Governor Quinn’s budget address recognizes critical problems; fails to provide details

The Illinois Manufacturers’ Association (IMA) commends Governor Patrick Quinn on his February 22nd budget address for recognizing the need for profound reforms in public pensions and Medicaid spending. However, the IMA is also disappointed in the lack of factual details. According to IMA President & CEO, Greg Baise, the governor set the right tone for reforms in pension and social services, but contradicted the tone of his earlier State of the State address encouraging a better environment for employers. “Governor Quinn’s blunt language challenging the General Assembly concerning the pressures our pension and Medicaid system are placing on the state budget was sorely needed,” Baise said. “Unfortunately, failing to provide lawmakers with the critical details of his plan makes it too easy to slough off real reforms.” According to Baise, Governor Quinn should have presented specific ideas to balance the budget and eliminate the backlog of bills, reform pension plans that are $85 billion underfunded, and reduce out-of-control Medicaid spending. Without changes to the state’s fiscal condition, it is extremely unlikely that the massive temporary $7 billion income tax increase will be allowed to sunset in three years.

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A lower dollar would ease the pressure of the unbalanced trade deficit

A new report released February 7th by the Center for Economic and Policy Research (CEPR) demonstrates that a reduction of the value of the dollar would not only correct the large trade deficit in the United States, but would also lead to a boom in the manufacturing sector, potentially creating millions of jobs.

“Any serious discussion of U.S. competitiveness has to begin with the value of the dollar,” said Dean Baker, author of the report and a co-director at CEPR. “This is the single most important factor in determining the relative cost of U.S. goods against goods produced elsewhere.”

“The Necessity of a Lower Dollar and the Route There” (http://www.cepr.net/index.php/publications/reports/the-necessity-of-a-lower-dollar-and-the-route-there) begins by making a simple economic point: a large trade deficit means that a country must either have a large budget deficit, negative private savings, or some combination of the two. As neither of these is considered desirable, a lower trade deficit should be a top policy concern. And a lower-valued dollar is the only plausible mechanism for balancing the trade deficit. The author then shows what sectors of the economy would expand under a scenario in which the United States had a lower trade deficit. Finally, the report highlights ways to lower the dollar.

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Obama budget proposal — Long term UI tax increases with short-term relief in some states and benefit increases

President Obama released his FY 2013 budget proposal on February 13th. Although the proposal is not likely to be adopted by Congress as submitted, it is an indication of the long-term policy of this administration to increase spending on unemployment benefits and increase federal and state unemployment insurance taxes to be paid by employers over the next ten years (above the increases that are already occurring). See page 822 of the detailed description at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/appendix.pdf.

Consistent with the proposal for FY 2012, the proposal would provide short term relief from Title XII interest and FUTA offset credit penalties for states that continue to borrow for 2012 and 2013 but restore the effect of the FUTA 0.2 surtax and require states to enact a minimum state UI tax base of $15,000 for 2015 and thereafter. The net cost of the combination of these changes over ten years is still being reviewed, but it appears to be in the neighborhood of $60 billion.

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United States, Korea set date for entry into force of U.S.-Korea Trade Agreement

Bilateral pact expected to support tens of thousands of U.S. jobs to take effect March 15 — United States Trade Representative Ron Kirk announced that the U.S.-Korea trade agreement will enter into force – that is, take effect – on March 15, 2012. This announcement follows the completion over the President’s Day weekend of work by the United States and Korea to review each other’s laws and regulations related to the implementation of the agreement. The United States has exchanged diplomatic notes with Korea in which each side confirmed that they had completed their applicable legal requirements and procedures for the agreement’s entry into force. “In a few short weeks, the promise of the U.S.-Korea trade agreement – including tens of thousands of export-supported jobs with better wages – will start to come home for American businesses and working families,” said Ambassador Kirk. “President Obama insisted that we get this agreement right by forging a better deal that led to strong bipartisan support in both houses of Congress. Entry into force of this agreement will open up Korea’s $1 trillion economy for America’s workers, businesses, farmers, and ranchers while also strengthening our economic partnership with a key Asia-Pacific ally.”

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Just Say No to Bad SEO

Website and Internet marketing tips from IMA member Weblinx, Inc. — In almost any industry, there are those who lurk on the fringes and create more problems than they solve. They are the roofers who use substandard shingles, the lawyers who literally chase ambulances, and the accountants who get you audited by the IRS over and over. In each case, these folks continue to get work because they know that a certain segment of the population is always looking for a deal that’s “too good to be true.” It’s no different with search engine optimization. You have probably already gotten dozens of junk e-mails from SEO companies promising to give your business website an immediate push on Google and elsewhere. What’s more, they promise to work quickly and for an amazingly low fee.

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Manufacturers applaud Governor’s focus on jobs/business growth

Encourages additional pro-employer programs to rebuild Illinois’ economy — The IMA commends Governor Pat Quinn for focusing on pro-jobs initiatives during his annual State-of-the-State address. According to IMA President and CEO, Greg Baise, the governor’s focus on jobs and exports is the right message at the right time, but can be expanded to further promote economic growth and make Illinois more competitive with neighboring states. “While our economy has improved slightly over the last few months and we have made strides in Workers’ Compensation and Research & Development, there are too many people still out of work and too few companies looking to expand in Illinois,” Baise said. “Developing carefully crafted programs to address further improvements in Workers Compensation, tax incentives and educational reforms would provide the fastest route to economic recovery. It is no longer a question whether the state can afford to do these things—we must do them.”

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Gov. Quinn announces Export Advisory Council during State of the State address

IMA members appointed to lead Council that will help Illinois reach ambitious goal of doubling exports by 2014 — As part of his State of the State address on February 1st, Governor Pat Quinn announced the formation a new council that will help Illinois reach his ambitious goal of doubling the number of state exports by the end of 2014. The Governor’s Export Advisory Council will work with the Governor and other state officials and agencies to provide recommendations aimed at improving Illinois’ standing in the international marketplace. “Illinois is home to world-class goods and services, and we should utilize all of our assets in order to market them around the world,” Governor Quinn said. “Expanding trade opportunities in growth markets like China, Australia, Brazil and India puts Illinois products in the international marketplace and creates jobs here at home.”

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January 2012 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in January for the 30th consecutive month, and the overall economy grew for the 32nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®. Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee, issued the report. “The PMI registered 54.1 percent, an increase of 1 percentage point from December’s seasonally adjusted reading of 53.1 percent, indicating expansion in the manufacturing sector for the 30th consecutive month. The New Orders Index increased 2.8 percentage points from December’s seasonally adjusted reading to 57.6 percent, reflecting the 33rd consecutive month of growth in new orders. Prices of raw materials increased for the first time in the last four months. Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January.”

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The Obama Labor Board and its impact on manufacturers — Recap of recent IMA Breakfast Briefing with Vedder Price Attorney James Spizzo

Significant recent developments bring labor-management relations to the forefront — The Obama Labor Board is attempting a fundamental re-examination of the legal framework for labor-management relations in the United States. Everything from Quickie Elections, Union Organizing Activities, Collective Bargaining, Employee rights within and outside the work place, Management Rights and more are under scrutiny. Manufacturers and all private sector employers are being impacted, union and non-union workplaces alike. At the IMA’s January 18th Breakfast Briefing in Oak Brook, Vedder Price Attorney James Spizzo discussed the evolving new direction of the National Labor Relations Board and its Obama majority.

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The Conference Board Consumer Confidence Index® Decreases Slightly

The Conference Board Consumer Confidence Index®, which had increased in December, retreated in January. The Index now stands at 61.1 (1985=100), down from 64.8 in December. The Present Situation Index declined to 38.4 from 46.5. The Expectations Index edged down to 76.2 from 77.0 in December. The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 19. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer Confidence retreated in January, after large back-to-back gains in the final two months of 2011. Consumers’ assessment of current business and labor market conditions turned more downbeat and is back to November 2011 levels. Regarding the short-term outlook, consumers are more upbeat about employment, but less optimistic about business conditions and their income prospects. Recent increases in gasoline prices may have consumers feeling a little less confident this month.”

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