Business Roundtable Letters - FullBinder

7/29/2019 Business Roundtable Letters - FullBinder

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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.
http://www.businessroundtable.org/http://www.businessroundtable.org/


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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.


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.


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.


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


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]


CEOChair:WilliamD.Green,ChairmanandCEO,Accenture

StaffContact:SusanTraiman,Director,PublicPolicy,202-872-1260, [email protected]


CEOChair:JamesW.Owens,ChairmanandCEO,CaterpillarInc.

StaffContact:BrigitteSchmidtGwyn,SeniorDirector,CongressionalRelations,202-872-1260,

[email protected]

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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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


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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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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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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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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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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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


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


27/72

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


29/72

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)

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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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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)

EDUCATION,INNOVATIONANDWORKFORCEEducation Reform Legislation


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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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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


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)

EDUCATION,INNOVATIONANDWORKFORCEInnovationPolicy


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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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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)

EDUCATION,INNOVATIONANDWORKFORCEWorkforceCompetitiveness


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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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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

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

(continued)

INTERNATIONALENGAGEMENTTradeandInvestment


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adjustwhentheirlivelihoodsarethreatenedforwhateverreasonwhetheritisduetoincreasingproductivity,technologicalchange,ordomesticorinternationalcompetition.

Americancompaniesneedpoliciestohelpthemcompetewithpowerfulinternationalcompetitorsandadapttheir

domesticandinternationalbusinessoperationstorapidlychangingbusinessenvironments.

ActionRecommended

BusinessRoundtablerecognizesthereisaneedtochangeU.S.internationaltradeandinvestment

policiestomakethemmoreeffectiveforAmericanworkersandcompaniesinthe21stcentury.

Someofthesechangeswillrequirelegislation;otherscanbedevelopedandimplementedbythe

newpresidentinconsultationwiththeCongressandprivatesector.

BusinessRoundtablebelievesthesenewpoliciesinclude:

Rebuildingabipartisanconsensusoninternationaltradeandinvestment,includingnew

Documents

Business Roundtable Letters - FullBinder