconomy,
whichiswhypoliciesfromtaxestoregulation,trade,energyandeducationmustbestructuredto
complementgrowthintheUnitedStatesandaroundtheworld.
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BusinessRoundtableInitiativesToaddressthechallengesAmericaisfacingtoday,BusinessRoundtablehasembarkedonfiveinterconnected,
mutuallysupportinginitiativesthataredevotedtogettingthefundamentalsrightbyintegratingdomesticand
internationalpolicytocreateopportunitiesforworkersandforstrengtheningAmericanbusiness.
ConsumerHealthandRetirement
Healthcaredeliveryneedsanewbusinessmodel:onethatputscustomersinthecenterandusesthepowerof
themarkettolowercosts,improvequality,createmoreconsumerchoiceandexpandaccessibility.13
TherisingcostofhealthcareisoneoftheprimeculpritserodingtheincomegainsoftheAmericanmiddleclass.
HealthcarealsohasbecometheprincipalcostdriverforAmericanbusiness,creatinganever-growinghealthcare
premiumonAmericanproductsthatputsusatadisadvantageinglobalmarkets.BusinessRoundtablecompanies
playacrucialroleinthehealthcaredebate,coveringnearly35millionpeopleone-quarterofallAmericanswho
haveprivateemployer-basedorgrouphealthinsurancecoverage.
Webelievethatbipartisanactionisneededtomakethehealthcaresystemmoreefficientandtransparent,delivergreatervaluetoconsumers,andprovidemoremarketplaceoptionsforemployersandindividualstoobtain
coverage.Atthesametime,wemustmaintaintheinnovationandexpertisethatmakeAmericanmedicalcarethe
bestintheworld.Long-termfinancialsecurityalsomustbeensuredforallAmericans.Workersshouldbeprovided
withfinancialincentivestosaveforretirement,familiesshouldhaveaccesstotoolstomanagetheirfinancesand
SocialSecuritymustbestrengthenedwithoutburdeningfuturegenerations.
BusinessRoundtablehasjoinedwithAARP,theServiceEmployeesInternationalUnionandtheNational
FederationofIndependentBusinesstoformD i v i d e d We F a i l .Thisstrategicpartnershipaimstocreateanenvironmentthatwillfosterthepoliticalwillneededtoencouragepolicymakerstofindcommonsense,centrist
solutionstohealthcareandlong-termfinancialsecurityissues.
SustainableGrowth
EnergyrepresentsoneofthegreatestcostdriversofAmericanbusinesstoday,anddependenceonforeignsources
ofoilmakesoureconomicwell-beingincreasinglyvulnerabletoworldeventsoutsideourcontrol.Atthesame
time,environmentalchallengesincludingthreatstoglobalclimatechangeandwaterqualityaredemanding
evermoreurgentattention.
Americasenergysuppliesmustbemorediverseandmoredomestic.Alloptionsshouldbeonthetable.Demand
willonlygrow,andwemustbeabletoanswerit.ThatswhyBusinessRoundtablepromotesanaggressive,
comprehensiveresponseonthepartofboththepublicandprivatesectors,drawingonthebesttechnologyto
safeguardtheenvironmentwhilepromotingalternativefuels,energyefficiencyandtheabundantdomesticenergy
suppliesnecessarytokeeptheU.S.economythrivingandU.S.businesscompetitiveintheglobalmarketplace.
Meanwhile,wemustaddresstheproblemofglobalwarming.BusinessRoundtablesupports collectiveactionsthatwillleadtothereductionofgreenhousegasemissionsonaglobalbasiswiththegoalofslowingincreasesin
greenhousegasconcentrationsintheatmosphereandultimatelystabilizingthematlevelsthatwilladdressthe
risksofclimatechange.
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Ifclimatelegislationistobepoliticallysustainable,italsomustbeeconomicallysustainable,reducingournations
carbonfootprintinsuchawaythatitdoesnotputAmericanindustryandjobsatadisadvantageintheglobal
marketplace.Italsoiscrucialthatweminimizecompliancecostswhilemaximizingthecertaintyandpredictability
onwhichrationalbusinessplanningandinvestmentdepend.
Education,InnovationandWorkforce
Ifwetakeourscientificandtechnologicalsupremacyforgranted,werisklosingit.Whatwearelackingatthe
momentisnotsomuchthewherewithaltomeetthechallenge,butthewill.
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Intheknowledge-basedeconomyofthe21stcentury,theUnitedStatesneedsapolicyagendathatfocuseson
maintainingitsplaceastheworldspre-eminentleaderinscience,technologyandinnovation.Webelievethatthe
UnitedStatescannotandwillnotthrivewithoutawell-educated,well-trainedworkforce.ThatiswhyBusiness
Roundtableispromotingeducation,innovationandworkforcepoliciestodeveloptheU.S.talentpipeline.
Asothercountrieshaveimprovedtheireducationsystems,theU.S.highschoolgraduationratehasfallenfrom
firstto21st,andourcollegeattainmentratehasfallenfromsecondto14thamongindustrializedcountries.The
problemisnotthatourschoolsaregettingworse;itisthatourcompetitorsaregettingbetteratafasterpace.
Whetherthemeasuresarestudentachievement,patents,investmentsinbasicscientificresearch,ordegreesin
engineeringandcomputerscience,theUnitedStatesriskslosingcompetitiveadvantage.
OurdynamiceconomynecessitatesanewlifelongapproachtolearningthatpreparesU.S.studentsandworkers
withtheskillsandknowledgetheyneedtosucceed.Inaddition,policiestoassistAmericanswhoexperiencejob
dislocation,increaseandsustaininvestmentinthebasicsciences,welcomethebestandbrightestfromabroad,
andpromoteinnovationandrisk-takingathomewillallbevitaltokeepingAmericascompetitiveedge.
InternationalEngagement
ThesuccessofAmericancompaniesandworkersinthe21stcenturyglobaleconomywilldependontheirabilityto
competeonaglobalscale.FormanyBusinessRoundtablecompanies,theUnitedStatesisstillourlargestmarket,
butinternationalmarketsaregrowingfasterandhavemorenewcustomers.Tosucceedinthisnewinternational
competitiveenvironment,wehavetobeabletoexportgoodsandservicestoforeigncustomersfromourdomestic
facilities,reachthosecustomersthroughourinternationaloperations,andalsoimportproductsandservicesto
offerthebestpricestoAmericanconsumers.Thereisnoeither/orintheglobalcompetitivestruggle.
Toensureweareabletomeetthechallengesoftheglobaleconomy,BusinessRoundtablesupports common
sense,pro-U.S.taxandinternationaltradeandinvestmentpoliciesthatputAmericancompaniesandworkersona
levelplayingfieldwiththeirforeigncompetitors.
Wesupportthereductionofhighcorporatetaxesthatputusatacompetitivedisadvantagewithothercountries
andtaxtreatmentthatlevelstheplayingfield.Wealsosupportinternationaltradeandinvestmentagreements
thatprovidefairtreatmentforAmericancompaniesandworkersbyopeningmarketsforourproductsandservices;
preventingdiscriminatoryregulatorybarriersandintellectualpropertyabuses;andpromotingbestcorporate,labor
andenvironmentalpractices.
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CorporateLeadership
GoodcorporategovernanceisessentialtopromotingconfidenceintheAmericanmarketplace.Thesuccessof
Americancorporationsisbasedontrustatrustthatcancomeonlythroughtransparencyofoperations;
adherencetothehighestethicalstandards;andatrackrecordofbehavingresponsiblywithemployees,
shareholdersandthecommunitieswheretheyoperate.
Inlightoftherecenteconomiccrisis,BusinessRoundtablesupportsregulatoryreformforthefinancialservices
industry.Reformeffortsshouldfocusonmoreeffectiveandmoderngovernmentoversightoffinancialinstitutions
andprovidebetterdisclosuresonrisk-taking.Corporategovernancereformsshouldfocusonevolvingprinciples
andbestpracticeswithoutbeingprescriptivesothatindividualcompaniesofallsectorsoftheeconomyhavethe
flexibilitytocontinueproducinglong-termshareholdervalue.
Aspartofourcommitmenttoethicalleadership,BusinessRoundtablehasestablishedtwokeyprograms:
InstituteforCorporateEthics,whichdrawsonthebestthinkinginbusinessandacademiaandseekstoadvanceethicaldecisionmakingineverydaybusinessaffairs.
PartnershipforDisasterResponse, whichbuildsontherecognitionthatAmericancorporationsoftenarethefirstonthegroundinrespondingtolocaldisasters.BusinessRoundtablehaspartneredwiththe
AmericanRedCrosstohelpthebusinesscommunityandnonprofitsectorsstrengthenthenationsdisaster
responsesystem.
BuildingtheFrameworkforContinuedProsperity
Thesefiveinitiativesaddressthefundamentalsofeconomicgrowthandwhatitwilltaketokeepourliving
standardsontheriseinanageofglobalcompetitionandeconomicchallenges.Whileeachisimportantinitself,theyareallinterconnected,andeachisvitaltothesuccessoftheothers.
Athriving21stcenturyeconomywilldependonnew,innovativeideas.Thoseinturnwillrequireaneducated,
knowledge-empoweredworkforce.Thatworkforcemusthavetheresourcestobringthoseideastofruition.Andall
ofthismusttakeplaceinaclimateofopennessandpersonalandinstitutionalresponsibility.
Americahasalwaysbeenatitsbestwhenfacedwithdauntingchallenges.Today,healthcare,therecessionand
energysecurityareamongthoseatthetopofthelist.Andthereareothers.Weknowthatwecanmeetthose
challengesbecauseAmericahasfacedevenmoredauntingchallengesinthepastandhascomeoutofthe
experiencestrongerwhilestillmaintainingthefreedomsthatmakeournationnotjustaleaderinprosperitybut
alsoaleaderinhopetoalltheworld.
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InitiativeCEOChairsandStaffContacts
ConsumerHealthandRetirement
CEOChair:IvanG.Seidenberg,ChairmanandCEO,VerizonCommunications
StaffContact:MariaGhazal,Director,PublicPolicy,202-872-1260,[email protected]
CorporateLeadership
CEOChair:AnneM.Mulcahy,ChairmanandCEO,XeroxCorporation
StaffContact:ThomasJ.Lehner,Director,PublicPolicy,202-872-1260, [email protected]
Education,InnovationandWorkforce
CEOChair:WilliamD.Green,ChairmanandCEO,Accenture
StaffContact:SusanTraiman,Director,PublicPolicy,202-872-1260, [email protected]
InternationalEngagement
CEOChair:JamesW.Owens,ChairmanandCEO,CaterpillarInc.
StaffContact:BrigitteSchmidtGwyn,SeniorDirector,CongressionalRelations,202-872-1260,
SustainableGrowth
CEOChair:MichaelG.Morris,Chairman,PresidentandCEO,AmericanElectricPowerCompany,Inc.
StaffContact:MarianHopkins,SeniorDirector,PublicPolicy,202-872-1260, [email protected]
BusinessRoundtablePresident:JohnJ.Castellani,202-872-1260
ExecutiveDirector:LarryD.Burton,202-872-1260
ExecutiveDirector,ExternalRelations:JohannaSchneider,202-872-1260
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected] -
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Endnotes
1.SecurityIndustryandFinancialMarketsAssociation,U.S.HouseholdOwnershipofEquitiesin1999and2005,
SIFMAFactBook2008,p.67.
2.SecurityIndustryandFinancialMarketsAssociation,EquityOwnershipinAmerica,2005,p.5,
http://archives2.sifma.org/research/pdf/EquityOwnership05.pdf.
3.www.chevron.com.
4.www.dupont.com.5.BusinessRoundtable,SEEingChange:2008ProgressReport.
6.Ibid.
7.www.ti.com.
8.CouncilonCompetitiveness,CompetitivenessIndex:WhereAmericaStands,
www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/.
9.WilliamJ.Amelia,InterconnectedWeProsper,InternationalHeraldTribune,June25,2008.
10.RobertSamuelson,ABafflingGlobalEconomy,WashingtonPost,July16,2008.
www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.html.
11.TheTop100Brands,BusinessWeek,September29,2008.
12.RobertSamuelson,ABafflingGlobalEconomy,WashingtonPost,July16,2008.
www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.html.
13.IvanG.Seidenberg,AmericasHealthCareatRisk:FindingaCure,OurCommonHealthCareChallenge:
FindingSolutionsthatWorkforAllAmericans,September18,2008.
14.TappingAmericasPotential:TheEducationforInnovationInitiative,July2005,p.14,
www.businessroundtable.org/node/3719.
http://archives2.sifma.org/research/pdf/EquityOwnership05.pdfhttp://archives2.sifma.org/research/pdf/EquityOwnership05.pdfhttp://archives2.sifma.org/research/pdf/EquityOwnership05.pdfhttp://archives2.sifma.org/research/pdf/EquityOwnership05.pdfhttp://www.chevron.com/http://www.dupont.com/http://www.ti.com/http://www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/http://www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/http://www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/http://www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/http://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.businessroundtable.org/node/3719http://www.businessroundtable.org/node/3719http://www.businessroundtable.org/node/3719http://www.businessroundtable.org/node/3719http://www.businessroundtable.org/node/3719http://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.htmlhttp://www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/http://www.ti.com/http://www.dupont.com/http://www.chevron.com/http://archives2.sifma.org/research/pdf/EquityOwnership05.pdf -
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ConsumerHealth
andRetirement
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CONSUMERHEALTHANDRETIREMENT
EmployeeRetirementIncomeSecurityAct(ERISA)IntroductionMostAmericansatotalof177millionobtainhealthinsurancecoveragethroughtheiremployers.
Approximately133millionarecoveredunderplansregulatedthroughanationallyuniformframeworkestablished
bythe1974EmployeeRetirementIncomeSecurityAct(ERISA).Thislawhasfiduciaryrequirements,administrative
requirementsandremedies.ERISAprovidesthelegalauthoritythatpermitsemployerstomanagehealthand
retirementbenefitsforemployeesinlocationsacrossthecountrywithout50statesimposingseparate
requirements.
BackgroundAllemployersthatofferhealthandretirementbenefits(exceptfederalandstategovernmentsandcertainreligious
organizations)aregovernedbyERISA.Thelawwasenactedin1974tocreateuniformfederalstandardsforemployer-sponsoredbenefitplans,includingbothhealthandretirementplans,andpre-emptstheapplication
ofvaryingrulesunderstatelawsthatrelatetotheseemployer-sponsoredplans.
OptionsOPTION1: PreserveERISA.CongressandthepresidentshouldpreserveERISAwithoutchanges.
P r o : Voluntaryemployer-sponsoredhealthbenefitsarepreserved.Employeescontinuetoobtainhealthcarecoveragethroughtheestablishedandfamiliarsystemwithtraditionalriskpools.
Continuationofcoverageisensuredforpatientswithpre-existingconditions.Incentivesare
maintainedforbusinessestoparticipateininsuranceprogramsforthepeoplewhoworkforthem.
Businessownersandmanagersarereassuredthatthebusinessregulatoryclimatewillnotchange
inthisrespectastheyplaninmidstofcurrenteconomicdifficulties.
C o n : Stateswouldbeforcedtoabandoninsurance-relatedtaxinitiativesonbusinessestofundexpandedhealthcarecoveragefortheirresidents.Stateswouldnot,however,havetoabandon
numerousotherhealthreforminitiativestohelpexpandhealthcoverage,lowercostsandimprove
healthcarequality.Theseincludesubsidizinghealthcoverageforlow-incomeindividualsand
families,establishingwellnessprograms,reformingmedicalliabilitylaws,orimposinganindividual
mandatetoobtaincoverage.
OPTION2: Change,erodeoreliminateERISA.P r o : Statescouldenactbroaderreforms,useemployersasasourceoffundingandcoveredlives,andspreadtheriskforstatehealthreformeffortsinalargerriskpool.
(continued)
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CONSUMERHEALTHANDRETIREMENTEmployeeRetirementIncomeSecurityAct(ERISA)
CEOChair StaffContact
C o n : StatesalreadyhavetheauthoritytoadoptinnovativeprogramstoexpandhealthinsurancecoverageforallwithoutmodificationstoERISA.WithoutERISA,thedeclineinemployer-
sponsoredcoveragewouldbesignificantandwouldaddtotheuninsuredandotherproblems
inourhealthcaresystem.ERISAispartofthe solution.Itmakescoveragemoreaffordablefor
employerstosponsor,andemployersbringinnovationandsignificanteffortstoimprovequality
andefficiencytoournationshealthcaresystem.
Resources
BusinessRoundtableHealthCareReformPrinciples,June2007,www.businessroundtable.org/sites/default/files/
Business_Roundtable_Principles_for_Reform_06062007.pdf.
HealthCareReforminAmericaABusinessRoundtablePlan,September2008,www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdf.
NationalCoalitiononBenefits,www.coalitiononbenefits.org.
ActionRecommended
BusinessRoundtableurgesCongresstopreserveERISAsothereisnodisruptiontothecurrent
employer-basedhealthcaresystem.ERISAprovidesthenecessaryfederalframeworkthatenables
employerstoprovidehealthandretirementbenefitstoAmericanworkersandtheirfamilies.
ERISAiscriticaltomaintainingavoluntaryemployer-sponsoredhealthbenefitssystem,whichBusiness
Roundtablewillcontinuetosupport.
http://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.coalitiononbenefits.org/http://www.coalitiononbenefits.org/http://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdf -
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CONSUMERHEALTHANDRETIREMENT
HealthCareReformLegislationIntroductionWhenitcomestoscientificadvances,medicaltechnology,andthequalityofdoctorsandmedicalinstitutions,
Americashealthcaresystemisarguablythebestintheworld.However,risingcostsmeanthatthosewhohave
coveragearepayingmoreandgettinglessvalueinreturn.Americanswithemployer-providedcoverageworry
thattheywontbeabletokeeptheirhealthinsuranceiftheyswitchjobs,retireearlyorstartanewbusiness.In
addition,morethan45millionAmericanslackhealthinsurancealtogether.
Effortstoreformourhealthcaresystemoffersignificantopportunitiestodrivedowncosts,driveupquality
andimproveaccesstohealthcareforallAmericans.Promisingreformsincludemeasurestousethepowerof
informationtechnologytoliberatedoctorsfromtodayspen-and-papersystemandempowerpatientstotakea
moreactiveroleintheirhealthcare.Appropriatehealthinsurancemarketreformscouldbreakdownbarriersto
innovation,promotecompetitionamonghealthinsurersandexpandconsumerchoice.
BackgroundIn2007,totalhealthcarespendingintheUnitedStatesreached$2.3trillionanincreaseof6.9percentoverthe
previousyearandmorethantwicetherateofinflation.TheUnitedStatescurrentlyspends16percentofgross
domesticproduct(GDP)onhealthcaremorethanfourtimestheamountspentonnationaldefensecompared
to10.7percentinGermany,9.7percentinCanadaand9.5percentinFrance.Recentfederalgovernmentreports
estimatehealthcarespendingcouldriseto$4.3trillionby2017andconsumenearly20percentofGDP.
Healthcarecostsrepresentthefastest-growingcostforAmericanbusinesses,hinderingjobcreation,hurtingour
abilitytocompeteinglobalmarketsandstrainingthehouseholdincomesofmanyAmericans.Forfiveconsecutive
years,BusinessRoundtablemembershavecitedhealthcarecostsasatopcostpressure.
Therearemanyfactorscontributingtorisinghealthcarecosts.Todayshealthcaresystemfailstomakeuseof
efficiency-enhancinginformationtechnology.Healthcareconsumersfinditdifficulttoobtainreliableinformation
onthecostandeffectivenessofcare.Ourhealthcarepaymentstructurerewardsvolumeoverquality,whichskews
incentivesanddrivesupprices.
ActionRecommended
Thecomplexissueswithinourhealthcaresystemshouldbeaddressedthroughacombinationofprivate
marketreformsandchangesingovernmentprograms.Publicpolicyshouldbeaimedatcreatinga
transformationalchangeinthesystemtoensurethatallAmericanshaveaccesstoaffordable,quality
healthcare.
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CONSUMERHEALTHANDRETIREMENTHealthCareReformLegislation
CEOChair StaffContact
Resources
HealthCareReforminAmericaABusinessRoundtablePlan,September2008,www.businessroundtable.org/
sites/default/files/Health_Care_Reform_Plan.pdf.
BusinessRoundtableHealthCarePrinciples,June2007,www.businessroundtable.org/sites/default/files/
Business_Roundtable_Principles_for_Reform_06062007.pdf.
Asleadersofcompaniesthatprovidehealthcarecoveragetonearly35millionAmericans,Business
Roundtablemembersstronglysupportpolicyreformsthatwouldmakeourhealthcaresystemmore
efficientandtransparent,delivergreatervaluetoconsumers,andprovidemoremarketplaceoptions
foremployersandindividualstoobtaincoverage.Ourproposalbuildsontheemployer-basedhealth
insurancesystemandseekstoimprovequalityofcarewhileexpandingaccessforallAmericans.
BusinessRoundtableshealthcarereformplanhasfourpillars: Creatinggreaterconsumervalueinthehealthcaremarketplacebyusinghealth
informationtechnologyandempoweringconsumerswithmoreinformationaboutquality
healthcare.
ProvidingmoreaffordablehealthinsuranceoptionsforallAmericans bycreatingan
open,all-inclusiveprivatemarketforhealthinsurance,replacingtodayshighlyfragmented,
state-by-statemarketwithmultistatemarkets.Toensureinsuranceplansaresolventand
meetcertainminimumrequirements,individualstatesshouldcontinuetoactastheprimaryregulators.Broader,morecompetitivemarketswillcreatemorechoicesformorehealthcare
consumers.
EngagingallAmericansintakinganactiveroleintheirhealthcare. First,placean
obligationonallAmericanstoobtainhealthinsuranceeitherthroughtheiremployeror
throughtheprivatemarket.Second,encourageallAmericanstoparticipateinemployeror
community-basedprevention,wellnessandchroniccareprograms.
Offeringhealthcoverageandassistancetolow-income,uninsuredAmericans to
createastableandsecurepublicsafetynet.Thisassistancewouldbefinancedfromthecost
savingsandefficienciesgeneratedbyamorecompetitiveandvalue-drivenhealthcare
system.
Today,ourhealthcaresystemleavesmajorconsumerneedsunmet,costsuncheckedandbasic
practicesuntouchedbytheproductivityrevolutionthathastransformedeveryothersectorof
oureconomy.BusinessRoundtableshealthcarereformplanwillstrengthencoverageforthe
177millionAmericanswhoreceiveitthroughtheiremployers,whilemakinghealthcaremoreaccessibleandmoreaffordableforeveryone.
http://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Health_Care_Reform_Plan.pdf -
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CONSUMERHEALTHANDRETIREMENT
HealthInformationTechnologyIntroductionHealthcareisoneofthefewsegmentsoftheAmericaneconomythathasnotyetexperiencedthetransformational
benefitsofmodern,efficientinformationtechnology(IT).Asconsumers,weareaccustomedtoelectroniccommunication
anddataexchangeintheformofATMsandonlinetransactions.Butthelackofsuchsystemsinhealthcarethelackof
healthITiscostlyanddangerous.Whenabusinessfailstousetechnology,theresultisinefficiencyandwasted
spending.Inmedicine,theresultisofteninferiorcare,personalsuffering,lossoflifeandspiralingcosts.
BackgroundHealthIThasthepotentialtosaveasmuchas$165billionayearfromefficienciesandimprovedhealthoutcomes.
Moreover,manyofthemorethan98,000peoplewhodieeachyearfrompreventablemedicalerrorscouldbe
savedthroughtheuseofaccurate,up-to-dateelectronicsystems.Finally,healthITpresentsanunprecedented
opportunitytoreplacetodayslargelyinsecurepaper-basedsystemwithasecuresystemthatprovidesgreater
convenienceforpatients,fasterandmoreup-to-dateanswersforproviders,moreaccurateinformationfor
pharmacists,andgreaterservicetounderservedanddistantpopulations.
LegislationisneededtocreatethelegalauthoritytoestablishuniforminteroperablestandardsforhealthIT.
InvestmentsinhealthIThavebegunbutwillneverfullyproliferatewithouttheestablishedfoundationinlaw
thatisneededforwidespreaddeployment.
OptionsOPTION1: Passlegislation.CongressshouldpassandthepresidentshouldsignhealthITlegislationto
establishinteroperablestandards.
P ro : Approximately98,000liveswouldbesavedeachyearfromareductionindeathsduetomedicalerrors;theUnitedStateswouldsaveasmuchas$165billioneachyearinefficienciesand
improvedhealthcareoutcomes;ITinfrastructurewouldprovidethebasisforallfuturereform;
underservedandremotecommunitieswouldgaingreateraccesstohealthcare;patientsand
familieswouldenjoygreaterconvenienceinaccessingrecords;patientsandfamilieswouldbenefit
fromsecure,improvedinteractionwithhealthcareproviderstosupportbetterlifestylechoices;
patientswithchronicdiseaseswouldreceiveearlierandmoreintensivesupport,thusavoidingpain
andsufferingandreducinggreaterpublicandprivateexpenselater;andelderlypatientswould
avoidriskytraveltohealthcareprovidersbyrelyingonlong-distanceimagingandinteraction.
C o n : Healthprovidersandpatientsmustpartwiththepaper-and-penapproachtorecord-keeping,whichwillrequiresubstantialfinancialinvestmentandachangeinthewayhealth
professionalsworkandinteractwithpatients.
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CONSUMERHEALTHANDRETIREMENTHealthInformationTechnology
OPTION2: Legislationfails.Legislationgoesunapproved;theissuecontinuestoberaisedannuallybutisperpetuallyboggeddowninancillarymatters.
P r o : Preservespatientfamiliaritywithcurrentpaper-and-pensysteminspiteofcostlinessandlossoflife;allowsexperimentincomplete laissez-faireapproachtorisksandrewardsofhealth
careoutcomes.
C o n : Livescontinuetobeunnecessarilylost;thehealthcaresystemfailstocontrolrisingcosts;theU.S.healthcaresystembeginstosignificantlylagbehindthoseofothernations;thehealthcaresystemremainsinapaper-basedworldevenasnearlyallotherindustriesandbusinessesuse
networkedelectronicservices;costlylifestyleissuesandearlytreatmentofchronicdiseases
remainunaddressedmattersamongpatientswhoneedhelp;andthelackofcommonelectronic
languageforhealthcareleadstoTowerofBabeleffectinwhichdifferentsystemsspeak
differentlanguagesandusedifferentformats(imagineplanesfromdifferentairlinesunableto
speakacommonlanguagewithairtrafficcontrol,andthechallengeisapparent).
ActionRecommended
BusinessRoundtableurgesCongresstoimmediatelypasslegislationprovidingstandardsforsecure,
uniformandinteroperablehealthIT.Asprovidersofhealthcarecoveragefornearly35million
Americans,membersofBusinessRoundtablesupportwidespreadadoptionofhealthITtodelivera
newdimensionofsafety,quality,choiceandconveniencetoAmericanconsumers.AllAmericans
shouldhaveaccesstoasecure,uniform,interoperablehealthITsystem.Itsadoptionwillimprove
thepatientexperience,increasepositivehealthoutcomesandgeneratesignificantsavings.
Congressshouldimmediatelypasslegislationthatwill:
Authorizetheestablishmentofuniforminteroperablestandardsandaprocessforsetting
thestandards;
Includegrants,loansortaxcreditsforproviderstoassistinthepurchaseofinteroperable
healthITsystems;
EducateAmericansonthevalueofelectronichealthrecordsandhealthinformation;
Protectpersonalhealthinformationwithoutover-regulatingorcreatingundueburdens
withinthesystembyincludinguniformsecuritystandardstoprotectpersonalhealth
informationwithoutnegativelyaffectingquality,patientsafetyandefficiencyofhealth
care;and
Includeadatecertainbywhichallpayersandprovidersarerequiredtohaveimplemented
interoperablesystems.
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CEOChair StaffContact
CONSUMERHEALTHANDRETIREMENT
HealthInformationTechnology
Resources
BusinessRoundtableLetterfromVerizonCEOonHealthIT, June2008,www.businessroundtable.org/
sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdf.
BusinessRoundtable,UpgradeAmericasHealthITSystemNow,April2008,
www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdf.
http://www.businessroundtable.org/sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdfhttp://www.businessroundtable.org/sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdf -
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CONSUMERHEALTHANDRETIREMENT
MedicalLiabilityReformIntroductionReformstoourmedicalliabilitysystemhavethepotentialtoimprovemedicalpractice,appropriatelycompensate
individualswhoareharmedasaresultofmedicalnegligenceandreducecostsinthehealthcaresystem.Medical
liabilitycostslargelyaredrivenbytwofactors:thecostofdefensivemedicineandthecostsassociatedwith
judicialproceedings.Faircompensationshouldbeprovidedwhenmedicalnegligenceoccurs;however,everyone
inthesystemwillbenefitifdefensivemedicineandunnecessarylawsuitscanbereduced.
BackgroundThecostofdefensivemedicineisdifficulttodetermine,butthemostcommonlyacceptedestimateissubstantial.
In2002,economistsDanielKesslerandMarkMcClellanexaminedsurveydataontheeffectsofdefensivemedicine
onphysicianproductivity,aswellasitsimpactonhealthoutcomes.Overall,theyfoundthatabout59percentof
totalhealthcareexpenditureswereduetodefensivemedicinecosts.
TheU.S.DepartmentofHealthandHumanServices(HHS)alsocommissionedasurveybyHarrisInteractiveon
defensivemedicine.InitsJuly2002reportConfrontingtheNewHealthCareCrisis:ImprovingHealthCareQuality
andLoweringCostsbyFixingOurMedicalLiabilitySystem ,Harrisfoundthat:
79percentofphysicianshaveorderedmoreteststhantheywouldbasedonprofessionaljudgmentofwhatismedicallyneeded;
74percenthavereferredpatientstospecialistsmoreoftenthantheybelievedwasmedicallynecessary; 51percenthaverecommendedinvasiveproceduressuchasbiopsiestoconfirmdiagnosesmoreoften
thantheybelievedwasmedicallynecessary;and
41percenthaveprescribedmoremedicationsthantheywouldbasedonlyontheirprofessionaljudgment.HHSfurtherdeterminedin2003thatoverallmedicalliabilityreformwouldlowerMedicarecostsbysome
$31billionperyear.1
Highmedicalmalpracticepremiumsandfearsoflawsuitsalsohavehadaneffectonthesupplyofdoctorsand
medicalcare.Some55percentofhospitalsreportdifficultyrecruitingdoctors, 2someemergencyroomshavebeen
forcedtoturnawayambulancesforlackofspecialists, 3morethan70percentofneurosurgeons4and55percent
oforthopedicsurgeons5reportlimitingthekindsofprocedurestheyperform,and78percentofallobstetricians
havestoppedpracticingobstetricsaltogether.6
Medicalliabilitylawshouldbereformedtoensurefaircompensationtoindividualswhoareharmedwhilereducing
unnecessarydefensivemedicineandlawsuits.
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CONSUMERHEALTHANDRETIREMENTMedicalLiabilityReform
OptionsOPTION1 : Enactmedicalliabilityreformthatincludescapsonnoneconomicdamages,similartothosein
placeinCalifornia,Texasandotherstates.
P r o : Statereformsthatincludeacaponnoneconomicdamageshaveprovenhighlyeffectiveinloweringdoctorsmedicalliabilitypremiumsandincreasingthesupplyofdoctors.
C o n : PreviousattemptstopasslimitsonnoneconomicdamagesatthefederallevelhavefailedtopasstheSenatethepartybeinginthemajoritydidnotaffecttheoutcome.
OPTION2: Adoptlegislationtoauthorizepilotprojectstoevaluatealternativeresolutionsofmedicalliabilityclaims,includingmedicalcourts,alternativedisputeresolutionandotherefforts.Followingthese
pilots,Congressshouldenactthoseprogramsthatworkinbroaderlegislationtosetupanational
systemthatprovidesfaircompensationofindividualswhoareharmedbutalsoreducesthecosts
associatedwithdefensivemedicine.
P r o :TheFairandReliableMedicalJusticeActwasintroducedinthe110thCongressbySen.
Baucus,D-MT;Sen.Enzi,R-WY;Rep.Cooper,D-TN;andRep.Thornberry,R-TX.Legislationthat
supportspilotdemonstrationprogramsforalternativestomedicallitigationwouldhaveagreater
chanceofachievingsufficientbipartisansupportinCongressthanpreviousattemptsatliability
reform.
C o n : Pilotdemonstrationprogramsforalternativestomedicallitigationwouldrequiresignificanttimetofullydevelopandprovetheireffectiveness,whichwoulddelayanyimpactonanational
scale.
OPTION3: Enactlegislationtoencourageandsupporttheuseofappropriatemedicalpracticeguidelinesdevelopedbynationalprofessionalorganizationsorothersimilarlyqualifiedorganizations.Ifa
physicianfollowstheguidelines,thentheprovidershouldbeabletouseadherencetothe
practiceguidelinesasanacceptabledefenseagainstanegligenceaction.
P r o : Suchapolicyhasthepotentialnotonlytoreducelitigationanddefensivemedicinebutalsotoencouragenationalpracticeguidelinesthatwouldimprovethequalityofmedicalcarefor
everyone.
C o n : Medicalcareisasmuchanartasitisascience.Rigidadherencetomedicalpracticeguidelinesinflictscookbookmedicinewhenclinicalcareshouldbetailoredtotheneedsof
eachindividual.
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CEOChair StaffContact
CONSUMERHEALTHANDRETIREMENT
MedicalLiabilityReform
Resource
BusinessRoundtableHealthCareReformPrinciples,June2007,www.businessroundtable.org/
sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdf.
1AddressingtheNewHealthCareCrisis:ReformingtheMedicalLitigationSystemtoImprovetheQualityofHealthCare11, Officeofthe
AssistantSecretaryforPlanningandEvaluation,U.S.DepartmentofHealthandHumanServices,2003.2AmericanHospitalAssociation, ProfessionalLiabilityInsurance:AGrowingCrisis,March2003.3TheSchumacherGroup,2004HospitalEmergencyDepartmentAdministrationSurvey,citedinFederalMedicalLiabilityReform,AllianceofSpecialtyMedicine,July2005.4AmericanAssociationofNeurologicalSurgeonsandCongressofNeurologicalSurgeons,2004survey,citedinFederalMedicalLiability
Reform,AllianceofSpecialtyMedicine,July2005.5AmericanAssociationofOrthopedicSurgeons,citedinFederalMedicalLiabilityReform,AllianceofSpecialtyMedicine,July2005.6AmericanCollegeofObstetriciansandGynecologists,November3,2006.
ActionRecommended
BusinessRoundtableurgesCongresstoauthorizepilotprojectstoevaluatealternativewaystoresolve
medicalliabilityclaims,includingmedicalcourts,alternativedisputeresolution,andothereffortsto
reducethecostsofdefensivemedicineandtoimprovehealthcarequality.Followingthesepilots,
Congressshouldenactthosethatenhancethefaircompensationofindividualswhoareharmedas
aresultofnegligencewhiledemonstratingareductionindefensivemedicalcosts.Congressshould
supporttheuseofappropriatemedicalpracticeguidelinesdevelopedbynationalprofessional
organizationsorothersimilarlyqualifiedorganizationsasanacceptabledefenseinmalpracticeactions.
http://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdfhttp://www.businessroundtable.org/sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdf -
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CONSUMERHEALTHANDRETIREMENT
PensionsIntroductionDefinedbenefitpensionplansremainacriticalcomponentoftheretirementsecurityequationformostBusiness
Roundtablemembercompanies.Theseretirementplans,whethertraditionalorhybrid,provideanongoingstreamof
incometothosewhohavealreadyretiredandremainanimportantretirementbenefitforthecurrentworkforce.The
RoundtablesconsistentpositionisthatthebestwaytoprotectpensionsisforCongresstopassprudentrulesthat
promotethelong-termretirementsecurityofAmericans;donotdisrupttheeconomyorfinancialmarkets;anddonot
inappropriatelydivertcapitalinvestmentsawayfromcreatingjobs,capitalimprovements,orresearchanddevelopment.
Recentadverseeconomicconditionshave,unfortunately,broughttheimportanceofimplementingBusiness
Roundtableshistoricalpositiononpensionfundingintostarkfocus.Withnewrestrictionsbeingimplementedor
consideredthatcouldunderminetheabilitytomaintainarobustdefinedbenefitsystem,therulesmustcontinue
toprovideemployerswiththeflexibilitytodesign,implementandprudentlyfundtheirpensionplansinamanner
thatisconsistentwithwisebusinesspractices.
BackgroundThe2006PensionProtectionAct(PPA)imposedstringentnewminimumfundingrequirementsonpensionplans.
ThosePPAruleshaveonlybeguntobephasedin.Thesuddendeclineinthevalueofpensionplanassetsinfall
2008,coupledwiththecreditcrunch,hasplaceddefinedplansponsorsinadifficultposition.Atatimewhen
companiesneedcash,theyalsoarerequiredtomakeunexpectedlylargecontributionstotheirplansunderPPA.
Whilethephase-inofthenewPPAfundingrulesisalreadyrapid,thechangedeconomicenvironmentmakesthe
limitedtransitionthatwasprovidedtothe2006fundingregimeunworkableformanyemployers.
Atthesametime,proposalshavebeguntosurfacethatwoulderodetheabilityofanemployertotailorapension
plantobestmeettheneedsofitsuniqueworkforce.PPAcontainedhelpfulclarificationsregardingthetreatmentof
cashbalanceandhybridplans.Therehasbeendiscussionthatsomeofthosedecisionscouldbereopened,either
throughnarrowregulatoryinterpretationsorlegislativechanges.Similarly,recentdiscussionofvolatileoilpriceshas
ledsometoproposerestrictionsonpensionplaninvestmentsinenergyorothercommodities,investmentsthathave
becomeanimportanttoolindiversifyingandhedgingadefinedbenefitplansinvestments.
OptionsOPTION1: TemporaryrelieffromthePPApensionfundingrequirements.Withthestringentnewfunding
rulesadoptedinPPAstillbeingphasedin,BusinessRoundtablehastakenthepositionthat
recentmarketdeclinesandtheshortageofavailablecreditrequireare-evaluationofthe
transitiontothosenewrules.Specifically,thevolatileandunexpectedcashflowdemandsonplanscausedbytherecenteconomicdownturnshouldbesmoothed,withthoseplansprudently
returnedtofullfundingstatusoverareasonableperiod.
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CONSUMERHEALTHANDRETIREMENTPensions
CEOChair StaffContact
P r o : ThelargeandunexpectednewfundingobligationscreatedbyPPA,ifnotmodified,willdivertassetsawayfromjobretention,jobcreationandneededbusinessinvestments,thus
increasingthenumberofAmericanswhoareunemployedandslowingoureconomicrecovery.
Insomecases,employersmightbeforcedtofreezeorterminatetheirplans.
Con : Ifproposalsarenotcarefullytargetedatextendedtransitionrelief,otherfavorableelementsofPPA(e.g.,hybridplanclarifications)orotherchangescouldbereopenedinthelegislativeprocess.
OPTION2: Flexiblerulesregardingmaintenanceofhybridpensionplans.TheTreasuryDepartmentcontinuessignificantregulatoryprojectsrelatedtoPPAclarificationofhybridpensionplanrules.Important
technicalissuesremainonhowtointerpretcertainPPAprovisions.Atthesametime,elementsof
theplaintiffsbarandsomeconsumeradvocacygroupscontinuetopressforareopeningofhybrid
planissues,andlitigationcontinues.Anyerosionofthecurrenthybridplanrulescoulddramatically
reducetheirutilityandundercutanimportantelementofthedefinedbenefitsystem.Business
Roundtablesupportsmaintainingtheflexibilitytoadopthybridplansthatmeetworkforceneeds.
P r o : Hybridplansprovideauniquemeansofmeetingworkforceretirementneedsandshouldremainaviablealternativeavailabletoemployers.
C o n : None.
OPTION3: Restrictionsoninvestmentofplanassets.Recenteffortstoprohibitpensionplaninvestmentinenergyorothercommoditiescontinuealong-standingdebateoverwhetherthegovernment
shouldbeinvolvedinmanagingretirementplaninvestmentdecisions.Theseeffortsmaytake
otherforms,includingsocialinvestinginwhichthegovernmentattemptstodirectinvestmentinto
certainactivitiesthataredeemedsociallydesirableorawayfromundesirableactivities.Attemptsto
directproxyvotingofsharesheldinpensionplansaresimilarlyaimedatgovernmentinvolvement
indecisionmaking.Thelong-standingBusinessRoundtablepositionisthatpensionplanassets
shouldbemanagedprudentlybyemployersactingonbehalfoftheiremployees,withemployers
continuingtohavethefreedom,andthesoleresponsibility,toinvestpensionplanassetswithin
theircontrolinthebesteconomicinterestoftheplansparticipantsandbeneficiaries.
P r o : None.
C o n : Government-mandatedinvestmentsolutionsarelikelytobecounterproductiveanddrivenbypoliticalwinds.Limitsofthatnature,onceenacted,arelikelytoerodetheeffectivenessof
fiduciaryresponsibilityandultimatelywillmultiply.
ActionRecommended
Continuetosupportthedefinedbenefitpensionsystembyworkingforreasonablefundingrulesand
promotinghybridplans.Opposeeffortsbythegovernmenttomicromanagepensionplaninvestments,leavingthatresponsibilitywhereitbelongswiththeplanfiduciary.
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Corporat
eLeadership
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CORPORATELEADERSHIP
CorporateGovernanceIntroductionGoodcorporategovernanceisessentialtopromotingconfidenceintheAmericaneconomy.Thesuccessof
Americancorporationsisbasedontrustatrustthatcancomethroughtransparencyofoperations;adherence
tothehighestethicalstandards;andatrackrecordofbehavingresponsiblywithemployees,shareholdersandthe
communitiesinwhichtheyoperate.
BackgroundRegulatoryReform
Manyofoursecuritieslawsandoversightagencieswerecreatedinthe1930s,andgivenoverlappingjurisdictions,
theycannoteffectivelymonitortodaysglobal,complexfinancialinstitutionsandtransactions.
Althoughthereweremanyfactorscontributingtotherecenteconomiccrisis,thecommondenominatorwasthat
long-termgrowthandvalueweresacrificedforshort-termgain.Therelentlessdriveforshort-termresultsledto
thecreationofcomplexfinancialinstrumentsthatwereunregulatedandnottransparent.
Inaddition,thecurrentsystemforcompaniestocommunicatewiththeirindividualshareholdersismorethan
25yearsold.Oneofthekeyobjectivesofgoodcorporategovernanceiseffectivecommunicationsanddialogue
amongboards,managementandshareholders,andcurrentlycompaniescannotcommunicatedirectlywith
shareholderswithoutgoingthroughbrokersandintermediaries.
ProxyAccess
Theissueofproxyaccessinvolveshowcorporatedirectorelectionsaregovernedandhowacompanyproxyisused.
Directorelectionsaregovernedbystatelawinthestatewherethecompanyisincorporated,andtheproxyisa
managementmechanismforshareholderstovotewhennotattendingshareholdermeetings. Shareholders
currentlyhavetherighttonominatedirectorsandruncampaignsbutnotonthecompanyproxy .Thishasbeen
animportantprotectionagainstusingcompany(shareholder)resourcestofinanceahostiletakeover.
Currently,nominatingcommitteesidentifyqualifiedcandidateswhohaveexpertiseandjudgmentandwill
representallshareholders,notoneparticulargroup.Proponentsofproxyaccesswanttoallowvirtuallyanyinvestororgroupofinvestorstoplacetheirboardcandidatedirectlyonthecompanyproxy.Thiswould
representafundamentalchangetothecarefulbalanceamongshareholders,boardsandmanagement,which
overthelongtermhasproventobesuccessful.
Proxyaccesscouldleadtospecialinterestboardcandidatesandpoliticizethedirectorelectionprocess.Inthisday
andageofshort-termholdings,borrowedvoting,hedgefundsandsovereignwealthfundsinvestinginU.S.
corporations,thelastthingsshareholdersneedarefracturedboardsrepresentingdivergentconstituenciesor
singleissueboardmembers.Todayscorporationshavemillionsofshareholders,oftenrepresentedbythousandsofinvestorgroupswithverydifferentagendas.Acompanyproxycardwithdozensofboardcandidatesisnota
formulaforstabilityandinvestorconfidence.
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CORPORATE LEADERSHIP
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CORPORATELEADERSHIPCorporateGovernance
The2007and2008BusinessRoundtablegovernancesurveysdemonstratethatcompanieshavetransformedthemselvesbyincreasingtheirboardindependenceanddemandingaccountability:
90percentofRoundtablecompaniesreportedthattheirboardsareatleast80percentindependent. 75percentofRoundtablecompanyboardsmeetinexecutivesession ateverymeeting. 76percentofRoundtablecompanyCEOsserveonnomorethanoneotherboard. 88percentofRoundtablecompanyboardshaveanindependentchairman,leaddirectororpresiding
director.
75percentofRoundtablecompanyboardshaveadoptedmajorityvotingfordirectorsinjusttwoyears. TheaveragetenureofRoundtablecompanyCEOsisdowntofiveyears;a2006BoozAllenstudyshowed
thatCEOturnoverhadincreasedtothehighestlevelin10yearsandthatoneofthreeCEOswholeft
theirjobswasforcedout.
Giventheoverwhelmingevidencethatboardsarenowdominatedbyindependentdirectors,webelieveproxy
accessisanideawhosetimehaspassed.Proxyaccesswouldnothavepreventedtheeconomiccrisis,anditwould
nothelpsolvethechallengesfacingustoday.
ExecutiveCompensation
Executivecompensationisacontroversialissue,andgivensomeofthehighlypublicizedfailures,thelevelof
outrageisjustifiable.
In2007,theHouseofRepresentativespassedHR1257,whichwouldmandateanannualshareholdervoteon
executivecompensationfor allpubliclytradedcompanies.However,shareholdersalreadyhavetherighttovoteoncompensationin2008,morethan90proposalswerefiledwiththeSecuritiesandExchangeCommission(SEC)
andvotedonbyshareholders.Inaddition,mandatorycompensationvotingcouldleadtofurtherdemandstovote
onotheraspectsofboarddecisionmaking,suchascapitalexpenditures,strategicplans,advertisingand
endorsementdealsallinvolvingfargreaterdollaramountsthancompensation.
Therealsocouldbewidespreaddisagreementoverwhattheresultswouldmean.Forexample,wouldayes
voteof52percentbeseenasanendorsementofcompensationplans?Wouldanovoteof48percentmean
compensationplansshouldberestructured?Ifaboarddecidestoretainitscompensationplanfollowinga
novote,willitbesubjectedtowithholdcampaignsthefollowingyear,andwhatwouldtheimpacton
shareholdersbeiftheboardweredestabilized?
Inthecontextoftheeconomiccrisis,BusinessRoundtablebelievestheemphasisonproducingshort-termresults
ledtoincreasinglyriskybehavior,andthatinturnproducedcompensationabuses.Thekeytocurbingthis
behavioristopreventrisksassociatedwithshort-termresultsandtoonceagainaligncompensationplanswith
shareholderinterests.
(continued)
CORPORATELEADERSHIP
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StaffContactCEOChair
CorporateGovernance
Resources
BusinessRoundtablecorporategovernancepublications,www.businessroundtable.org/initiatives/
leadership/governance.
BusinessRoundtableInstituteforCorporateEthics,www.darden.virginia.edu/corporate-ethics/.
ActionRecommended Therecenteconomiccrisishasfocusedattentionongovernanceissues.BusinessRoundtable
recognizestheneedforregulatoryreformforthefinancialservicesindustry,andweare
committedtoworkingconstructivelyonameaningfulsolution.
Corporategovernancereformsshouldacknowledgethereforms,evolvingprinciplesandbestpractices
thatcompanieshaveinstituted;atthesametime,theyshouldconsolidateandenhancefinancial
servicesoversightandminimizetheriskthatcontributedtotheeconomiccrisis.Bydoingso,Business
Roundtablebelievesthatindividualcompaniesofallsectorsoftheeconomywillhavetheabilityto
innovate,growandcontinueproducinglong-termshareholdervalue.Specifically,werecommend:
RegulatoryReform BusinessRoundtablebelievesthatreformeffortsshouldfocusonthreemainareas:Modernize
andconsolidategovernmentoversightagencies,regulatecreditdefaultswapsandother
derivativeinstruments,andrequirecompaniestodisclosetheirkeyperformanceindicators
andbetterdisclosetheirriskmanagementprocessesinSECfilings.
Inaddition,wesupportreformingtheshareholdercommunicationsprocesstoallowcompaniesto
communicatedirectlywiththeirindividualshareholderswithouthavingtogothroughthirdparties
andintermediaries.Wealsobelieveproxyadvisoryfirmsshouldberegulatedtoprohibitconflicts
ofinterestandshouldberequiredtomaketheirprocessestransparent.
ProxyAccess
Inthepast,somehavesuggestedthatproxyaccesswouldenhanceboardindependenceand
oversight.BusinessRoundtabledisagrees;boardshavebecomeoverwhelminglyindependentin
recentyears,andtheunintendedconsequencesofproxyaccessfaroutweighanybenefits.Theissuehasbeenthoroughlydebatedovertheyears,andtheSEChasrepeatedlyconcludedthatchanging
thecurrentsystemisinconsistentwithstatelawandunworkablefromapracticalstandpoint.
ExecutiveCompensation
BusinessRoundtablebelievesthatthelimitsplacedonexecutivecompensationforthosecompanies
usingfundsfromtheeconomicrescuelegislationarereasonableandappropriate.However,we
opposemandatinganannualshareholdervoteonexecutivecompensationfor allpubliclytraded
companies.Subjectingboarddecisionstoareferendumsystemofvotingcouldleadtouncertainty,resultinginalackofinvestorconfidenceincorporationsanddecliningshareholdervalue.
http://www.businessroundtable.org/initiatives/leadership/governancehttp://www.businessroundtable.org/initiatives/leadership/governancehttp://www.darden.virginia.edu/corporate-ethics/http://www.darden.virginia.edu/corporate-ethics/http://www.businessroundtable.org/initiatives/leadership/governance -
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Education,Innovation
andWorkforce
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EDUCATION,INNOVATIONANDWORKFORCE
EducationReformLegislationIntroductionTheElementaryandSecondaryEducationAct(ESEA),firstenactedin1965andnamedtheNoChildLeftBehind
(NCLB)Actinitscurrentiteration,isupforreauthorization.Aninitialefforttobeginthereauthorizationprocess
failedtoreachbipartisanconsensusatthecommitteelevelin2007.Astheprincipalfederalvehicletoimprove
K12educationintheUnitedStates,reauthorizationofESEAhasthepotentialtoeitheraccelerateorslowdownmomentumforprovidingallstudentsaworld-classeducation.
BackgroundBusinessRoundtablehashadalong-termcommitmenttoimprovingtheperformanceoftheeducationsystemand
raisingstudentachievementintheUnitedStates.Changingdemographics;upcomingbaby-boomerretirements;
growthofhigh-wage,high-skilljobsthatrequirepostsecondaryeducationandtraining;andtheinternational
marketplacefortalentareforcesthatemphasizetheneedforallU.S.studentstograduatefromhighschoolwith
thefoundationskillsandknowledgethatpreparethemtosucceedincollege,intheworkplaceandinlife.
From1965through2001,thefederalroleineducationfocusedprimarilyonhelpingspecialgroupsofstudents,
suchasdisadvantagedanddisabledchildren.NCLB,signedintolawin2002,broadenedthescopeofthefederal
roleintermsofaccountabilityfortheachievementoutcomesexpectedforallstudents.BusinessRoundtable
supportedinitialpassageofNCLBandviewedtwodimensionsofthelegislationasespeciallypromising:
First,itwasimportantcivilrightslegislationthatmadeclearthatstandardsandexpectationsforstudentsmustnotvarybasedonrace/ethnicity,language,disabilityoreconomicstatus.
Second,itestablishedamoretransparentdatareportingsystem,accountabilityforimprovingstudentacademicachievementandoptionsforstudentstoleavechronicallylow-performingschools.
TheNationalAssessmentofEducationalProgress(NAEP)2007readingachievementresultsfor4thgradestudents
andmathresultsfor4thand8thgradestudentsarethehighestinthehistoryoftheNAEPassessment.Recent
reportsusingstateassessmentdataalsoshowthatstudentreadingandmathachievementhasimprovedsince
NCLBwasenactedsixyearsago.1
Fromabusinessperspective,althoughweareencouragedbyrecentstudentachievementgains,U.S.education
performance,particularlymathandscienceachievementandhighschoolandcollegegraduationrates,isnot
gettingbetterfastenoughincomparisontoourinternationalcompetitors.FormostAmericanstudents,education
willdeterminetheirfuturestandardoflivingtheincomeanindividualearnsoveralifetimechangesbasedon
whetherheorsheisahighschooldropout,isahighschoolgraduate,orhasatwo-orfour-yearcollegedegree.
(continued)
EDUCATION,INNOVATIONANDWORKFORCEEd i R f L i l i
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EducationReformLegislation
Options
OPTION1: ReauthorizeESEAwithsubstantialchangestothebasicframeworkofNCLB,particularlytolimitannualassessments,lowerunrealisticaccountabilityrequirementsandeliminatepunitive
consequencesforpersistentlylow-performingschools.
P r o : TheNCLBbrandispoliticallydamagedbeyondrepair,andasignificantlydifferentapproachtoschoolimprovementisneeded.
(continued)
Weak U.S. Performance in Science and Mathematics LiteracyAverage scores of 15-year-old students on combined science literacy scale and
mathematics literacy scale, by Organisation for Economic Co-operation and
Development (OECD) jurisdiction, 2006
Combined science literacy scale
Jurisdiction ScoreOECD average 500
OECD jurisdictionsFinland 563
Canada 534Japan 531New Zealand 530Australia 527Netherlands 525Korea, Republic of 522Germany 516United Kingdom 515Czech Republic 513Switzerland 512Austria 511Belgium 510Ireland 508
Hungary 504Sweden 503Poland 498Denmark 496France 495Iceland 491
UNITED STATES 489Slovak Republic 488Spain 488Norway 487Luxembourg 486Italy 475Portugal 474
Greece 473Turkey 424Mexico 410
Mathematics literacy scale
Jurisdiction ScoreOECD average 498
OECD jurisdictionsFinland 548
Korea, Republic of 547Netherlands 531Switzerland 530Canada 527Japan 523New Zealand 522Belgium 520Australia 520Denmark 513Czech Republic 510Iceland 506Austria 505Germany 504
Sweden 502Ireland 501France 496United Kingdom 495Poland 495Slovak Republic 492Hungary 491Luxembourg 490Norway 490Spain 480
UNITED STATES 474Portugal 466Italy 462
Greece 459Turkey 424Mexico 406
Average is higherthan the U.S.average
Average is notmeasurablydifferentfrom the U.S.average
Average is lowerthan the U.S.average
Source: National Center for Education Statistics, U.S. Depar tment of Education and Institute of Education Sciences,
Highlights from PISA (Programme for International Student Assessment) 2006, 2007
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EducationReformLegislation
C o n : Datashowthatstudentachievementisimprovingandachievementgapsareclosing.Weneedtostaythecourseondatatransparency;accountabilityforallstudentgroupsreaching
reading,mathandscienceproficiency;andoptionsforstudentstrappedinconsistentlylow-
performingschools.
OPTION2: ReauthorizeESEAwithasignificantlyreducedfederalroleineducation.P r o : AsasmallinvestorinK12education,federaleducationrequirementsshouldbeminimal,leavingstatesandlocalschooldistrictsmorelatitudeindeterminingeducationpolicyandlocaleducationpriorities.
C o n : Inaneconomythatputsapremiumonintellectualcapitalandhasaglobalmarketplacefortalent,Americanstudentswillcompetewiththeirpeersaroundtheworld.Itisinthenational
interestforthefederalgovernmenttoprovideresources,researchanddatatoimproveU.S.
educationperformanceandtoexpectrecipientsoffederaleducationfundstobeaccountable
fordemonstratingimprovedstudentachievement.
OPTION3: ReauthorizeESEAbyretainingthefundamentalprinciplesofNCLBwhilealsoaddressingproblemsthatemergedduringimplementation.
P ro : Thestatestandards-basededucationreformmovementandNCLBcontinuetohelpraisestudentachievementandcloseachievementgaps.Thefederalinsistenceonaccountabilitywaslongoverdue
afteryearsofprovidingfundingwithlittleornoconnectiontomeasurableimprovementinstudent
achievement.Necessaryrefinementsandomissionsinthelawcanbeaddressedandstrengthened
duringreauthorizationwithoutcompromisingthelawsfundamentalprinciples.
C o n : NCLBhaslaudablegoals,butthelawisfundamentallyflawedandneedstobeoverhauled.
ActionRecommended
BusinessRoundtablesupportsthethirdoption.K12educationintheUnitedStatesisalocal
functionandstateresponsibilitywiththelionsshareofresourcesprovidedbystateandlocal
fundingsources.However,inourinternationaleconomy,itismoreimportantthaneverforthefederalgovernmenttoremaincommittedtothenationalimportanceofimprovingU.S.education
performance.Thefederalinvestmentneedstobetargeted,focusedandalignedwithpoliciesand
programsthatproducehighschoolgraduatesacademicallypreparedtosucceedincollege,workand
life.Recipientsoffederalfundsmustbeheldaccountablefortheseresults.DuringESEA
reauthorization,greateremphasisisneededonimprovinghighschools;supportingandrewarding
highlyeffectiveteachers;strengtheningscience,technology,engineeringandmatheducation;and
creatingincentivesforstatestocollaborateoncommonhigherstandardsandbetterassessments
thatreflecttheexpectationsofcollege,workandinternationalcompetitors.ButanychangesCongressmakesshouldretainandbuildonNCLBsfundamentalprinciples.
(continued)
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EducationReformLegislation
CEOLeadEducationReform StaffContact
ResourcesBusinessCoalitionforStudentAchievement,FrameworkforReauthorizingtheNoChildLeftBehind(NCLB)Act:
RecommendationstoImproveandStrengthentheLaw,January2007,http://biz4achievement.org/
about_the_coalition/position_statement3.pdf.
BusinessRoundtable,EssentialComponentsofaSuccessfulEducationSystem,2000,www.businessroundtable
.org/sites/default/files/2007.10.17_9-Essential_Components_of_a_Successful_Education_System.pdf.
BusinessRoundtableandCorporateVoicesforWorkingFamilies,EarlyChildhoodEducation:ACalltoActionfrom
theBusinessCommunity,2009.
1CenteronEducationPolicy,HasStudentAchievementIncreasedSince2002?StateTestScoreTrendsthrough2006-07.
http://biz4achievement.org/about_the_coalition/position_statement3.pdfhttp://biz4achievement.org/about_the_coalition/position_statement3.pdfhttp://biz4achievement.org/about_the_coalition/position_statement3.pdfhttp://www.businessroundtable.org/sites/default/files/2007.10.17_9-Essential_Components_of_a_Successful_Education_System.pdfhttp://www.businessroundtable.org/sites/default/files/2007.10.17_9-Essential_Components_of_a_Successful_Education_System.pdfhttp://www.businessroundtable.org/sites/default/files/2007.10.17_9-Essential_Components_of_a_Successful_Education_System.pdfhttp://biz4achievement.org/about_the_coalition/position_statement3.pdf -
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EDUCATION,INNOVATIONANDWORKFORCE
InnovationPolicy
(continued)
IntroductionIntheworldsadvancedeconomies,anationscapacitytoinnovatehasproventobeakeydeterminantofeconomic
success.
Forthebetterpartofacentury,theUnitedStatesenjoyedahigherrateofproductivitygrowthandahigherstandardof
livingthanotherlarge,industrializedcountries.U.S.economicleadershiprestedonabundantnaturalresources,efficient
capitalmarkets,andtheworldsmostadvancedscienceandtechnologyenterprise,whichfedacontinuousstreamof
technologicalinnovationintoanentrepreneurialbusinessculturethatcreatednewproductsandprocessesandeven
wholenewindustries.
Duringthepast20years,however,manyofAmericasintrinsiceconomicadvantageshavebeenglobalized.
Capitalandnaturalresourcescanbesourcedalmostanywhereintheworld,andtheUnitedStatesnolongercanclaima
competitiveadvantage.Overthissameperiod,theU.S.economyoutpacedtherestoftheworldintheproductivityof
ourworkforceandtheincreasingsophisticationofoureconomybecauseweheldaclearadvantageininnovation
capacity.Americashistoricalstrengthininnovationisbasedonhavingworld-classresearchuniversitiesandnational
laboratoriesandonholdingasubstantialleadinpublicandprivateresearchanddevelopment(R&D)investments.
BusinessRoundtableleadsTappingAmericasPotential(TAP),acoalitionof16nationalbusinessgroupsthatsetagoal
toincreasetheannualnumberofU.S.science,technology,engineeringandmathematicsbachelors-levelgraduatesto
400,000by2015.Reachingthisgoalwillbeverydifficultunlesspoliciesandfundingareinplacetocreatetheright
incentives.
DegreesAwarded
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Year
TAP Goal
STEM degrees awarded to U.S. citizensand permanent residents, 200106
400,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S. STEM Bachelors Degree Production Not on Track To Meet TAP Goal
Source: National Science Foundation
201,055 208,243
220,360
223,148
223,255225,660
EDUCATION,INNOVATIONANDWORKFORCE
Innovation Policy
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InnovationPolicy
BackgroundIronically,afiscallyconstrainedbudgetenvironmentandmoreimmediatelyvisibleshort-termpolicyprioritieshave
ledtheUnitedStatestosubstantiallyunderinvestinnationalinnovationcapacityattheverytimewhensuch
capacityispayingthehighestdividendstotheU.S.economyandtheAmericanpeople.TheUnitedStatesisin
dangerofcedingourleadininnovationtoemergingeconomiesthatarerapidlyinvestinginresearchand
educationtoincreasenationaleconomicperformance.
ThisisterriblyshortsightedbecauseinvestmentsinU.S.innovationcapacitynotonlywillhelpensurelong-term
economicgrowthandarisingstandardoflivingforallAmericansbutalsowilldrivesolutionstomanyofAmericas
mostchallengingproblems.Forexample,addressingglobalclimatechangeandreducingU.S.dependenceon
foreignoilrequireacceleratedtechnologicalinnovationtocreatedramaticallymoreefficientautomobiles,lighting
andappliancesanddramaticallylowercostsforrenewablesourcesofenergy.
Overthepastseveralyears,astrongconsensushasemergedonthefundamentalsofaninnovationpolicyagenda
thatwouldmakeAmericansmoreeconomicallysecureoverthelongterm,ensurehigherwagesandahigher
standardoflivingforsucceedinggenerationsofAmericans,andcreatethetechnologiesthatwillsolvesomeof
Americasgreatestproblems.
Articulatedbyleadersfromthebusiness,scientificandeducationcommunitiesaswellasintheNational
Academiesreport,RisingAbovetheGatheringStorm,thisconsensusagendaincludes:
RenewingAmericascommitmenttoknowledgecreationanddiscoverybysignificantlyincreasingfederalinvestmentsinphysicalsciencesandengineeringresearch,thetypeofresearchmostdirectlycoupledto
technologicalinnovation.
BuildingthemosthighlyeducatedandhighlyskilledworkforceintheworldbysignificantlyincreasingfederalinvestmentsinmathandscienceeducationprogramstoimproveU.S.studentachievementand
recruitandtrainmorequalifiedmathandscienceteachersforAmericasschools.
Ensuringthatcutting-edgeinnovationwillcontinuetobeinventedinAmericabyfosteringanenvironmentthatencouragesprivate-sectorR&Dinvestments.
Significantincreasesformathandscienceeducationprogramsandphysicalsciencesandengineeringresearch
wereauthorizedintheAmericaCOMPETESAct,whichwaspassedwithstrongbipartisansupportandsignedintolawin2007.
So,whatstheproblem?ActiononappropriationsforAmericaCOMPETESActprioritieswasthwartedbecauseof
unrelateddisputesbetweenCongressandtheprioradministrationoverthetotallevelofdomesticdiscretionary
spending.Forthelasttwobudgetcycles,HouseandSenateappropriatorsapprovedAmericaCOMPETESAct
fundingincommittee,butthebillswereneverbroughttothefloorforconsideration.Asaconsequence,real
federalspendingonscienceandengineeringresearchandmathandscienceeducationhasdroppedoverthelast
twoyears.
(continued)
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CEOChair StaffContact
y
Similarly,repeatedattemptstoenactalong-termextensionofthefederalR&Dtaxcredithavefounderedovertheissueofbudgetaryscoring,andthecredithasbeenrepeatedlyextendedforshortperiodsoftimes,greatly
lesseningitseffectivenessasaspurtoincreasedprivate-sectorR&Dinvestments.
Resources
TappingAmericasPotential:TheEducationforInnovationInitiative:GainingMomentum,LosingGround,
July2008,www.businessroundtable.org/sites/default/files/tap_2008_progress.pdf.
TappingAmericasPotential:TheEducationforInnovationInitiative,July2005,www.tap2015.org/about/
TAP_report2.pdf.
ActionRecommended
BusinessRoundtablebelievesthatacoherentnationalinnovationstrategyisaprerequisitefor
sustainedgrowthinhigh-wageemploymentintheUnitedStatesandanever-risingstandardofliving
forU.S.citizens.Asthefirststeptowarddemonstratingalong-termcommitmenttotheessential
investmentsthatmaintainingU.S.innovationleadershiprequires,Congressshouldfundannuallythe
scienceandengineeringresearchandthemathandscienceeducationprogramsauthorizedinthe
AmericaCOMPETESActandpermanentlyextendastrengthenedR&Dtaxcredit.
http://www.businessroundtable.org/sites/default/files/tap_2008_progress.pdfhttp://www.businessroundtable.org/sites/default/files/tap_2008_progress.pdfhttp://www.tap2015.org/about/TAP_report2.pdfhttp://www.tap2015.org/about/TAP_report2.pdfhttp://www.tap2015.org/about/TAP_report2.pdfhttp://www.tap2015.org/about/TAP_report2.pdfhttp://www.tap2015.org/about/TAP_report2.pdfhttp://www.businessroundtable.org/sites/default/files/tap_2008_progress.pdf -
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EDUCATION,INNOVATIONANDWORKFORCE
WorkforceCompetitivenessIntroductionDespitetheeconomicdownturnandrisingunemployment,long-termdemandintheUnitedStatesforeducated
andskilledworkerswillrapidlyexceedthesupply.Tocompeteandsucceedinaninternationalmarketplacefor
talent,U.S.workersandbusinessesneeda21st-centuryapproachtolifelonglearningthatenablesthemto
developandrefreshtheskillsneededforhigh-skilledserviceandmanufacturingjobs.Inaddition,theU.S.economybenefitsfromwelcomingthebestandbrightestfromaroundtheworldtoworkintheUnitedStates,
particularlythosewithadvanceddegreesinscience,technology,engineeringandmathfromU.S.universities.
BusinessRoundtablehaslongbeencommittedtoimprovingtheU.S.educationsystemforindividualsofall
ages.TheRoundtablebelievesthatacompetitiveworkforcestartswithaccesstohigh-qualityearlychildhood
educationandhigh-performingschoolsandextendstorelevantandeffectiveworkforceeducationandtraining
opportunities.
BackgroundOurchangingeconomyposesrecurringchallengesforU.S.workersasnewjobsarecreatedinonceunknownfields
andoldjobsdisappearinoncerock-solidoccupations.Thisjobchurniscausinganxietyforworkersinmany
industriesandcommunities.Thedaysofretiringfromthesamecompanyinwhichanemployeestartedafirstjob
arelonggone.
CurrentworkforceeducationandtrainingpoliciesandprogramsweredesignedtomeetthepastneedsofU.S.workers,buttheynowareoutdatedandneedtoadjusttocurrenteconomicanddemographicrealities.
Americanworkerscanexpecttohave10to12jobsandthreetofivecareers. Thefastest-growingsegmentsoftheU.S.populationincreasinglyarelesseducatedatatimewhenthe
fastest-growingnewjobsrequireeducationbeyondahighschooldiplomaandstronganalyticand
problem-solvingskills.
Whetherjoblossresultsfromincreasingproductivity,technologicalchange,ordomesticorinternationalcompetition,U.S.workersneedaccesstoeducationandtrainingwhileemployedaswellastotransition
tonewjobs.
Unemploymentratesdeclineandwagesincreasewitheachadditionallevelofeducationandtraining.TheUnitedStateshasanimportanteducationassettohelpmeetthisneedcommunitycolleges.
(continued)
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p
Options
OPTION1: PasslegislationtoimproveandstrengthencurrentTradeAdjustmentAssistanceandWorkforceInvestmentActprogramsfordislocatedworkers.
P r o : Givencurrentfiscalrestraints,undertakingamajoroverhaulofworkforcetrainingandassistanceprogramsisunrealistic.
C o n : Differentiatingprogramsbasedonwhyaworkerlostajobnolongermakessense.Tomeetcurrentneedsaswellasfutureexpectations,theworkertrainingsystemmustberedesignedto
makeiteasilyaccessible,flexible,accountableandresponsivetolabormarketchangesand
workerneeds.
OPTION2: InadditiontocontinuouslydevelopingapipelineofAmericantalentandeffectiveworkereducationandtrainingprograms,passlegislationtoreformtheimmigrationpoliciesthatlimit
visasandgreencardsforhighlyeducatedandskilledforeigntalent.
P r o : TheUnitedStateshasbenefitedfromwelcomingthebestandbrightestfromaroundtheworldandcouldlosethistalenttoforeigncompetitors.
C o n : Anychangesinvisaandgreencardavailabilityforhighlyskilledforeigntalentshouldbedoneinthecontextofcomprehensiveimmigrationreform.
(continued)
Source: Bureau of Labor Statistics, Current Population Survey
Education Pays
Doctoral Degree
Professional Degree
Masters Degree
Bachelors Degree
Associate Degree
Some College, No Degree
High School Diploma
Less Than a High SchoolDiploma
1.4% $1,497
$1,427
$1,165
$987
$740
$683
$604
$428
1.3%
1.8%
2.2%
3.0%
3.8%
4.4%
7.1%
Unemployment Rate in 2007 (Percent) Median Weekly Earnings in 2007 (Dollars)
EDUCATION,INNOVATIONANDWORKFORCEWorkforceCompetitiveness
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CEOChair StaffContact
OPTION3: EstablishaNationalCommissiononWorkforceCompetitivenesstoreviewtrainingandadjustmentassistanceprogramstodetermineeffectivenessandrecommendthedesignand
fundingmechanismsforanewapproachthatoffersworkerseasyaccesstoalltraining,assistance
andeducationprograms.
P r o : Theworkofidentifyingthebestwayoverthelongtermtocreate,fundandbuildpoliticalsupportforaportable,flexible,easy-to-usesystemforindividualstoaccesseducation,training
andassistancewouldbenefitfromtherecommendationsofacommissionofwell-regarded
experts.
C o n : Commissionscanbeusedtoprovideexcusesforpostponingdifficultpolicydecisions.
Resources
America21:ANewApproachtothe21stCenturyWorkforce,February2008,www.businessroundtable.org/sites/
default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20
Workforce.pdf.
ProsperingTogether:AmericasCitizens,CommunitiesandCompanies,February2008,
www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdf.
TheUntappedPotentialofCommunityCollegestoAdvanceU.S.Competitiveness,forumonCapitolHill,
May20,2008,www.businessroundtable.org/initiatives/education/workforce_competitiveness.
ActionRecommended
BusinessRoundtablebelievesthattheUnitedStatesneedsbothshort-andlong-termpolicystrategiesto
maintaincurrentandboostfutureworkforcecompetitiveness.WerecommendthatCongressmoveforward
onallthreeoptionstoensureanimble,productiveandcompetitiveworkforceintheUnitedStates.
http://www.businessroundtable.org/sites/default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20Workforce.pdfhttp://www.businessroundtable.org/sites/default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20Workforce.pdfhttp://www.businessroundtable.org/sites/default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20Workforce.pdfhttp://www.businessroundtable.org/sites/default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20Workforce.pdfhttp://www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdfhttp://www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdfhttp://www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdfhttp://www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdfhttp://www.businessroundtable.org/initiatives/education/workforce_competitivenesshttp://www.businessroundtable.org/initiatives/education/workforce_competitivenesshttp://www.businessroundtable.org/initiatives/education/workforce_competitivenesshttp://www.businessroundtable.org/initiatives/education/workforce_competitivenesshttp://www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdfhttp://www.businessroundtable.org/sites/default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20Workforce.pdf -
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InternationalEngagement
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INTERNATIONALENGAGEMENT
TradeandInvestmentIntroductionAnintensedebateisunderwayintheUnitedStatesoverthefutureofU.S.tradeandinvestmentpolicies.Some
wanttocontinuecurrentU.S.policiesofinternationaleconomicengagementwhileotherswouldmaintainthe
fundamentalprinciplesofthosepolicesbutwouldmakethemmoreeffectiveforAmericanworkersandcompanies.
AndstillotherswanttheUnitedStatestoabandoninternationaleconomicengagement.
ContributingtothesenseofurgencyforthenewCongressandadministrationtoresolvethisdebatearethese
inescapablefacts:
Theinternationaleconomyisareality. Americancompaniesandworkershavetobecompetitiveonaglobalscaletosucceed. Ourforeigncompetitorscontinuetopursuepoliciesofinternationaleconomicengagementtobenefit
theircompaniesandworkersatAmericasexpense.
BackgroundAmericancompaniesandworkersfaceunprecedentedcompetitivechallengesintheworldeconomy.Thesechallenges
anduncertaintimesarecreatinganxietyaboutthefutureforAmericancitizens,communitiesandcompanies.To
overcometheseanxietiesandtakeadvantageofopportunitiesintheworldeconomy,wemustdevelopandimplement
newandmoreeffectivedomesticandinternationalpoliciestopromoteAmericancompetitivenessandfairtreatment
forAmericanexportersandinvestorsandtheirworkersnotabandoninternationaleconomicengagement.
InternationaleconomicengagementisthecornerstoneofU.S.competitivenessforthreebasicreasons:
First,theglobaleconomyisareality.Thecurrentfinancialandeconomiccrisesmakethispointsharply. Second,Americancompaniesandworkersfaceunprecedentedglobalcompetition.Ourforeigncompetitors
andtheirgovernmentsareworkingcloselytogethertodevelopandimplementdomesticandinternational
policiestosucceedintheglobaleconomy.Whilewedebatethemeritsofinternationaltradeandinvestment
negotiations,theyaremovingforwardwithnewbilateralandregionaltradeagreementsthatwilldiscriminate
againstAmericanworkersandcompaniesandgivetheircompaniesandworkerscommercialadvantagesin
importantforeignmarkets.
Third,Americancompaniesandworkershavetobeevenmorecompetitiveandonaglobalscaletosucceed.Theyhavetobeabletoexporttheirgoodsandservicestoforeignmarkets,markettheirgoodsandservices
throughforeignoperations,andimportgoodsandservicestoofferthemostcompetitivepricesandbest
qualitytoAmericanconsumers.Thereisnoeither/orinthenewinternationalcompetitivestruggle.
Americanworkersneedprogramstodevelopandmaintaintheskillsneededforhigh-skilledserviceandmanufacturing
jobsthatincreasinglycharacterizetheU.S.economyinthe21stcentury.Andtheyneedprogramstohelpthem
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CEOChair StaffContact
adjustwhentheirlivelihoodsarethreatenedforwhateverreasonwhetheritisduetoincreasingproductivity,technologicalchange,ordomesticorinternationalcompetition.
Americancompaniesneedpoliciestohelpthemcompetewithpowerfulinternationalcompetitorsandadapttheir
domesticandinternationalbusinessoperationstorapidlychangingbusinessenvironments.
ActionRecommended
BusinessRoundtablerecognizesthereisaneedtochangeU.S.internationaltradeandinvestment
policiestomakethemmoreeffectiveforAmericanworkersandcompaniesinthe21stcentury.
Someofthesechangeswillrequirelegislation;otherscanbedevelopedandimplementedbythe
newpresidentinconsultationwiththeCongressandprivatesector.
BusinessRoundtablebelievesthesenewpoliciesinclude:
Rebuildingabipartisanconsensusoninternationaltradeandinvestment,includingnew