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1717 Rhode Island Avenue, NW
Suite 800
Washington, DC 20036
Telephone 202.872.1260
Facsimile 202.466.3509
Website businessroundtable.org
Effective Leadership on the World StageCEO Memos to Congress
Effective Leadership on the Wo
rld S
tage
CEO M
emos to Congress
�
Effective�Leadership�on�the�World�Stage�CEO�Memos�to�Congress�
�
Contents�
About�Business�Roundtable�Maintaining�U.S.�Leadership�in�the�World�Economy�U.S.�Corporations:�Drivers�of�Economic�Success�Business�Roundtable�Initiatives�Initiative�CEO�Chairs�and�Staff�Contacts�Endnotes�
Consumer�Health�and�Retirement�
Employee�Retirement�Income�Security�Act�(ERISA)�Health�Care�Reform�Legislation�Health�Information�Technology�Medical�Liability�Reform�Pensions�
Corporate�Leadership�
Corporate�Governance�
Education,�Innovation�and�Workforce�
Education�Reform�Legislation�Innovation�Policy�Workforce�Competitiveness�
International�Engagement�
Trade�and�Investment��U.S.�Corporate�Tax�Rate��Taxation�of�Foreign�Earnings�of�U.S.�Corporations�Expiring�Business�Tax�Provisions�Individual�Taxes�on�Dividends�and�Capital�Gains��Budget�Deficits�and�Spending�Controls�
Sustainable�Growth�
Building�Efficiency�Building�a�“Greener”�Energy�Infrastructure�Climate�Change��Domestic�Energy�Supply�Electric�Grid�Modernization�Wind�and�Solar�
�
� 1
About�Business�Roundtable�
Business�Roundtable�(www.businessroundtable.org)�is�an�association�of�chief�executive�officers�(CEOs)�of�leading�
U.S.�companies.�Business�Roundtable�members�include�more�than�160�corporations�with�$5�trillion�in�annual�
revenues.�Combined,�Business�Roundtable�members:�
• Employ�nearly�10�million�people�in�stable�jobs�and�provide�health�care�for�them�and�nearly�35�million�
family�members;�
• Maintain�U.S.�technology�leadership�by�investing�$90�billion�in�research�and�development�(R&D)�every�
year�—�nearly�half�the�total�private�R&D�spending�in�the�United�States;�
• Contribute�$7�billion�to�charity�each�year,�nearly�60�percent�of�total�corporate�giving;�
• Comprise�nearly�a�third�of�the�total�value�of�the�U.S.�stock�markets;�and�
• Generate�$114�billion�in�dividends�to�shareholders�(in�2006)�and�pay�$179�billion�in�corporate�taxes�—�
more�than�40�percent�of�all�corporate�income�taxes�paid�to�the�federal�government.�
Business�Roundtable�unites�these�top�CEOs,�amplifying�diverse�business�perspectives�and�voices�on�solutions�to�
some�of�the�world’s�most�difficult�challenges.�Combining�those�insights�with�policy�know-how,�Business�
Roundtable�innovates�and�advocates�to�help�expand�economic�opportunity�for�all�Americans.�
2
Maintaining�U.S.�Leadership�in�the�World�Economy�
The�U.S.�economy�today�drives�world�growth,�innovation�and�prosperity.�And�as�recent�events�reinforce,�the�
health�of�the�U.S.�economy�is�inextricably�linked�to�the�economic�health�of�the�rest�of�the�world.�If�America�is�not�
doing�well,�the�rest�of�the�world�is�affected.��
America�can�and�must�maintain�a�leadership�role�in�the�world�economy.�In�an�interconnected�and�increasingly�
competitive�global�environment,�the�members�of�Business�Roundtable�believe�that�it�is�now�more�important�than�
ever�to�commit�ourselves�to�the�core�values�and�policies�that�have�traditionally�made�America’s�economy�strong:��
• Sound�fiscal�policies�that�keep�us�on�a�path�of�growth�and�prosperity,�including�a�regulatory�and�tax�
structure�that�complements�growth;��
• Open�and�competitive�markets�built�upon�modern�and�efficient�infrastructure�and�robust�and�transparent�
financial�markets;�
• Innovation�driven�by�our�entrepreneurial�culture,�vigorous�investment�in�R&D�and�a�world-class�education�
system;�
• A�highly�productive,�skilled�workforce�with�access�to�the�highest-quality�health�care�system�and�lifelong�
learning;�and�
• A�commitment�to�environmental�stewardship�combined�with�the�development�of�sustainable,�secure�and�
reliable�energy�supplies.�
We�recognize�that�we�also�must�continually�re-evaluate�our�policies�to�ensure�that�they�reflect�emerging�21st�
century�issues.��
The�CEOs�of�Business�Roundtable�are�committed�to�preserving�U.S.�economic�leadership�and�to�the�people�who�
keep�our�economy�modern,�competitive�and�thriving�—�the�U.S.�workforce.�
� 3
U.S.�Corporations:�Drivers�of�Economic�Success�
Providing�a�Foundation�of�Stability,�Growth�and�Prosperity�The�more�than�160�corporations�that�make�up�Business�Roundtable�represent�the�capstone�of�the�American�economy�
and�the�cornerstones�of�the�communities�in�which�we�operate.�We�employ�millions�of�workers�in�stable,�well-paying�
jobs,�providing�health�care�and�other�benefits�to�our�employees,�retirees�and�their�family�members;�contributing�time�
and�resources�to�philanthropic�causes;�and�keeping�America�growing,�prosperous�and�economically�secure.��
Serving�as�a�Historic�and�Vital�Repository�of�Middle�Class�Savings�
Despite�the�current�economic�crisis,�historic�growth�trends�of�America’s�corporations�have�made�corporate�equities�an�
ever-growing�part�of�the�savings�and�retirement�accounts�of�middle�class�Americans.�Half�of�all�U.S.�households�own�
corporate�equities,�both�individually�and�in�pension�and�other�retirement�funds.1�A�typical�investor�is�middle�class�with�
a�household�income�of�$65,000.2�These�households�must�be�able�to�trust�in�the�health�and�security�of�their�assets.��
Building�the�Infrastructure�of�the�21st�Century�Today,�America’s�corporations�are�building�the�infrastructure�of�the�21st�century�economy,�enabling�the�United�States�to�
maintain�its�economic�leadership�in�global�markets.�Every�year,�America’s�corporations�make�investments�that�have�been�
compared�to�the�building�of�the�transcontinental�railroad�in�the�19th�century,�which�united�our�nation�and�enabled�the�
United�States�to�become�a�world�power.�Who�else�but�large�corporations�could�invest�the�hundreds�of�billions�of�dollars�
it�costs�to�lay�fiber-optic�cable�and�raise�cell�towers�across�the�American�continent,�build�new�jetliners�to�compete�
against�foreign�competition,�and�bring�to�market�new�life-saving�drugs?�
�
� America’s�corporations�lead�the�world�in�innovations,�products�and�the�adoption�of�new�technologies.�
Just�a�few�examples�from�Business�Roundtable�members�include:�
• Chevron’s�5-mile-long,�36-inch-wide�drill�that�pushes�technology�to�the�limit�to�reach�new�sources�of�oil�7,000�feet�below�the�sea�and�20,000�feet�below�the�sea�floor.3�
• Dupont’s�corn�seeds�that�protect�themselves�from�pests�and�resist�herbicides�to�boost�farmers’�production�and�improve�crop�quality.4�
• GE’s�desalination�platforms�that�reclaim�more�than�2�billion�gallons�of�water�a�day�for�a�thirsty�world.5�
• Siemens’�7,000�wind�turbines�that�produce�some�7,000�megawatts�worldwide.6�The�Biglow�Canyon�Wind�Farm�in�Oregon�provides�141�turbines�that�produce�23�megawatts�each�with�a�total�output�of�324�megawatts.�This�is�equivalent�to�a�reduction�in�carbon�dioxide�emissions�of�approximately�500,000�tons�per�year.�
• Texas�Instruments’�visual�prosthetic�implant�that�gives�a�semblance�of�genuine�vision�to�the�blind.7�
4
In�every�sector�of�our�economy,�America’s�corporations�are�leading�with�innovation,�investment�and�the�adoption�of�new�
technologies.�It�is�in�large�part�due�to�this�contribution�that�America�today�attracts�more�foreign�investment�than�any�
other�country,�maintains�the�world’s�leading�share�in�manufacturing�output�and�continues�to�enjoy�one�of�the�highest�
standards�of�living�in�the�world.8��
Seizing�Opportunities�Provided�by�World�Growth�
According�to�a�study�by�Goldman�Sachs,�the�world’s�middle�class�will�expand�by�1�billion�people�by�2020�9�and�
by�2�billion�by�2030.10�
The�advent�of�globalization�has�coincided�with�and�contributed�to�a�period�of�sustained�growth�in�the�world�
economy�that�has�helped�strengthen�growth�at�home�and�is�creating�unprecedented�opportunities�for�American�
business�and�workforce.�This�rise�in�global�prosperity�created�a�demand�for�American�products�and�services�in�a�
world�in�which�American�corporate�brands�still�overwhelmingly�dominate.�Seven�of�the�top�10�global�brands,�14�of�
the�top�20�and�52�of�the�top�100�are�owned�by�U.S.�companies.11��
Meeting�the�Challenges�of�a�Changing�World�
America�today�faces�real�challenges.�The�subprime�lending�crisis�and�ensuing�turmoil�on�Wall�Street�and�Main�
Street�have�revealed�how�deeply�interconnected�we�all�are�and�have�tested�our�economy�as�it�has�only�rarely�been�
tested�before.�Business�Roundtable�believes�that�one�of�the�greatest�strengths�of�the�American�economy�is�its�
resilience�in�the�face�of�such�shocks�and�that�we�will�return�to�our�historic�path�of�strong�growth�and�rising�
prosperity.�American�industry�will�be�a�vital�partner�in�that�recovery.�
Even�so,�America�will�face�the�ongoing�challenge�of�an�increasingly�open,�global�economy.�There�is�no�question�
that�globalization�is�creating�massive�structural�shifts�that�are�having�a�profound�impact�on�the�American�worker�
and�American�enterprise�in�general.�But�as�the�economist�Robert�Samuelson�has�said,�“It�is�no�more�possible�to�
undo�globalization�than�it�was�possible,�in�the�19th�century,�to�undo�the�Industrial�Revolution.”12�Competing�on�a�
global�scale�is�not�a�choice,�it�is�a�fact�of�life�in�the�21st�century,�and�we�believe�that�American�enterprise�is�up�to�
the�challenge.�The�prosperity�of�the�United�States�is�fundamentally�interconnected�with�the�global�economy,�
which�is�why�policies�—�from�taxes�to�regulation,�trade,�energy�and�education�—�must�be�structured�to�
complement�growth�in�the�United�States�and�around�the�world.�
�������������������
� 5
Business�Roundtable�Initiatives�
To�address�the�challenges�America�is�facing�today,�Business�Roundtable�has�embarked�on�five�interconnected,�
mutually�supporting�initiatives�that�are�devoted�to�getting�the�fundamentals�right�by�integrating�domestic�and�
international�policy�to�create�opportunities�for�workers�and�for�strengthening�American�business.�
Consumer�Health�and�Retirement�
Health�care�delivery�needs�a�new�business�model:�one�that�puts�customers�in�the�center�and�uses�the�power�of�
the�market�to�lower�costs,�improve�quality,�create�more�consumer�choice�and�expand�accessibility.13�
The�rising�cost�of�health�care�is�one�of�the�prime�culprits�eroding�the�income�gains�of�the�American�middle�class.�
Health�care�also�has�become�the�principal�cost�driver�for�American�business,�creating�an�ever-growing�“health�care�
premium”�on�American�products�that�puts�us�at�a�disadvantage�in�global�markets.�Business�Roundtable�companies�
play�a�crucial�role�in�the�health�care�debate,�covering�nearly�35�million�people�—�one-quarter�of�all�Americans�who�
have�private�employer-based�or�group�health�insurance�coverage.��
We�believe�that�bipartisan�action�is�needed�to�make�the�health�care�system�more�efficient�and�transparent,�deliver�
greater�value�to�consumers,�and�provide�more�marketplace�options�for�employers�and�individuals�to�obtain�
coverage.�At�the�same�time,�we�must�maintain�the�innovation�and�expertise�that�make�American�medical�care�the�
best�in�the�world.�Long-term�financial�security�also�must�be�ensured�for�all�Americans.�Workers�should�be�provided�
with�financial�incentives�to�save�for�retirement,�families�should�have�access�to�tools�to�manage�their�finances�and�
Social�Security�must�be�strengthened�without�burdening�future�generations.�
Business�Roundtable�has�joined�with�AARP,�the�Service�Employees�International�Union�and�the�National�
Federation�of�Independent�Business�to�form�Divided�We�Fai l .�This�strategic�partnership�aims�to�create�an�
environment�that�will�foster�the�political�will�needed�to�encourage�policymakers�to�find�common�sense,�centrist�
solutions�to�health�care�and�long-term�financial�security�issues.�
Sustainable�Growth�
Energy�represents�one�of�the�greatest�cost�drivers�of�American�business�today,�and�dependence�on�foreign�sources�
of�oil�makes�our�economic�well-being�increasingly�vulnerable�to�world�events�outside�our�control.�At�the�same�
time,�environmental�challenges�—�including�threats�to�global�climate�change�and�water�quality�—�are�demanding�
ever�more�urgent�attention.�
America’s�energy�supplies�must�be�more�diverse�and�more�domestic.�All�options�should�be�on�the�table.�Demand�
will�only�grow,�and�we�must�be�able�to�answer�it.�That’s�why�Business�Roundtable�promotes�an�aggressive,�
comprehensive�response�on�the�part�of�both�the�public�and�private�sectors,�drawing�on�the�best�technology�to�
safeguard�the�environment�while�promoting�alternative�fuels,�energy�efficiency�and�the�abundant�domestic�energy�
supplies�necessary�to�keep�the�U.S.�economy�thriving�and�U.S.�business�competitive�in�the�global�marketplace.�
Meanwhile,�we�must�address�the�problem�of�global�warming.�Business�Roundtable�supports�collective�actions�that�
will�lead�to�the�reduction�of�greenhouse�gas�emissions�on�a�global�basis�with�the�goal�of�slowing�increases�in�
greenhouse�gas�concentrations�in�the�atmosphere�and�ultimately�stabilizing�them�at�levels�that�will�address�the�
risks�of�climate�change.��
6
If�climate�legislation�is�to�be�politically�sustainable,�it�also�must�be�economically�sustainable,�reducing�our�nation’s�
carbon�footprint�in�such�a�way�that�it�does�not�put�American�industry�and�jobs�at�a�disadvantage�in�the�global�
marketplace.�It�also�is�crucial�that�we�minimize�compliance�costs�while�maximizing�the�certainty�and�predictability�
on�which�rational�business�planning�and�investment�depend.�
Education,�Innovation�and�Workforce�
If�we�take�our�scientific�and�technological�supremacy�for�granted,�we�risk�losing�it.�What�we�are�lacking�at�the�
moment�is�not�so�much�the�wherewithal�to�meet�the�challenge,�but�the�will.14�
In�the�knowledge-based�economy�of�the�21st�century,�the�United�States�needs�a�policy�agenda�that�focuses�on�
maintaining�its�place�as�the�world’s�pre-eminent�leader�in�science,�technology�and�innovation.�We�believe�that�the�
United�States�cannot�and�will�not�thrive�without�a�well-educated,�well-trained�workforce.�That�is�why�Business�
Roundtable�is�promoting�education,�innovation�and�workforce�policies�to�develop�the�U.S.�talent�pipeline.��
As�other�countries�have�improved�their�education�systems,�the�U.S.�high�school�graduation�rate�has�fallen�from�
first�to�21st,�and�our�college�attainment�rate�has�fallen�from�second�to�14th�among�industrialized�countries.�The�
problem�is�not�that�our�schools�are�getting�worse;�it�is�that�our�competitors�are�getting�better�at�a�faster�pace.�
Whether�the�measures�are�student�achievement,�patents,�investments�in�basic�scientific�research,�or�degrees�in�
engineering�and�computer�science,�the�United�States�risks�losing�competitive�advantage.��
Our�dynamic�economy�necessitates�a�new�lifelong�approach�to�learning�that�prepares�U.S.�students�and�workers�
with�the�skills�and�knowledge�they�need�to�succeed.�In�addition,�policies�to�assist�Americans�who�experience�job�
dislocation,�increase�and�sustain�investment�in�the�basic�sciences,�welcome�the�best�and�brightest�from�abroad,�
and�promote�innovation�and�risk-taking�at�home�will�all�be�vital�to�keeping�America’s�competitive�edge.�
International�Engagement�
The�success�of�American�companies�and�workers�in�the�21st�century�global�economy�will�depend�on�their�ability�to�
compete�on�a�global�scale.�For�many�Business�Roundtable�companies,�the�United�States�is�still�our�largest�market,�
but�international�markets�are�growing�faster�and�have�more�new�customers.�To�succeed�in�this�new�international�
competitive�environment,�we�have�to�be�able�to�export�goods�and�services�to�foreign�customers�from�our�domestic�
facilities,�reach�those�customers�through�our�international�operations,�and�also�import�products�and�services�to�
offer�the�best�prices�to�American�consumers.�There�is�no�either/or�in�the�global�competitive�struggle.��
To�ensure�we�are�able�to�meet�the�challenges�of�the�global�economy,�Business�Roundtable�supports�common�
sense,�pro-U.S.�tax�and�international�trade�and�investment�policies�that�put�American�companies�and�workers�on�a�
level�playing�field�with�their�foreign�competitors.��
We�support�the�reduction�of�high�corporate�taxes�that�put�us�at�a�competitive�disadvantage�with�other�countries�
and�tax�treatment�that�levels�the�playing�field.�We�also�support�international�trade�and�investment�agreements�
that�provide�fair�treatment�for�American�companies�and�workers�by�opening�markets�for�our�products�and�services;�
preventing�discriminatory�regulatory�barriers�and�intellectual�property�abuses;�and�promoting�best�corporate,�labor�
and�environmental�practices.��
�
� 7
Corporate�Leadership�
Good�corporate�governance�is�essential�to�promoting�confidence�in�the�American�marketplace.�The�success�of�
American�corporations�is�based�on�trust�—�a�trust�that�can�come�only�through�transparency�of�operations;�
adherence�to�the�highest�ethical�standards;�and�a�track�record�of�behaving�responsibly�with�employees,�
shareholders�and�the�communities�where�they�operate.�
In�light�of�the�recent�economic�crisis,�Business�Roundtable�supports�regulatory�reform�for�the�financial�services�
industry.�Reform�efforts�should�focus�on�more�effective�and�modern�government�oversight�of�financial�institutions�
and�provide�better�disclosures�on�risk-taking.�Corporate�governance�reforms�should�focus�on�evolving�principles�
and�best�practices�without�being�prescriptive�so�that�individual�companies�of�all�sectors�of�the�economy�have�the�
flexibility�to�continue�producing�long-term�shareholder�value.�
As�part�of�our�commitment�to�ethical�leadership,�Business�Roundtable�has�established�two�key�programs:�
• Institute�for�Corporate�Ethics,�which�draws�on�the�best�thinking�in�business�and�academia�and�seeks�
to�advance�ethical�decisionmaking�in�everyday�business�affairs.�
• Partnership�for�Disaster�Response,�which�builds�on�the�recognition�that�American�corporations�often�
are�the�first�on�the�ground�in�responding�to�local�disasters.�Business�Roundtable�has�partnered�with�the�
American�Red�Cross�to�help�the�business�community�and�nonprofit�sectors�strengthen�the�nation’s�disaster�
response�system.�
Building�the�Framework�for�Continued�Prosperity�
These�five�initiatives�address�the�fundamentals�of�economic�growth�and�what�it�will�take�to�keep�our�living�
standards�on�the�rise�in�an�age�of�global�competition�and�economic�challenges.�While�each�is�important�in�itself,�
they�are�all�interconnected,�and�each�is�vital�to�the�success�of�the�others.��
A�thriving�21st�century�economy�will�depend�on�new,�innovative�ideas.�Those�in�turn�will�require�an�educated,�
knowledge-empowered�workforce.�That�workforce�must�have�the�resources�to�bring�those�ideas�to�fruition.�And�all�
of�this�must�take�place�in�a�climate�of�openness�and�personal�and�institutional�responsibility.�
America�has�always�been�at�its�best�when�faced�with�daunting�challenges.�Today,�health�care,�the�recession�and�
energy�security�are�among�those�at�the�top�of�the�list.�And�there�are�others.�We�know�that�we�can�meet�those�
challenges�because�America�has�faced�even�more�daunting�challenges�in�the�past�and�has�come�out�of�the�
experience�stronger�while�still�maintaining�the�freedoms�that�make�our�nation�not�just�a�leader�in�prosperity�but�
also�a�leader�in�hope�to�all�the�world.�
8
�Initiative�CEO�Chairs�and�Staff�Contacts�
Consumer�Health�and�Retirement�
CEO�Chair:�Ivan�G.�Seidenberg,�Chairman�and�CEO,�Verizon�Communications�
Staff�Contact:�Maria�Ghazal,�Director,�Public�Policy,�202-872-1260,�[email protected]�
�
Corporate�Leadership�
CEO�Chair:�Anne�M.�Mulcahy,�Chairman�and�CEO,�Xerox�Corporation�
Staff�Contact:�Thomas�J.�Lehner,�Director,�Public�Policy,�202-872-1260,�[email protected]�
�
Education,�Innovation�and�Workforce�
CEO�Chair:�William�D.�Green,�Chairman�and�CEO,�Accenture�
Staff�Contact:�Susan�Traiman,�Director,�Public�Policy,�202-872-1260,�[email protected]�
�
International�Engagement�
CEO�Chair:�James�W.�Owens,�Chairman�and�CEO,�Caterpillar�Inc.�
Staff�Contact:�Brigitte�Schmidt�Gwyn,�Senior�Director,�Congressional�Relations,�202-872-1260,�
�
Sustainable�Growth�
CEO�Chair:�Michael�G.�Morris,�Chairman,�President�and�CEO,�American�Electric�Power�Company,�Inc.�
Staff�Contact:�Marian�Hopkins,�Senior�Director,�Public�Policy,�202-872-1260,�[email protected]�
�
Business�Roundtable�
President:�John�J.�Castellani,�202-872-1260�
Executive�Director:�Larry�D.�Burton,�202-872-1260�
Executive�Director,�External�Relations:�Johanna�Schneider,�202-872-1260�
� 9
�Endnotes�
1.�Security�Industry�and�Financial�Markets�Association,�“U.S.�Household�Ownership�of�Equities�in�1999�and�2005,”�SIFMA�Fact�Book�2008,�p.�67.�
2.�Security�Industry�and�Financial�Markets�Association,�Equity�Ownership�in�America,�2005,�p.�5,�http://archives2.sifma.org/research/pdf/EquityOwnership05.pdf.�
3.�www.chevron.com.�
4.�www.dupont.com.�
5.�Business�Roundtable,�“SEE”ing�Change:�2008�Progress�Report.�
6.�Ibid.�
7.�www.ti.com.�
8.�Council�on�Competitiveness,�Competitiveness�Index:�Where�America�Stands,�www.compete.org/publications/detail/357/competitiveness-index-where-america-stands/.�
9.�William�J.�Amelia,�“Interconnected�We�Prosper,”�International�Herald�Tribune,�June�25,�2008.��
10.�Robert�Samuelson,�“A�Baffling�Global�Economy,”�Washington�Post,�July�16,�2008.�www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.html.�
11.�“The�Top�100�Brands,”�Business�Week,�September�29,�2008.�
12.�Robert�Samuelson,�“A�Baffling�Global�Economy,”�Washington�Post,�July�16,�2008.�www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502428.html.�
13.�Ivan�G.�Seidenberg,�“America’s�Health�Care�at�Risk:�Finding�a�Cure,”�Our�Common�Health�Care�Challenge:�Finding�Solutions�that�Work�for�All�Americans,�September�18,�2008.�
14.�Tapping�America’s�Potential:�The�Education�for�Innovation�Initiative,�July�2005,�p.�14,�www.businessroundtable.org/node/3719.�
�
�
Consum
er Health
and Retirem
ent
1
�CONSUMER�HEALTH�AND�RETIREMENT�
Employee�Retirement�Income�Security�Act�(ERISA)�
Introduction�
Most�Americans�—�a�total�of�177�million�—�obtain�health�insurance�coverage�through�their�employers.�
Approximately�133�million�are�covered�under�plans�regulated�through�a�nationally�uniform�framework�established�
by�the�1974�Employee�Retirement�Income�Security�Act�(ERISA).�This�law�has�fiduciary�requirements,�administrative�
requirements�and�remedies.�ERISA�provides�the�legal�authority�that�permits�employers�to�manage�health�and�
retirement�benefits�for�employees�in�locations�across�the�country�without�50�states�imposing�separate�
requirements.�
Background�All�employers�that�offer�health�and�retirement�benefits�(except�federal�and�state�governments�and�certain�religious�
organizations)�are�governed�by�ERISA.�The�law�was�enacted�in�1974�to�create�uniform�federal�standards�for�
employer-sponsored�benefit�plans,�including�both�health�and�retirement�plans,�and�pre-empts�the�application��
of�varying�rules�under�state�laws�that�“relate�to”�these�employer-sponsored�plans.�
Options�OPTION�1 : � Preserve�ERISA.�Congress�and�the�president�should�preserve�ERISA�without�changes.�
Pro:�Voluntary�employer-sponsored�health�benefits�are�preserved.�Employees�continue�to�obtain�
health�care�coverage�through�the�established�and�familiar�system�with�traditional�risk�pools.�
Continuation�of�coverage�is�ensured�for�patients�with�pre-existing�conditions.�Incentives�are�
maintained�for�businesses�to�participate�in�insurance�programs�for�the�people�who�work�for�them.�
Business�owners�and�managers�are�reassured�that�the�business�regulatory�climate�will�not�change�
in�this�respect�as�they�plan�in�midst�of�current�economic�difficulties.��
Con:�States�would�be�forced�to�abandon�insurance-related�tax�initiatives�on�businesses�to�fund�
expanded�health�care�coverage�for�their�residents.�States�would�not,�however,�have�to�abandon�
numerous�other�health�reform�initiatives�to�help�expand�health�coverage,�lower�costs�and�improve�
health�care�quality.�These�include�subsidizing�health�coverage�for�low-income�individuals�and�
families,�establishing�wellness�programs,�reforming�medical�liability�laws,�or�imposing�an�individual�
mandate�to�obtain�coverage.�
OPTION�2: � Change,�erode�or�eliminate�ERISA.��
Pro:�States�could�enact�broader�reforms,�use�employers�as�a�source�of�funding�and�covered�lives,�
and�spread�the�“risk”�for�state�health�reform�efforts�in�a�larger�risk�pool.��
(continued)�
2
�CONSUMER�HEALTH�AND�RETIREMENT�
Employee�Retirement�Income�Security�Act�(ERISA)�
CEO�Chair�
Ivan�G.�Seidenberg��
Chairman�and�CEO�
Verizon�Communications�
�
Staff�Contact�
Maria�Ghazal��
Business�Roundtable�
202-872-1260�
Con:�States�already�have�the�authority�to�adopt�innovative�programs�to�expand�health�insurance�
coverage�for�all�without�modifications�to�ERISA.�Without�ERISA,�the�decline�in�employer-
sponsored�coverage�would�be�significant�and�would�add�to�the�uninsured�and�other�problems��
in�our�health�care�system.�ERISA�is�part�of�the�solution.�It�makes�coverage�more�affordable�for�
employers�to�sponsor,�and�employers�bring�innovation�and�significant�efforts�to�improve�quality�
and�efficiency�to�our�nation’s�health�care�system.��
�
�Resources�Business�Roundtable�Health�Care�Reform�Principles,�June�2007,�www.businessroundtable.org/sites/default/files/�
Business_Roundtable_Principles_for_Reform_06062007.pdf.�
Health�Care�Reform�in�America�—�A�Business�Roundtable�Plan,�September�2008,�www.businessroundtable.org/�
sites/default/files/Health_Care_Reform_Plan.pdf.�
National�Coalition�on�Benefits,�www.coalitiononbenefits.org.��
��Action�Recommended�� Business�Roundtable�urges�Congress�to�preserve�ERISA�so�there�is�no�disruption�to�the�current�
employer-based�health�care�system.�ERISA�provides�the�necessary�federal�framework�that�enables�
employers�to�provide�health�and�retirement�benefits�to�American�workers�and�their�families.�
� ERISA�is�critical�to�maintaining�a�voluntary�employer-sponsored�health�benefits�system,�which�Business�
Roundtable�will�continue�to�support.��
1
�CONSUMER�HEALTH�AND�RETIREMENT�
Health�Care�Reform�Legislation�
Introduction�
When�it�comes�to�scientific�advances,�medical�technology,�and�the�quality�of�doctors�and�medical�institutions,�
America’s�health�care�system�is�arguably�the�best�in�the�world.�However,�rising�costs�mean�that�those�who�have�
coverage�are�paying�more�and�getting�less�value�in�return.�Americans�with�employer-provided�coverage�worry��
that�they�won’t�be�able�to�keep�their�health�insurance�if�they�switch�jobs,�retire�early�or�start�a�new�business.�In�
addition,�more�than�45�million�Americans�lack�health�insurance�altogether.��
Efforts�to�reform�our�health�care�system�offer�significant�opportunities�to�drive�down�costs,�drive�up�quality��
and�improve�access�to�health�care�for�all�Americans.�Promising�reforms�include�measures�to�use�the�power�of�
information�technology�to�liberate�doctors�from�today’s�pen-and-paper�system�and�empower�patients�to�take�a�
more�active�role�in�their�health�care.�Appropriate�health�insurance�market�reforms�could�break�down�barriers�to�
innovation,�promote�competition�among�health�insurers�and�expand�consumer�choice.�
Background�In�2007,�total�health�care�spending�in�the�United�States�reached�$2.3�trillion�—�an�increase�of�6.9�percent�over�the�
previous�year�and�more�than�twice�the�rate�of�inflation.�The�United�States�currently�spends�16�percent�of�gross�
domestic�product�(GDP)�on�health�care�—�more�than�four�times�the�amount�spent�on�national�defense�—�compared�
to�10.7�percent�in�Germany,�9.7�percent�in�Canada�and�9.5�percent�in�France.�Recent�federal�government�reports�
estimate�health�care�spending�could�rise�to�$4.3�trillion�by�2017�and�consume�nearly�20�percent�of�GDP.��
Health�care�costs�represent�the�fastest-growing�cost�for�American�businesses,�hindering�job�creation,�hurting�our�
ability�to�compete�in�global�markets�and�straining�the�household�incomes�of�many�Americans.�For�five�consecutive�
years,�Business�Roundtable�members�have�cited�health�care�costs�as�a�top�cost�pressure.��
There�are�many�factors�contributing�to�rising�health�care�costs.�Today’s�health�care�system�fails�to�make�use�of�
efficiency-enhancing�information�technology.�Health�care�consumers�find�it�difficult�to�obtain�reliable�information�
on�the�cost�and�effectiveness�of�care.�Our�health�care�payment�structure�rewards�volume�over�quality,�which�skews�
incentives�and�drives�up�prices.��
�
��Action�Recommended�� The�complex�issues�within�our�health�care�system�should�be�addressed�through�a�combination�of�private�
market�reforms�and�changes�in�government�programs.�Public�policy�should�be�aimed�at�creating�a�
transformational�change�in�the�system�to�ensure�that�all�Americans�have�access�to�affordable,�quality�
health�care.��
(continued)�
2
�CONSUMER�HEALTH�AND�RETIREMENT�
Health�Care�Reform�Legislation�
CEO�Chair�
Ivan�G.�Seidenberg��
Chairman�and�CEO�
Verizon�Communications�
�
Staff�Contact�
Maria�Ghazal��
Business�Roundtable�
202-872-1260�
�
�Resources�Health�Care�Reform�in�America�—�A�Business�Roundtable�Plan,�September�2008,�www.businessroundtable.org/�
sites/default/files/Health_Care_Reform_Plan.pdf.�
Business�Roundtable�Health�Care�Principles,�June�2007,�www.businessroundtable.org/sites/default/files/�
Business_Roundtable_Principles_for_Reform_06062007.pdf.�
� As�leaders�of�companies�that�provide�health�care�coverage�to�nearly�35�million�Americans,�Business�
Roundtable�members�strongly�support�policy�reforms�that�would�make�our�health�care�system�more�
efficient�and�transparent,�deliver�greater�value�to�consumers,�and�provide�more�marketplace�options�
for�employers�and�individuals�to�obtain�coverage.�Our�proposal�builds�on�the�employer-based�health�
insurance�system�and�seeks�to�improve�quality�of�care�while�expanding�access�for�all�Americans.�
� Business�Roundtable’s�health�care�reform�plan�has�four�pillars:�
• � Creating�greater�consumer�value�in�the�health�care�marketplace�by�using�health�
information�technology�and�empowering�consumers�with�more�information�about�quality�
health�care.�
• � Providing�more�affordable�health�insurance�options�for�all�Americans�by�creating�an�
open,�all-inclusive�private�market�for�health�insurance,�replacing�today’s�highly�fragmented,�
state-by-state�market�with�multistate�markets.�To�ensure�insurance�plans�are�solvent�and�
meet�certain�minimum�requirements,�individual�states�should�continue�to�act�as�the�primary�
regulators.�Broader,�more�competitive�markets�will�create�more�choices�for�more�health�care�
consumers.�
• � Engaging�all�Americans�in�taking�an�active�role�in�their�health�care.�First,�place�an�
obligation�on�all�Americans�to�obtain�health�insurance�either�through�their�employer�or�
through�the�private�market.�Second,�encourage�all�Americans�to�participate�in�employer�or�
community-based�prevention,�wellness�and�chronic�care�programs.��
• � Offering�health�coverage�and�assistance�to�low-income,�uninsured�Americans�to�
create�a�stable�and�secure�public�safety�net.�This�assistance�would�be�financed�from�the�cost�
savings�and�efficiencies�generated�by�a�more�competitive�and�value-driven�health�care�
system.��
� Today,�our�health�care�system�leaves�major�consumer�needs�unmet,�costs�unchecked�and�basic�
practices�untouched�by�the�productivity�revolution�that�has�transformed�every�other�sector�of��
our�economy.�Business�Roundtable’s�health�care�reform�plan�will�strengthen�coverage�for�the��
177�million�Americans�who�receive�it�through�their�employers,�while�making�health�care�more�
accessible�and�more�affordable�for�everyone.
1
�CONSUMER�HEALTH�AND�RETIREMENT�
Health�Information�Technology�
Introduction�
Health�care�is�one�of�the�few�segments�of�the�American�economy�that�has�not�yet�experienced�the�transformational�
benefits�of�modern,�efficient�information�technology�(IT).�As�consumers,�we�are�accustomed�to�electronic�communication�
and�data�exchange�in�the�form�of�ATMs�and�online�transactions.�But�the�lack�of�such�systems�in�health�care�—�the�lack�of�
health�IT�—�is�costly�and�dangerous.�When�a�business�fails�to�use�technology,�the�result�is�inefficiency�and�wasted�
spending.�In�medicine,�the�result�is�often�inferior�care,�personal�suffering,�loss�of�life�and�spiraling�costs.�
Background�
Health�IT�has�the�potential�to�save�as�much�as�$165�billion�a�year�from�efficiencies�and�improved�health�outcomes.�
Moreover,�many�of�the�more�than�98,000�people�who�die�each�year�from�preventable�medical�errors�could�be�
saved�through�the�use�of�accurate,�up-to-date�electronic�systems.�Finally,�health�IT�presents�an�unprecedented�
opportunity�to�replace�today’s�largely�insecure�paper-based�system�with�a�secure�system�that�provides�greater�
convenience�for�patients,�faster�and�more�up-to-date�answers�for�providers,�more�accurate�information�for�
pharmacists,�and�greater�service�to�underserved�and�distant�populations.�
Legislation�is�needed�to�create�the�legal�authority�to�establish�uniform�interoperable�standards�for�health�IT.�
Investments�in�health�IT�have�begun�but�will�never�fully�proliferate�without�the�established�foundation�in�law��
that�is�needed�for�widespread�deployment.�
Options�OPTION�1 : � Pass�legislation.�Congress�should�pass�and�the�president�should�sign�health�IT�legislation�to�
establish�interoperable�standards.���
Pro:�Approximately�98,000�lives�would�be�saved�each�year�from�a�reduction�in�deaths�due�to�
medical�errors;�the�United�States�would�save�as�much�as�$165�billion�each�year�in�efficiencies�and�
improved�health�care�outcomes;�IT�infrastructure�would�provide�the�basis�for�all�future�reform;�
underserved�and�remote�communities�would�gain�greater�access�to�health�care;�patients�and�
families�would�enjoy�greater�convenience�in�accessing�records;�patients�and�families�would�benefit�
from�secure,�improved�interaction�with�health�care�providers�to�support�better�lifestyle�choices;�
patients�with�chronic�diseases�would�receive�earlier�and�more�intensive�support,�thus�avoiding�pain�
and�suffering�and�reducing�greater�public�and�private�expense�later;�and�elderly�patients�would�
avoid�risky�travel�to�health�care�providers�by�relying�on�long-distance�imaging�and�interaction.�
Con:�Health�providers�and�patients�must�part�with�the�paper-and-pen�approach�to�record-
keeping,�which�will�require�substantial�financial�investment�and�a�change�in�the�way�health�
professionals�work�and�interact�with�patients.��
(continued)�
2
�CONSUMER�HEALTH�AND�RETIREMENT�
Health�Information�Technology�
OPTION�2: � Legislation�fails.�Legislation�goes�unapproved;�the�issue�continues�to�be�raised�annually�but�is�
perpetually�bogged�down�in�ancillary�matters.��
Pro: �Preserves�patient�familiarity�with�current�paper-and-pen�system�in�spite�of�costliness�and�
loss�of�life;�allows�experiment�in�complete�laissez-faire�approach�to�risks�and�rewards�of�health�
care�outcomes.�
Con:�Lives�continue�to�be�unnecessarily�lost;�the�health�care�system�fails�to�control�rising�costs;�
the�U.S.�health�care�system�begins�to�significantly�lag�behind�those�of�other�nations;�the�health�
care�system�remains�in�a�paper-based�world�even�as�nearly�all�other�industries�and�businesses�use�
networked�electronic�services;�costly�lifestyle�issues�and�early�treatment�of�chronic�diseases�
remain�unaddressed�matters�among�patients�who�need�help;�and�the�lack�of�common�electronic�
language�for�health�care�leads�to�“Tower�of�Babel”�effect�in�which�different�systems�speak�
different�languages�and�use�different�formats�(imagine�planes�from�different�airlines�unable�to�
speak�a�common�language�with�air�traffic�control,�and�the�challenge�is�apparent).�
�
�
��Action�Recommended�� Business�Roundtable�urges�Congress�to�immediately�pass�legislation�providing�standards�for�secure,�
uniform�and�interoperable�health�IT.�As�providers�of�health�care�coverage�for�nearly�35�million�
Americans,�members�of�Business�Roundtable�support�widespread�adoption�of�health�IT�to�deliver�a�
new�dimension�of�safety,�quality,�choice�and�convenience�to�American�consumers.�All�Americans�
should�have�access�to�a�secure,�uniform,�interoperable�health�IT�system.�Its�adoption�will�improve�
the�patient�experience,�increase�positive�health�outcomes�and�generate�significant�savings.��
� Congress�should�immediately�pass�legislation�that�will:�
• Authorize�the�establishment�of�uniform�interoperable�standards�and�a�process�for�setting�
the�standards;��
• Include�grants,�loans�or�tax�credits�for�providers�to�assist�in�the�purchase�of�interoperable�
health�IT�systems;�
• Educate�Americans�on�the�value�of�electronic�health�records�and�health�information;�
• Protect�personal�health�information�without�over-regulating�or�creating�undue�burdens�
within�the�system�by�including�uniform�security�standards�to�protect�personal�health�
information�without�negatively�affecting�quality,�patient�safety�and�efficiency�of�health�
care;�and��
• Include�a�date�certain�by�which�all�payers�and�providers�are�required�to�have�implemented�
interoperable�systems.
(continued)�
3
CEO�Chair��
Ivan�G.�Seidenberg��
Chairman�and�CEO�
Verizon�Communications�
�
Staff�Contact�
Maria�Ghazal��
Business�Roundtable�
202-872-1260�
�CONSUMER�HEALTH�AND�RETIREMENT�
Health�Information�Technology�
�Resources�Business�Roundtable�Letter�from�Verizon�CEO�on�Health�IT,�June�2008,�www.businessroundtable.org/�
sites/default/files/BRT_e-Communications_Edition%20-%20Ivan_letter_v4-BRT_letterhead.pdf.�
Business�Roundtable,�Upgrade�America’s�Health�IT�System�Now,�April�2008,�
www.businessroundtable.org/sites/default/files/BRT_Hill_Event_Brochure_Split-10-13.pdf.�
1
�CONSUMER�HEALTH�AND�RETIREMENT�
Medical�Liability�Reform�
Introduction�
Reforms�to�our�medical�liability�system�have�the�potential�to�improve�medical�practice,�appropriately�compensate�
individuals�who�are�harmed�as�a�result�of�medical�negligence�and�reduce�costs�in�the�health�care�system.�Medical�
liability�costs�largely�are�driven�by�two�factors:�the�cost�of�defensive�medicine�and�the�costs�associated�with�
judicial�proceedings.�Fair�compensation�should�be�provided�when�medical�negligence�occurs;�however,�everyone��
in�the�system�will�benefit�if�defensive�medicine�and�unnecessary�lawsuits�can�be�reduced.�
Background�The�cost�of�defensive�medicine�is�difficult�to�determine,�but�the�most�commonly�accepted�estimate�is�substantial.�
In�2002,�economists�Daniel�Kessler�and�Mark�McClellan�examined�survey�data�on�the�effects�of�defensive�medicine�
on�physician�productivity,�as�well�as�its�impact�on�health�outcomes.�Overall,�they�found�that�about�5–9�percent�of�
total�health�care�expenditures�were�due�to�defensive�medicine�costs.��
The�U.S.�Department�of�Health�and�Human�Services�(HHS)�also�commissioned�a�survey�by�Harris�Interactive�on�
defensive�medicine.�In�its�July�2002�report�Confronting�the�New�Health�Care�Crisis:�Improving�Health�Care�Quality�
and�Lowering�Costs�by�Fixing�Our�Medical�Liability�System,�Harris�found�that:�
• 79�percent�of�physicians�have�ordered�more�tests�than�they�would�based�on�professional�judgment�of�
what�is�medically�needed;�
• 74�percent�have�referred�patients�to�specialists�more�often�than�they�believed�was�medically�necessary;��
• 51�percent�have�recommended�invasive�procedures�such�as�biopsies�to�confirm�diagnoses�more�often�
than�they�believed�was�medically�necessary;�and�
• 41�percent�have�prescribed�more�medications�than�they�would�based�only�on�their�professional�judgment.�
HHS�further�determined�in�2003�that�overall�medical�liability�reform�would�lower�Medicare�costs�by�some��
$31�billion�per�year.1�
High�medical�malpractice�premiums�and�fears�of�lawsuits�also�have�had�an�effect�on�the�supply�of�doctors�and�
medical�care.�Some�55�percent�of�hospitals�report�difficulty�recruiting�doctors,2�some�emergency�rooms�have�been�
forced�to�turn�away�ambulances�for�lack�of�specialists,3�more�than�70�percent�of�neurosurgeons4�and�55�percent��
of�orthopedic�surgeons5�report�limiting�the�kinds�of�procedures�they�perform,�and�7–8�percent�of�all�obstetricians�
have�stopped�practicing�obstetrics�altogether.6��
Medical�liability�law�should�be�reformed�to�ensure�fair�compensation�to�individuals�who�are�harmed�while�reducing�
unnecessary�defensive�medicine�and�lawsuits.�
(continued)�
2
�CONSUMER�HEALTH�AND�RETIREMENT�
Medical�Liability�Reform�
Options�OPTION�1 : � � Enact�medical�liability�reform�that�includes�caps�on�noneconomic�damages,�similar�to�those�in�
place�in�California,�Texas�and�other�states.��
Pro: �State�reforms�that�include�a�cap�on�noneconomic�damages�have�proven�highly�effective�in�
lowering�doctors’�medical�liability�premiums�and�increasing�the�supply�of�doctors.�
Con:�Previous�attempts�to�pass�limits�on�noneconomic�damages�at�the�federal�level�have�failed�
to�pass�the�Senate�—�the�party�being�in�the�majority�did�not�affect�the�outcome.��
OPTION�2: � Adopt�legislation�to�authorize�pilot�projects�to�evaluate�alternative�resolutions�of�medical�liability�
claims,�including�medical�courts,�alternative�dispute�resolution�and�other�efforts.�Following�these�
pilots,�Congress�should�enact�those�programs�that�work�in�broader�legislation�to�set�up�a�national�
system�that�provides�fair�compensation�of�individuals�who�are�harmed�but�also�reduces�the�costs�
associated�with�defensive�medicine.��
Pro: �The�Fair�and�Reliable�Medical�Justice�Act�was�introduced�in�the�110th�Congress�by�Sen.�
Baucus,�D-MT;�Sen.�Enzi,�R-WY;�Rep.�Cooper,�D-TN;�and�Rep.�Thornberry,�R-TX.�Legislation�that�
supports�pilot�demonstration�programs�for�alternatives�to�medical�litigation�would�have�a�greater�
chance�of�achieving�sufficient�bipartisan�support�in�Congress�than�previous�attempts�at�liability�
reform.�
Con:�Pilot�demonstration�programs�for�alternatives�to�medical�litigation�would�require�significant�
time�to�fully�develop�and�prove�their�effectiveness,�which�would�delay�any�impact�on�a�national�
scale.�
OPTION�3: � Enact�legislation�to�encourage�and�support�the�use�of�appropriate�medical�practice�guidelines�
developed�by�national�professional�organizations�or�other�similarly�qualified�organizations.�If�a�
physician�follows�the�guidelines,�then�the�provider�should�be�able�to�use�adherence�to�the�
practice�guidelines�as�an�acceptable�defense�against�a�negligence�action.��
Pro: �Such�a�policy�has�the�potential�not�only�to�reduce�litigation�and�defensive�medicine�but��
also�to�encourage�national�practice�guidelines�that�would�improve�the�quality�of�medical�care�for�
everyone.�
Con:�Medical�care�is�as�much�an�art�as�it�is�a�science.�Rigid�adherence�to�medical�practice�
guidelines�inflicts�“cookbook�medicine”�when�clinical�care�should�be�tailored�to�the�needs�of��
each�individual.��
(continued)�
3
CEO�Chair��
Ivan�G.�Seidenberg��
Chairman�and�CEO�
Verizon�Communications�
�
Staff�Contact�
Maria�Ghazal��
Business�Roundtable�
202-872-1260�
�CONSUMER�HEALTH�AND�RETIREMENT�
Medical�Liability�Reform�
�
�Resource�Business�Roundtable�Health�Care�Reform�Principles,�June�2007,�www.businessroundtable.org/�
sites/default/files/Business_Roundtable_Principles_for_Reform_06062007.pdf.�
1�Addressing�the�New�Health�Care�Crisis:�Reforming�the�Medical�Litigation�System�to�Improve�the�Quality�of�Health�Care�11,�Office�of�the�Assistant�Secretary�for�Planning�and�Evaluation,�U.S.�Department�of�Health�and�Human�Services,�2003.��2�American�Hospital�Association,�Professional�Liability�Insurance:�A�Growing�Crisis,�March�2003.�3�The�Schumacher�Group,�2004�Hospital�Emergency�Department�Administration�Survey,�cited�in�“Federal�Medical�Liability�Reform,”�Alliance�of�Specialty�Medicine,�July�2005.�4�American�Association�of�Neurological�Surgeons�and�Congress�of�Neurological�Surgeons,�2004�survey,�cited�in�“Federal�Medical�Liability�Reform,”�Alliance�of�Specialty�Medicine,�July�2005.��5�American�Association�of�Orthopedic�Surgeons,�cited�in�“Federal�Medical�Liability�Reform,”�Alliance�of�Specialty�Medicine,�July�2005.�6�American�College�of�Obstetricians�and�Gynecologists,�November�3,�2006.�
��Action�Recommended�� Business�Roundtable�urges�Congress�to�authorize�pilot�projects�to�evaluate�alternative�ways�to�resolve�
medical�liability�claims,�including�medical�courts,�alternative�dispute�resolution,�and�other�efforts�to�
reduce�the�costs�of�defensive�medicine�and�to�improve�health�care�quality.�Following�these�pilots,�
Congress�should�enact�those�that�enhance�the�fair�compensation�of�individuals�who�are�harmed�as��
a�result�of�negligence�while�demonstrating�a�reduction�in�defensive�medical�costs.�Congress�should�
support�the�use�of�appropriate�medical�practice�guidelines�developed�by�national�professional�
organizations�or�other�similarly�qualified�organizations�as�an�acceptable�defense�in�malpractice�actions.
1
�CONSUMER�HEALTH�AND�RETIREMENT�
Pensions�
Introduction�
Defined�benefit�pension�plans�remain�a�critical�component�of�the�retirement�security�equation�for�most�Business�
Roundtable�member�companies.�These�retirement�plans,�whether�traditional�or�hybrid,�provide�an�ongoing�stream�of�
income�to�those�who�have�already�retired�and�remain�an�important�retirement�benefit�for�the�current�workforce.�The�
Roundtable’s�consistent�position�is�that�the�best�way�to�protect�pensions�is�for�Congress�to�pass�prudent�rules�that�
promote�the�long-term�retirement�security�of�Americans;�do�not�disrupt�the�economy�or�financial�markets;�and�do�not�
inappropriately�divert�capital�investments�away�from�creating�jobs,�capital�improvements,�or�research�and�development.�
Recent�adverse�economic�conditions�have,�unfortunately,�brought�the�importance�of�implementing�Business�
Roundtable’s�historical�position�on�pension�funding�into�stark�focus.�With�new�restrictions�being�implemented�or�
considered�that�could�undermine�the�ability�to�maintain�a�robust�defined�benefit�system,�the�rules�must�continue�
to�provide�employers�with�the�flexibility�to�design,�implement�and�prudently�fund�their�pension�plans�in�a�manner�
that�is�consistent�with�wise�business�practices.�
Background�
The�2006�Pension�Protection�Act�(PPA)�imposed�stringent�new�minimum�funding�requirements�on�pension�plans.�
Those�PPA�rules�have�only�begun�to�be�phased�in.�The�sudden�decline�in�the�value�of�pension�plan�assets�in�fall�
2008,�coupled�with�the�credit�crunch,�has�placed�defined�plan�sponsors�in�a�difficult�position.�At�a�time�when�
companies�need�cash,�they�also�are�required�to�make�unexpectedly�large�contributions�to�their�plans�under�PPA.�
While�the�phase-in�of�the�new�PPA�funding�rules�is�already�rapid,�the�changed�economic�environment�makes�the�
limited�transition�that�was�provided�to�the�2006�funding�regime�unworkable�for�many�employers.��
At�the�same�time,�proposals�have�begun�to�surface�that�would�erode�the�ability�of�an�employer�to�tailor�a�pension�
plan�to�best�meet�the�needs�of�its�unique�workforce.�PPA�contained�helpful�clarifications�regarding�the�treatment�of�
cash�balance�and�hybrid�plans.�There�has�been�discussion�that�some�of�those�decisions�could�be�reopened,�either�
through�narrow�regulatory�interpretations�or�legislative�changes.�Similarly,�recent�discussion�of�volatile�oil�prices�has�
led�some�to�propose�restrictions�on�pension�plan�investments�in�energy�or�other�commodities,�investments�that�have�
become�an�important�tool�in�diversifying�and�hedging�a�defined�benefit�plan’s�investments.�
Options�OPTION�1:� Temporary�relief�from�the�PPA�pension�funding�requirements.�With�the�stringent�new�funding�
rules�adopted�in�PPA�still�being�phased�in,�Business�Roundtable�has�taken�the�position�that�
recent�market�declines�and�the�shortage�of�available�credit�require�a�re-evaluation�of�the�
transition�to�those�new�rules.�Specifically,�the�volatile�and�unexpected�cash�flow�demands�on�
plans�caused�by�the�recent�economic�downturn�should�be�smoothed,�with�those�plans�prudently�
returned�to�full�funding�status�over�a�reasonable�period.��
�(continued)�
2
�CONSUMER�HEALTH�AND�RETIREMENT�
Pensions�
CEO�Chair�
Ivan�G.�Seidenberg��
Chairman�and�CEO�
Verizon�Communications�
�
Staff�Contact�
Maria�Ghazal��
Business�Roundtable�
202-872-1260�
Pro:�The�large�and�unexpected�new�funding�obligations�created�by�PPA,�if�not�modified,�will�
divert�assets�away�from�job�retention,�job�creation�and�needed�business�investments,�thus�
increasing�the�number�of�Americans�who�are�unemployed�and�slowing�our�economic�recovery.��
In�some�cases,�employers�might�be�forced�to�freeze�or�terminate�their�plans.�
Con:�If�proposals�are�not�carefully�targeted�at�extended�transition�relief,�other�favorable�elements�of�
PPA�(e.g.,�hybrid�plan�clarifications)�or�other�changes�could�be�reopened�in�the�legislative�process.��
OPTION�2:� Flexible�rules�regarding�maintenance�of�hybrid�pension�plans.�The�Treasury�Department�continues�
significant�regulatory�projects�related�to�PPA�clarification�of�hybrid�pension�plan�rules.�Important�
technical�issues�remain�on�how�to�interpret�certain�PPA�provisions.�At�the�same�time,�elements�of�
the�plaintiffs’�bar�and�some�consumer�advocacy�groups�continue�to�press�for�a�reopening�of�hybrid�
plan�issues,�and�litigation�continues.�Any�erosion�of�the�current�hybrid�plan�rules�could�dramatically�
reduce�their�utility�and�undercut�an�important�element�of�the�defined�benefit�system.�Business�
Roundtable�supports�maintaining�the�flexibility�to�adopt�hybrid�plans�that�meet�workforce�needs.��
Pro: �Hybrid�plans�provide�a�unique�means�of�meeting�workforce�retirement�needs�and�should�
remain�a�viable�alternative�available�to�employers.�
Con:�None.�
OPTION�3:� Restrictions�on�investment�of�plan�assets.�Recent�efforts�to�prohibit�pension�plan�investment�in�
energy�or�other�commodities�continue�a�long-standing�debate�over�whether�the�government�
should�be�involved�in�managing�retirement�plan�investment�decisions.�These�efforts�may�take�
other�forms,�including�social�investing�in�which�the�government�attempts�to�direct�investment�into�
certain�activities�that�are�deemed�socially�desirable�or�away�from�undesirable�activities.�Attempts�to�
direct�proxy�voting�of�shares�held�in�pension�plans�are�similarly�aimed�at�government�involvement�
in�decisionmaking.�The�long-standing�Business�Roundtable�position�is�that�pension�plan�assets�
should�be�managed�prudently�by�employers�acting�on�behalf�of�their�employees,�with�employers�
continuing�to�have�the�freedom,�and�the�sole�responsibility,�to�invest�pension�plan�assets�within�
their�control�in�the�best�economic�interest�of�the�plan’s�participants�and�beneficiaries.��
Pro: �None.�
Con:�Government-mandated�investment�solutions�are�likely�to�be�counterproductive�and�driven�
by�political�winds.�Limits�of�that�nature,�once�enacted,�are�likely�to�erode�the�effectiveness�of�
fiduciary�responsibility�and�ultimately�will�multiply.��
�
��Action�Recommended�� Continue�to�support�the�defined�benefit�pension�system�by�working�for�reasonable�funding�rules�and�
promoting�hybrid�plans.�Oppose�efforts�by�the�government�to�micromanage�pension�plan�investments,�
leaving�that�responsibility�where�it�belongs�—�with�the�plan�fiduciary.
Corporate Leadership
1
�CORPORATE�LEADERSHIP�
Corporate�Governance�
Introduction�
Good�corporate�governance�is�essential�to�promoting�confidence�in�the�American�economy.�The�success�of�
American�corporations�is�based�on�trust�—�a�trust�that�can�come�through�transparency�of�operations;�adherence�
to�the�highest�ethical�standards;�and�a�track�record�of�behaving�responsibly�with�employees,�shareholders�and�the�
communities�in�which�they�operate.�
Background�
Regulatory�Reform�
Many�of�our�securities�laws�and�oversight�agencies�were�created�in�the�1930s,�and�given�overlapping�jurisdictions,�
they�cannot�effectively�monitor�today’s�global,�complex�financial�institutions�and�transactions.�
Although�there�were�many�factors�contributing�to�the�recent�economic�crisis,�the�common�denominator�was�that�
long-term�growth�and�value�were�sacrificed�for�short-term�gain.�The�relentless�drive�for�short-term�results�led�to�
the�creation�of�complex�financial�instruments�that�were�unregulated�and�not�transparent.�
In�addition,�the�current�system�for�companies�to�communicate�with�their�individual�shareholders�is�more�than��
25�years�old.�One�of�the�key�objectives�of�good�corporate�governance�is�effective�communications�and�dialogue�
among�boards,�management�and�shareholders,�and�currently�companies�cannot�communicate�directly�with�
shareholders�without�going�through�brokers�and�intermediaries.��
Proxy�Access�
The�issue�of�proxy�access�involves�how�corporate�director�elections�are�governed�and�how�a�company�proxy�is�used.�
Director�elections�are�governed�by�state�law�in�the�state�where�the�company�is�incorporated,�and�the�proxy�is�a�
management�mechanism�for�shareholders�to�vote�when�not�attending�shareholder�meetings.�Shareholders�
currently�have�the�right�to�nominate�directors�and�run�campaigns�but�not�on�the�company�proxy.�This�has�been��
an�important�protection�against�using�company�(shareholder)�resources�to�finance�a�hostile�takeover.�
Currently,�nominating�committees�identify�qualified�candidates�who�have�expertise�and�judgment�and�will�
represent�all�shareholders,�not�one�particular�group.�Proponents�of�proxy�access�want�to�allow�virtually�any�
investor�—�or�group�of�investors�—�to�place�their�board�candidate�directly�on�the�company�proxy.�This�would�
represent�a�fundamental�change�to�the�careful�balance�among�shareholders,�boards�and�management,�which��
over�the�long�term�has�proven�to�be�successful.��
Proxy�access�could�lead�to�special�interest�board�candidates�and�politicize�the�director�election�process.�In�this�day�
and�age�of�short-term�holdings,�“borrowed�voting,”�hedge�funds�and�sovereign�wealth�funds�investing�in�U.S.�
corporations,�the�last�things�shareholders�need�are�fractured�boards�representing�divergent�constituencies�or�
“single�issue”�board�members.�Today’s�corporations�have�millions�of�shareholders,�often�represented�by�thousands�
of�investor�groups�with�very�different�agendas.�A�company�proxy�card�with�dozens�of�board�candidates�is�not�a�
formula�for�stability�and�investor�confidence.�
(continued)�
2
�CORPORATE�LEADERSHIP�
Corporate�Governance�
The�2007�and�2008�Business�Roundtable�governance�surveys�demonstrate�that�companies�have�transformed�
themselves�by�increasing�their�board�independence�and�demanding�accountability:�
• 90�percent�of�Roundtable�companies�reported�that�their�boards�are�at�least�80�percent�independent.�
• 75�percent�of�Roundtable�company�boards�meet�in�executive�session�at�every�meeting.�
• 76�percent�of�Roundtable�company�CEOs�serve�on�no�more�than�one�other�board.�
• 88�percent�of�Roundtable�company�boards�have�an�independent�chairman,�lead�director�or�presiding�
director.�
• 75�percent�of�Roundtable�company�boards�have�adopted�majority�voting�for�directors�in�just�two�years.�
• The�average�tenure�of�Roundtable�company�CEOs�is�down�to�five�years;�a�2006�Booz�Allen�study�showed�
that�CEO�turnover�had�increased�to�the�highest�level�in�10�years�and�that�one�of�three�CEOs�who�left�
their�jobs�was�forced�out.�
Given�the�overwhelming�evidence�that�boards�are�now�dominated�by�independent�directors,�we�believe�proxy�
access�is�an�idea�whose�time�has�passed.�Proxy�access�would�not�have�prevented�the�economic�crisis,�and�it�would�
not�help�solve�the�challenges�facing�us�today.�
Executive�Compensation�
Executive�compensation�is�a�controversial�issue,�and�given�some�of�the�highly�publicized�failures,�the�level�of�
outrage�is�justifiable.�
In�2007,�the�House�of�Representatives�passed�HR�1257,�which�would�mandate�an�annual�shareholder�vote�on�
executive�compensation�for�all�publicly�traded�companies.�However,�shareholders�already�have�the�right�to�vote�on�
compensation�—�in�2008,�more�than�90�proposals�were�filed�with�the�Securities�and�Exchange�Commission�(SEC)�
and�voted�on�by�shareholders.�In�addition,�mandatory�compensation�voting�could�lead�to�further�demands�to�vote�
on�other�aspects�of�board�decisionmaking,�such�as�capital�expenditures,�strategic�plans,�advertising�and�
endorsement�deals�—�all�involving�far�greater�dollar�amounts�than�compensation.�
There�also�could�be�widespread�disagreement�over�what�the�results�would�mean.�For�example,�would�a�“yes”��
vote�of�52�percent�be�seen�as�an�endorsement�of�compensation�plans?�Would�a�“no”�vote�of�48�percent�mean�
compensation�plans�should�be�restructured?�If�a�board�decides�to�retain�its�compensation�plan�following�a��
“no”�vote,�will�it�be�subjected�to�“withhold”�campaigns�the�following�year,�and�what�would�the�impact�on�
shareholders�be�if�the�board�were�destabilized?�
In�the�context�of�the�economic�crisis,�Business�Roundtable�believes�the�emphasis�on�producing�short-term�results�
led�to�increasingly�risky�behavior,�and�that�in�turn�produced�compensation�abuses.�The�key�to�curbing�this�
behavior�is�to�prevent�risks�associated�with�short-term�results�and�to�once�again�align�compensation�plans�with�
shareholder�interests.�
(continued)�
3
Staff�Contact�
Thomas�J.�Lehner��
Business�Roundtable�
202-872-1260�
CEO�Chair��
Anne�M.�Mulcahy��
Chairman�and�CEO�
Xerox�Corporation�
�
�CORPORATE�LEADERSHIP�
Corporate�Governance�
�
�
�Resources�Business�Roundtable�corporate�governance�publications,�www.businessroundtable.org/initiatives/�
leadership/governance.��
Business�Roundtable�Institute�for�Corporate�Ethics,�www.darden.virginia.edu/corporate-ethics/.�
��Action�Recommended�� The�recent�economic�crisis�has�focused�attention�on�governance�issues.�Business�Roundtable�
recognizes�the�need�for�regulatory�reform�for�the�financial�services�industry,�and�we�are�
committed�to�working�constructively�on�a�meaningful�solution.�
� Corporate�governance�reforms�should�acknowledge�the�reforms,�evolving�principles�and�best�practices�
that�companies�have�instituted;�at�the�same�time,�they�should�consolidate�and�enhance�financial�
services�oversight�and�minimize�the�risk�that�contributed�to�the�economic�crisis.�By�doing�so,�Business�
Roundtable�believes�that�individual�companies�of�all�sectors�of�the�economy�will�have�the�ability�to�
innovate,�grow�and�continue�producing�long-term�shareholder�value.�Specifically,�we�recommend:�
� Regulatory�Reform�
� Business�Roundtable�believes�that�reform�efforts�should�focus�on�three�main�areas:�Modernize�
and�consolidate�government�oversight�agencies,�regulate�credit�default�swaps�and�other�
derivative�instruments,�and�require�companies�to�disclose�their�key�performance�indicators��
and�better�disclose�their�risk�management�processes�in�SEC�filings.�
� In�addition,�we�support�reforming�the�shareholder�communications�process�to�allow�companies�to�
communicate�directly�with�their�individual�shareholders�without�having�to�go�through�third�parties�
and�intermediaries.�We�also�believe�proxy�advisory�firms�should�be�regulated�to�prohibit�conflicts�
of�interest�and�should�be�required�to�make�their�processes�transparent.�
� Proxy�Access�
� In�the�past,�some�have�suggested�that�proxy�access�would�enhance�board�independence�and�
oversight.�Business�Roundtable�disagrees;�boards�have�become�overwhelmingly�independent�in�
recent�years,�and�the�unintended�consequences�of�proxy�access�far�outweigh�any�benefits.�The�issue�
has�been�thoroughly�debated�over�the�years,�and�the�SEC�has�repeatedly�concluded�that�changing�
the�current�system�is�inconsistent�with�state�law�and�unworkable�from�a�practical�standpoint.�
� Executive�Compensation�
� Business�Roundtable�believes�that�the�limits�placed�on�executive�compensation�for�those�companies�
using�funds�from�the�economic�rescue�legislation�are�reasonable�and�appropriate.�However,�we�
oppose�mandating�an�annual�shareholder�vote�on�executive�compensation�for�all�publicly�traded�
companies.�Subjecting�board�decisions�to�a�referendum�system�of�voting�could�lead�to�uncertainty,�
resulting�in�a�lack�of�investor�confidence�in�corporations�and�declining�shareholder�value.��
Education, Innovation and W
orkforce
1
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Education�Reform�Legislation�
Introduction�
The�Elementary�and�Secondary�Education�Act�(ESEA),�first�enacted�in�1965�and�named�the�No�Child�Left�Behind�
(NCLB)�Act�in�its�current�iteration,�is�up�for�reauthorization.�An�initial�effort�to�begin�the�reauthorization�process�
failed�to�reach�bipartisan�consensus�at�the�committee�level�in�2007.�As�the�principal�federal�vehicle�to�improve��
K–12�education�in�the�United�States,�reauthorization�of�ESEA�has�the�potential�to�either�accelerate�or�slow�down�
momentum�for�providing�all�students�a�world-class�education.��
Background�
Business�Roundtable�has�had�a�long-term�commitment�to�improving�the�performance�of�the�education�system�and�
raising�student�achievement�in�the�United�States.�Changing�demographics;�upcoming�baby-boomer�retirements;�
growth�of�high-wage,�high-skill�jobs�that�require�postsecondary�education�and�training;�and�the�international�
marketplace�for�talent�are�forces�that�emphasize�the�need�for�all�U.S.�students�to�graduate�from�high�school�with�
the�foundation�skills�and�knowledge�that�prepare�them�to�succeed�in�college,�in�the�workplace�and�in�life.�
From�1965�through�2001,�the�federal�role�in�education�focused�primarily�on�helping�special�groups�of�students,�
such�as�disadvantaged�and�disabled�children.�NCLB,�signed�into�law�in�2002,�broadened�the�scope�of�the�federal�
role�in�terms�of�accountability�for�the�achievement�outcomes�expected�for�all�students.�Business�Roundtable�
supported�initial�passage�of�NCLB�and�viewed�two�dimensions�of�the�legislation�as�especially�promising:�
• First,�it�was�important�civil�rights�legislation�that�made�clear�that�standards�and�expectations�for�students�
must�not�vary�based�on�race/ethnicity,�language,�disability�or�economic�status.�
• Second,�it�established�a�more�transparent�data�reporting�system,�accountability�for�improving�student�
academic�achievement�and�options�for�students�to�leave�chronically�low-performing�schools.�
The�National�Assessment�of�Educational�Progress�(NAEP)�2007�reading�achievement�results�for�4th�grade�students�
and�math�results�for�4th�and�8th�grade�students�are�the�highest�in�the�history�of�the�NAEP�assessment.�Recent�
reports�using�state�assessment�data�also�show�that�student�reading�and�math�achievement�has�improved�since�
NCLB�was�enacted�six�years�ago.1��
From�a�business�perspective,�although�we�are�encouraged�by�recent�student�achievement�gains,�U.S.�education�
performance,�particularly�math�and�science�achievement�and�high�school�and�college�graduation�rates,�is�not�
getting�better�fast�enough�in�comparison�to�our�international�competitors.�For�most�American�students,�education�
will�determine�their�future�standard�of�living�—�the�income�an�individual�earns�over�a�lifetime�changes�based�on�
whether�he�or�she�is�a�high�school�dropout,�is�a�high�school�graduate,�or�has�a�two-�or�four-year�college�degree.�
�
(continued)�
2
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Education�Reform�Legislation�
�
�Options�OPTION�1 : � Reauthorize�ESEA�with�substantial�changes�to�the�basic�framework�of�NCLB,�particularly�to�limit�
annual�assessments,�lower�unrealistic�accountability�requirements�and�eliminate�punitive�
consequences�for�persistently�low-performing�schools.�
Pro:�The�NCLB�“brand”�is�politically�damaged�beyond�repair,�and�a�significantly�different�
approach�to�school�improvement�is�needed.��
(continued)�
Weak U.S. Performance in Science and Mathematics Literacy
Average scores of 15-year-old students on combined science literacy scale andmathematics literacy scale, by Organisation for Economic Co-operation andDevelopment (OECD) jurisdiction, 2006
Combined science literacy scaleJurisdiction ScoreOECD average 500
OECD jurisdictionsFinland 563Canada 534Japan 531New Zealand 530Australia 527Netherlands 525Korea, Republic of 522Germany 516United Kingdom 515Czech Republic 513Switzerland 512Austria 511Belgium 510Ireland 508Hungary 504Sweden 503Poland 498Denmark 496France 495Iceland 491UNITED STATES 489Slovak Republic 488Spain 488Norway 487Luxembourg 486Italy 475Portugal 474Greece 473Turkey 424Mexico 410
Mathematics literacy scaleJurisdiction ScoreOECD average 498
OECD jurisdictionsFinland 548Korea, Republic of 547Netherlands 531Switzerland 530Canada 527Japan 523New Zealand 522Belgium 520Australia 520Denmark 513Czech Republic 510Iceland 506Austria 505Germany 504Sweden 502Ireland 501France 496United Kingdom 495Poland 495Slovak Republic 492Hungary 491Luxembourg 490Norway 490Spain 480UNITED STATES 474Portugal 466Italy 462Greece 459Turkey 424Mexico 406
Average is higherthan the U.S. average
Average is notmeasurably differentfrom the U.S.average
Average is lowerthan the U.S.average
Source: National Center for Education Statistics, U.S. Department of Education and Institute of Education Sciences,Highlights from PISA (Programme for International Student Assessment) 2006, 2007
3
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Education�Reform�Legislation�
Con:�Data�show�that�student�achievement�is�improving�and�achievement�gaps�are�closing.�We�
need�to�stay�the�course�on�data�transparency;�accountability�for�all�student�groups�reaching�
reading,�math�and�science�proficiency;�and�options�for�students�trapped�in�consistently�low-
performing�schools.�
OPTION�2: � Reauthorize�ESEA�with�a�significantly�reduced�federal�role�in�education.��
Pro: �As�a�small�investor�in�K–12�education,�federal�education�requirements�should�be�minimal,�
leaving�states�and�local�school�districts�more�latitude�in�determining�education�policy�and�local�
education�priorities.��
Con:�In�an�economy�that�puts�a�premium�on�intellectual�capital�and�has�a�global�marketplace�for�
talent,�American�students�will�compete�with�their�peers�around�the�world.�It�is�in�the�national�
interest�for�the�federal�government�to�provide�resources,�research�and�data�to�improve�U.S.�
education�performance�and�to�expect�recipients�of�federal�education�funds�to�be�accountable��
for�demonstrating�improved�student�achievement.�
OPTION�3: � Reauthorize�ESEA�by�retaining�the�fundamental�principles�of�NCLB�while�also�addressing�
problems�that�emerged�during�implementation.�
Pro:�The�state�standards-based�education�reform�movement�and�NCLB�continue�to�help�raise�student�
achievement�and�close�achievement�gaps.�The�federal�insistence�on�accountability�was�long�overdue�
after�years�of�providing�funding�with�little�or�no�connection�to�measurable�improvement�in�student�
achievement.�Necessary�refinements�and�omissions�in�the�law�can�be�addressed�and�strengthened�
during�reauthorization�without�compromising�the�law’s�fundamental�principles.��
Con:�NCLB�has�laudable�goals,�but�the�law�is�fundamentally�flawed�and�needs�to�be�overhauled.
�
��Action�Recommended�� Business�Roundtable�supports�the�third�option.�K–12�education�in�the�United�States�is�a�local�
function�and�state�responsibility�with�the�lion’s�share�of�resources�provided�by�state�and�local�
funding�sources.�However,�in�our�international�economy,�it�is�more�important�than�ever�for�the�
federal�government�to�remain�committed�to�the�national�importance�of�improving�U.S.�education�
performance.�The�federal�investment�needs�to�be�targeted,�focused�and�aligned�with�policies�and�
programs�that�produce�high�school�graduates�academically�prepared�to�succeed�in�college,�work�and�
life.�Recipients�of�federal�funds�must�be�held�accountable�for�these�results.�During�ESEA�
reauthorization,�greater�emphasis�is�needed�on�improving�high�schools;�supporting�and�rewarding�
highly�effective�teachers;�strengthening�science,�technology,�engineering�and�math�education;�and�
creating�incentives�for�states�to�collaborate�on�common�higher�standards�and�better�assessments�
that�reflect�the�expectations�of�college,�work�and�international�competitors.�But�any�changes�
Congress�makes�should�retain�and�build�on�NCLB’s�fundamental�principles.��
(continued)�
4
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Education�Reform�Legislation�
CEO�Lead�Education�Reform�
Edward�B.�Rust�Jr.��
Chairman�and�CEO�
State�Farm�Insurance�Companies�
�
Staff�Contact�
Susan�Traiman�
Business�Roundtable�
202-872-1260�
�Resources�Business�Coalition�for�Student�Achievement,�“Framework�for�Reauthorizing�the�No�Child�Left�Behind�(NCLB)�Act:�
Recommendations�to�Improve�and�Strengthen�the�Law,”�January�2007,�http://biz4achievement.org/�
about_the_coalition/position_statement3.pdf.�
Business�Roundtable,�“Essential�Components�of�a�Successful�Education�System,”�2000,�www.businessroundtable�
.org/sites/default/files/2007.10.17_9-Essential_Components_of_a_Successful_Education_System.pdf.�
Business�Roundtable�and�Corporate�Voices�for�Working�Families,�“Early�Childhood�Education:�A�Call�to�Action�from�
the�Business�Community,”�2009.��
1�Center�on�Education�Policy,�Has�Student�Achievement�Increased�Since�2002?�State�Test�Score�Trends�through�2006-07.�
1
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Innovation�Policy�
(continued)�
Introduction�
In�the�world’s�advanced�economies,�a�nation’s�capacity�to�innovate�has�proven�to�be�a�key�determinant�of�economic�
success.��
For�the�better�part�of�a�century,�the�United�States�enjoyed�a�higher�rate�of�productivity�growth�and�a�higher�standard�of�
living�than�other�large,�industrialized�countries.�U.S.�economic�leadership�rested�on�abundant�natural�resources,�efficient�
capital�markets,�and�the�world’s�most�advanced�science�and�technology�enterprise,�which�fed�a�continuous�stream�of�
technological�innovation�into�an�entrepreneurial�business�culture�that�created�new�products�and�processes�and�even�
whole�new�industries.�
During�the�past�20�years,�however,�many�of�America’s�intrinsic�economic�advantages�have�been�globalized.��
Capital�and�natural�resources�can�be�sourced�almost�anywhere�in�the�world,�and�the�United�States�no�longer�can�claim�a�
competitive�advantage.�Over�this�same�period,�the�U.S.�economy�outpaced�the�rest�of�the�world�in�the�productivity�of�
our�workforce�and�the�increasing�sophistication�of�our�economy�because�we�held�a�clear�advantage�in�innovation�
capacity.�America’s�historical�strength�in�innovation�is�based�on�having�world-class�research�universities�and�national�
laboratories�and�on�holding�a�substantial�lead�in�public�and�private�research�and�development�(R&D)�investments.��
Business�Roundtable�leads�Tapping�America’s�Potential�(TAP),�a�coalition�of�16�national�business�groups�that�set�a�goal�
to�increase�the�annual�number�of�U.S.�science,�technology,�engineering�and�mathematics�bachelor’s-level�graduates�to�
400,000�by�2015.�Reaching�this�goal�will�be�very�difficult�unless�policies�and�funding�are�in�place�to�create�the�right�
incentives.��
� �
Deg
rees
Aw
arde
d
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. citizens and permanent residents, 2001–06
400,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S. STEM Bachelor’s Degree Production Not on Track To Meet TAP Goal
Source: National Science Foundation
201,055 208,243
220,360
223,148
223,255225,660
2
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Innovation�Policy�
Background�
Ironically,�a�fiscally�constrained�budget�environment�and�more�immediately�visible�short-term�policy�priorities�have�
led�the�United�States�to�substantially�underinvest�in�national�innovation�capacity�at�the�very�time�when�such�
capacity�is�paying�the�highest�dividends�to�the�U.S.�economy�and�the�American�people.�The�United�States�is�in�
danger�of�ceding�our�lead�in�innovation�to�emerging�economies�that�are�rapidly�investing�in�research�and�
education�to�increase�national�economic�performance.�
This�is�terribly�shortsighted�because�investments�in�U.S.�innovation�capacity�not�only�will�help�ensure�long-term�
economic�growth�and�a�rising�standard�of�living�for�all�Americans�but�also�will�drive�solutions�to�many�of�America’s�
most�challenging�problems.�For�example,�addressing�global�climate�change�and�reducing�U.S.�dependence�on�
foreign�oil�require�accelerated�technological�innovation�to�create�dramatically�more�efficient�automobiles,�lighting�
and�appliances�and�dramatically�lower�costs�for�renewable�sources�of�energy.��
Over�the�past�several�years,�a�strong�consensus�has�emerged�on�the�fundamentals�of�an�innovation�policy�agenda�
that�would�make�Americans�more�economically�secure�over�the�long�term,�ensure�higher�wages�and�a�higher�
standard�of�living�for�succeeding�generations�of�Americans,�and�create�the�technologies�that�will�solve�some�of�
America’s�greatest�problems.�
Articulated�by�leaders�from�the�business,�scientific�and�education�communities�as�well�as�in�the�National�
Academies�report,�Rising�Above�the�Gathering�Storm,�this�consensus�agenda�includes:�
• Renewing�America’s�commitment�to�knowledge�creation�and�discovery�by�significantly�increasing�federal�
investments�in�physical�sciences�and�engineering�research,�the�type�of�research�most�directly�coupled�to�
technological�innovation.�
• Building�the�most�highly�educated�and�highly�skilled�workforce�in�the�world�by�significantly�increasing�
federal�investments�in�math�and�science�education�programs�to�improve�U.S.�student�achievement�and�
recruit�and�train�more�qualified�math�and�science�teachers�for�America’s�schools.�
• Ensuring�that�cutting-edge�innovation�will�continue�to�be�“invented�in�America”�by�fostering�an�
environment�that�encourages�private-sector�R&D�investments.�
Significant�increases�for�math�and�science�education�programs�and�physical�sciences�and�engineering�research�
were�authorized�in�the�America�COMPETES�Act,�which�was�passed�with�strong�bipartisan�support�and�signed�into�
law�in�2007.��
So,�what’s�the�problem?�Action�on�appropriations�for�America�COMPETES�Act�priorities�was�thwarted�because�of�
unrelated�disputes�between�Congress�and�the�prior�administration�over�the�total�level�of�domestic�discretionary�
spending.�For�the�last�two�budget�cycles,�House�and�Senate�appropriators�approved�America�COMPETES�Act�
funding�in�committee,�but�the�bills�were�never�brought�to�the�floor�for�consideration.�As�a�consequence,�real�
federal�spending�on�science�and�engineering�research�and�math�and�science�education�has�dropped�over�the�last�
two�years.��
(continued)�
3
CEO�Chair�
William�D.�Green�
Chairman�and�CEO�
Accenture�
�
Staff�Contact�
Susan�Traiman�
Business�Roundtable�
202-872-1260�
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Innovation�Policy�
Similarly,�repeated�attempts�to�enact�a�long-term�extension�of�the�federal�R&D�tax�credit�have�foundered�over��
the�issue�of�budgetary�scoring,�and�the�credit�has�been�repeatedly�extended�for�short�periods�of�times,�greatly�
lessening�its�effectiveness�as�a�spur�to�increased�private-sector�R&D�investments.�
�
�
�Resources�Tapping�America’s�Potential:�The�Education�for�Innovation�Initiative:�Gaining�Momentum,�Losing�Ground,��
July�2008,�www.businessroundtable.org/sites/default/files/tap_2008_progress.pdf.��
Tapping�America’s�Potential:�The�Education�for�Innovation�Initiative,�July�2005,�www.tap2015.org/about/�
TAP_report2.pdf.
��Action�Recommended�� Business�Roundtable�believes�that�a�coherent�national�innovation�strategy�is�a�prerequisite�for�
sustained�growth�in�high-wage�employment�in�the�United�States�and�an�ever-rising�standard�of�living�
for�U.S.�citizens.�As�the�first�step�toward�demonstrating�a�long-term�commitment�to�the�essential�
investments�that�maintaining�U.S.�innovation�leadership�requires,�Congress�should�fund�annually�the�
science�and�engineering�research�and�the�math�and�science�education�programs�authorized�in�the�
America�COMPETES�Act�and�permanently�extend�a�strengthened�R&D�tax�credit.��
1
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Workforce�Competitiveness�
Introduction�
Despite�the�economic�downturn�and�rising�unemployment,�long-term�demand�in�the�United�States�for�educated�
and�skilled�workers�will�rapidly�exceed�the�supply.�To�compete�and�succeed�in�an�international�marketplace�for�
talent,�U.S.�workers�and�businesses�need�a�21st-century�approach�to�lifelong�learning�that�enables�them�to�
develop�and�refresh�the�skills�needed�for�high-skilled�service�and�manufacturing�jobs.�In�addition,�the�U.S.�
economy�benefits�from�welcoming�the�best�and�brightest�from�around�the�world�to�work�in�the�United�States,�
particularly�those�with�advanced�degrees�in�science,�technology,�engineering�and�math�from�U.S.�universities.��
Business�Roundtable�has�long�been�committed�to�improving�the�U.S.�education�system�for�individuals�of�all��
ages.�The�Roundtable�believes�that�a�competitive�workforce�starts�with�access�to�high-quality�early�childhood�
education�and�high-performing�schools�and�extends�to�relevant�and�effective�workforce�education�and�training�
opportunities.��
Background�Our�changing�economy�poses�recurring�challenges�for�U.S.�workers�as�new�jobs�are�created�in�once�unknown�fields�
and�old�jobs�disappear�in�once�rock-solid�occupations.�This�job�“churn”�is�causing�anxiety�for�workers�in�many�
industries�and�communities.�The�days�of�retiring�from�the�same�company�in�which�an�employee�started�a�first�job�
are�long�gone.��
Current�workforce�education�and�training�policies�and�programs�were�designed�to�meet�the�past�needs�of�U.S.�
workers,�but�they�now�are�outdated�and�need�to�adjust�to�current�economic�and�demographic�realities.�
• American�workers�can�expect�to�have�10�to�12�jobs�and�three�to�five�careers.�
• The�fastest-growing�segments�of�the�U.S.�population�increasingly�are�less�educated�at�a�time�when�the�
fastest-growing�new�jobs�require�education�beyond�a�high�school�diploma�and�strong�analytic�and�
problem-solving�skills.�
• Whether�job�loss�results�from�increasing�productivity,�technological�change,�or�domestic�or�international�
competition,�U.S.�workers�need�access�to�education�and�training�while�employed�as�well�as�to�transition�
to�new�jobs.�
• Unemployment�rates�decline�and�wages�increase�with�each�additional�level�of�education�and�training.�
The�United�States�has�an�important�education�asset�to�help�meet�this�need�—�community�colleges.�
�
�
(continued)�
2
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Workforce�Competitiveness�
�
�
�Options�OPTION�1:� Pass�legislation�to�improve�and�strengthen�current�Trade�Adjustment�Assistance�and�Workforce�
Investment�Act�programs�for�dislocated�workers.�
Pro:�Given�current�fiscal�restraints,�undertaking�a�major�overhaul�of�workforce�training�and�
assistance�programs�is�unrealistic.��
Con:�Differentiating�programs�based�on�why�a�worker�lost�a�job�no�longer�makes�sense.�To�meet�
current�needs�as�well�as�future�expectations,�the�worker�training�system�must�be�redesigned�to�
make�it�easily�accessible,�flexible,�accountable�and�responsive�to�labor�market�changes�and�
worker�needs.�
OPTION�2:� In�addition�to�continuously�developing�a�pipeline�of�American�talent�and�effective�worker�
education�and�training�programs,�pass�legislation�to�reform�the�immigration�policies�that�limit�
visas�and�green�cards�for�highly�educated�and�skilled�foreign�talent.��
Pro: �The�United�States�has�benefited�from�welcoming�the�best�and�brightest�from�around�the�
world�and�could�lose�this�talent�to�foreign�competitors.��
Con:�Any�changes�in�visa�and�green�card�availability�for�highly�skilled�foreign�talent�should�be�
done�in�the�context�of�comprehensive�immigration�reform.�
�
(continued)�
Source: Bureau of Labor Statistics, Current Population Survey
Education Pays
Doctoral Degree
Professional Degree
Master’s Degree
Bachelor’s Degree
Associate Degree
Some College, No Degree
High School Diploma
Less Than a High School Diploma
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)
3
�EDUCATION,�INNOVATION�AND�WORKFORCE�
Workforce�Competitiveness�
CEO�Chair�
William�D.�Green��
Chairman�and�CEO�
Accenture�
�
Staff�Contact�
Susan�Traiman�
Business�Roundtable�
202-872-1260�
OPTION�3: � Establish�a�National�Commission�on�Workforce�Competitiveness�to�review�training�and�
adjustment�assistance�programs�to�determine�effectiveness�and�recommend�the�design�and�
funding�mechanisms�for�a�new�approach�that�offers�workers�easy�access�to�all�training,�assistance�
and�education�programs.�
Pro:�The�work�of�identifying�the�best�way�over�the�long�term�to�create,�fund�and�build�political�
support�for�a�portable,�flexible,�easy-to-use�system�for�individuals�to�access�education,�training�
and�assistance�would�benefit�from�the�recommendations�of�a�commission�of�well-regarded�
experts.��
Con:�Commissions�can�be�used�to�provide�excuses�for�postponing�difficult�policy�decisions.�
�
�
�Resources�America�21:�A�New�Approach�to�the�21st�Century�Workforce,�February�2008,�www.businessroundtable.org/sites/�
default/files/2008.05.20_One_pager_-_A%20New%20Approach%20to%20The%2021st%20Century%20�
Workforce.pdf.�
Prospering�Together:�America’s�Citizens,�Communities�and�Companies,�February�2008,�
www.businessroundtable.org/sites/default/files/2008.01.30_Prospering_Together.pdf.�
The�Untapped�Potential�of�Community�Colleges�to�Advance�U.S.�Competitiveness,�forum�on�Capitol�Hill,��
May�20,�2008,�www.businessroundtable.org/initiatives/education/workforce_competitiveness.
��Action�Recommended�� Business�Roundtable�believes�that�the�United�States�needs�both�short-�and�long-term�policy�strategies�to�
maintain�current�and�boost�future�workforce�competitiveness.�We�recommend�that�Congress�move�forward�
on�all�three�options�to�ensure�a�nimble,�productive�and�competitive�workforce�in�the�United�States.��
International Engagement
1
�INTERNATIONAL�ENGAGEMENT�
Trade�and�Investment�
Introduction�
An�intense�debate�is�under�way�in�the�United�States�over�the�future�of�U.S.�trade�and�investment�policies.�Some�
want�to�continue�current�U.S.�policies�of�international�economic�engagement�while�others�would�maintain�the�
fundamental�principles�of�those�polices�but�would�make�them�more�effective�for�American�workers�and�companies.�
And�still�others�want�the�United�States�to�abandon�international�economic�engagement.�
Contributing�to�the�sense�of�urgency�for�the�new�Congress�and�administration�to�resolve�this�debate�are�these�
inescapable�facts:�
• The�international�economy�is�a�reality.�
• American�companies�and�workers�have�to�be�competitive�on�a�global�scale�to�succeed.�
• Our�foreign�competitors�continue�to�pursue�policies�of�international�economic�engagement�to�benefit��
their�companies�and�workers�at�America’s�expense.�
Background�American�companies�and�workers�face�unprecedented�competitive�challenges�in�the�world�economy.�These�challenges�
and�uncertain�times�are�creating�anxiety�about�the�future�for�American�citizens,�communities�and�companies.�To�
overcome�these�anxieties�and�take�advantage�of�opportunities�in�the�world�economy,�we�must�develop�and�implement�
new�and�more�effective�domestic�and�international�policies�to�promote�American�competitiveness�and�fair�treatment�
for�American�exporters�and�investors�and�their�workers�—�not�abandon�international�economic�engagement.��
International�economic�engagement�is�the�cornerstone�of�U.S.�competitiveness�for�three�basic�reasons:�
• First,�the�global�economy�is�a�reality.�The�current�financial�and�economic�crises�make�this�point�sharply.��
• Second,�American�companies�and�workers�face�unprecedented�global�competition.�Our�foreign�competitors�
and�their�governments�are�working�closely�together�to�develop�and�implement�domestic�and�international�
policies�to�succeed�in�the�global�economy.�While�we�debate�the�merits�of�international�trade�and�investment�
negotiations,�they�are�moving�forward�with�new�bilateral�and�regional�trade�agreements�that�will�discriminate�
against�American�workers�and�companies�and�give�their�companies�and�workers�commercial�advantages�in�
important�foreign�markets.�
• Third,�American�companies�and�workers�have�to�be�even�more�competitive�and�on�a�global�scale�to�succeed.�
They�have�to�be�able�to�export�their�goods�and�services�to�foreign�markets,�market�their�goods�and�services�
through�foreign�operations,�and�import�goods�and�services�to�offer�the�most�competitive�prices�and�best�
quality�to�American�consumers.�There�is�no�either/or�in�the�new�international�competitive�struggle.�
American�workers�need�programs�to�develop�and�maintain�the�skills�needed�for�high-skilled�service�and�manufacturing�
jobs�that�increasingly�characterize�the�U.S.�economy�in�the�21st�century.�And�they�need�programs�to�help�them�
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
Trade�and�Investment�
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn��
Business�Roundtable�
202-872-1260�
adjust�when�their�livelihoods�are�threatened�for�whatever�reason�—�whether�it�is�due�to�increasing�productivity,�
technological�change,�or�domestic�or�international�competition.�
American�companies�need�policies�to�help�them�compete�with�powerful�international�competitors�and�adapt�their�
domestic�and�international�business�operations�to�rapidly�changing�business�environments.�
�
��Action�Recommended�� Business�Roundtable�recognizes�there�is�a�need�to�change�U.S.�international�trade�and�investment�
policies�to�make�them�more�effective�for�American�workers�and�companies�in�the�21st�century.�
Some�of�these�changes�will�require�legislation;�others�can�be�developed�and�implemented�by�the�
new�president�in�consultation�with�the�Congress�and�private�sector.��
� Business�Roundtable�believes�these�new�policies�include:��
• Rebuilding�a�bipartisan�consensus�on�international�trade�and�investment,�including�new�
trade�negotiating�legislation;�
• Completing�the�World�Trade�Organization�Doha�Round;��
• Modernizing�Trade�Adjustment�Assistance�and�transitioning�it�to�a�more�comprehensive�
training�and�adjustment�program�for�American�workers�and�communities;��
• Developing�new�approaches�to�make�sure�international�trade�and�investment�agreements�
work�more�effectively�for�American�companies�and�workers�through�integrating,�expanding�
and�modernizing�existing�free�trade�agreements�(FTAs),�negotiating�new�FTAs�with�major�
markets�and�new�bilateral�investment�treaties,�and�improving�enforcement;��
• Using�existing�and�new�constructive�initiatives�and�tools�to�promote�beneficial�economic�
relations�with�China;�
• Developing�new�approaches�to�maximize�the�effectiveness�of�international�trade�and�
investment�negotiations,�such�as�using�“rolling”�negotiations,�plurilateral�negotiations�
with�“like-minded”�countries�and�alternative�formats�like�nonbinding�agreements;�
emphasizing�best�practices;�and�using�capacity�building�and�technical�assistance�
agreements�to�encourage�countries�to�eliminate�barriers�and�regulatory�discrimination;�
• Implementing�the�pending�FTAs�with�Colombia,�Panama�and�Korea;��
• Ensuring�U.S.�trade�programs�provide�real�economic�benefits�for�least�developed�countries;��
• Eliminating�laws�and�regulations�that�impede�U.S.�exports;�and�
• Improving�export�promotion�programs.��
1
�INTERNATIONAL�ENGAGEMENT�
U.S.�Corporate�Tax�Rate�
Introduction�
The�U.S.�federal�corporate�tax�rate�is�35�percent.�Including�state�and�local�corporate�income�taxes,�the�combined�
corporate�tax�rate�was�approximately�39.3�percent�in�2008.�In�comparison,�the�average�combined�corporate�tax�
rate�in�other�Organisation�for�Economic�Co-Operation�and�Development�(OECD)�countries�was�26.2�percent.�
Background�
The�U.S.�combined�corporate�tax�rate�is�the�second�highest�in�the�30-nation�OECD�and�50�percent�higher�than�the�
average�rate�of�the�other�29�OECD�countries.�The�U.S.�corporate�tax�rate�is�9�percentage�points�higher�than�
Germany’s�and�more�than�11�percentage�points�higher�than�the�United�Kingdom’s�(see�figure).��
��������Source:�OECD,�2008�
�
Combined Corporate Tax Rates for OECD Countries, 2008
0
5
10
15
20
25
30
35
40
45
Ja
pa
n
Un
ited
Sta
tes
Canada
Fra
nce
Belg
ium
Italy
Germ
any
Au
stra
lia
New
Zeala
nd
Spain
Luxem
bourg
Me
xic
o
Norw
ay
Sw
ed
en
Unite
d K
ingdom
Kore
a
Po
rtug
al
Fin
land
Ne
the
rlan
ds
Au
stria
Denm
ark
Gre
ece
Sw
itze
rlan
d
Cze
ch
Re
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blic
Hungary
Tu
rke
y
Pola
nd
Slo
va
k R
ep
ub
lic
Ice
lan
d
Irela
nd
OECD Average (excl. US) = 26.2%
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
U.S.�Corporate�Tax�Rate�
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn��
Business�Roundtable�
202-872-1260�
The�high�U.S.�tax�rate�reduces�capital�investment�in�the�United�States,�and�some�studies�indicate�that�the�reduced�
level�of�investment�results�in�lower�wages�for�American�workers.�Other�studies�suggest�that�total�corporate�tax�
collections�would�increase�if�the�corporate�tax�rate�were�lowered.��
Researchers�using�other�measures�of�corporate�tax�rates,�such�as�effective�tax�rates,�have�found�generally�similar�
patterns:�high�U.S.�rates,�with�our�major�competitors�having�lower�rates�that�have�declined�over�the�past�decade.��
A�recent�study�by�a�Canadian�researcher�finds�U.S.�effective�corporate�tax�rates�to�be�the�second�highest�in�the�
OECD�and�7–9�percentage�points�higher�than�competitors�such�as�Canada,�Germany�and�the�United�Kingdom.�
The�one�exception�to�the�pattern�of�high�U.S.�corporate�taxes�is�that�the�ratio�of�U.S.�corporate�taxes�to�gross�
domestic�product�(GDP)�is�lower�in�the�United�States�than�the�average�OECD�country.�In�2005,�for�example,�the�
ratio�of�corporate�taxes�to�GDP�was�3.1�percent�in�the�United�States�and�was�an�average�of�3.7�percent�in�the�
OECD�(the�average�OECD�rate�was�3.4�percent,�excluding�Norway,�which�receives�significant�corporate�tax�
revenue�from�oil�production).�However,�the�United�States�has�extensive�business�activity�that�is�not�conducted�in�
corporate�form�and�is�not�subject�to�corporate�tax.�If�the�corporate�share�of�business�income�in�the�United�States�
were�more�similar�to�the�average�OECD�country,�U.S.�corporate�tax�receipts�as�a�percentage�of�GDP�would�be�
among�the�highest�in�the�OECD.�
�
�
��Action�Recommended�� Overwhelmingly,�the�international�trend�is�for�lower�taxes�on�corporations�to�enhance�economic��
growth�and�provide�higher�paying�jobs�for�a�nation’s�workforce.�Business�Roundtable�believes�that�a�
significantly�lower�U.S.�corporate�tax�rate�would�increase�corporate�investment�in�the�United�States��
and�lead�to�stronger�economic�growth,�with�higher�and�growing�wages�for�American�workers.
1
�INTERNATIONAL�ENGAGEMENT�
Taxation�of�Foreign�Earnings�of�U.S.�Corporations�
Introduction�
The�taxation�of�foreign�operations�of�American�corporations�has�become�a�major�tax�reform�issue.�There�is�a�
growing�belief�that�raising�taxes�on�the�foreign�operations�of�American�corporations�will�help�prevent�the�loss�of�
U.S.�jobs.�Proposals�to�raise�taxes�have�focused�primarily�on�changes�in�current�law�“deferral”�rules.��
The�U.S.�business�community�is�concerned�that�an�increase�in�U.S.�taxes�paid�by�American�companies�on�their�
foreign�earnings�would�reduce�the�ability�of�American-headquartered�businesses�to�compete�with�foreign-
headquartered�companies�for�sales�in�global�markets.�
Background�U.S.�Taxation�of�Foreign�Earnings�
The�United�States�follows�a�principle�of�“worldwide�taxation”�under�which�a�U.S.�company�is�subject�to�U.S.�tax��
on�its�worldwide�income�no�matter�where�the�income�is�earned.�This�includes�the�income�of�any�separately�
incorporated�foreign�affiliates.��
The�United�States�generally�does�not�tax�a�U.S.-based�company�on�the�active�foreign�income�of�its�separately�
incorporated�foreign�affiliates�until�those�earnings�have�been�paid,�typically�as�a�cash�dividend�to�the�U.S.�parent�
company.�
Because�the�parent�company�may�delay�payment�of�U.S.�tax�until�it�has�received�the�foreign�income�as�a�dividend,�
this�method�of�taxation�results�in�deferral�of�U.S.�tax�relative�to�when�the�foreign�earnings�arise.��
Foreign�countries�also�tax�the�profits�arising�from�the�foreign�operations�of�U.S.-based�international�companies.�
To�prevent�double�taxation,�the�United�States�provides�a�foreign�tax�credit�for�the�income�taxes�paid�to�foreign�
governments�by�the�parent�company�and�its�foreign�affiliates.�
Countries�not�following�a�system�of�worldwide�taxation�with�deferral�use�an�“exemption”�or�“territorial”�system�
under�which�the�active�earnings�of�foreign�subsidiaries�are�exempted�from�tax�in�the�home�country�of�the�parent�
company.��
About�one-third�of�Organisation�for�Economic�Co-Operation�and�Development�(OECD)�members�(nine�of�30�
countries)�follow�a�worldwide�system�of�taxation�with�deferral,�while�the�other�two-thirds�follow�an�exemption�
system.�
In�considering�a�U.S.-owned�foreign�subsidiary�competing�against�a�foreign-owned�foreign�subsidiary�operating��
in�the�same�country,�the�U.S.�system�of�worldwide�taxation�with�deferral�generally�results�in�the�U.S.�subsidiary�
paying�the�same�rate�of�tax�on�its�operations�as�the�foreign-owned�subsidiary�while�those�earnings�remain�
reinvested.�This�permits�U.S.-based�international�companies�to�compete�against�foreign-based�companies��
taxed�under�either�deferral�or�exemption�systems.�
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
Taxation�of�Foreign�Earnings�of�U.S.�Corporations�
Operations�of�U.S.-Based�International�Companies�
U.S.-based�international�companies�employed�21.8�million�Americans�in�2005,�accounting�for�nearly�one-fifth�of�
total�U.S.�employment�in�private�industries.�More�than�8�million�Americans�in�manufacturing,�or�56�percent�of�all�
U.S.�manufacturing�employees,�and�13.4�million�Americans�in�service�industries�work�for�these�companies.�
Suppliers�to�U.S.-based�international�companies�and�spending�by�their�employees�created�an�additional�30�million�
American�jobs�in�2005.�Total�employment�generated�by�U.S.-based�international�companies,�both�directly�and�
indirectly,�is�conservatively�estimated�at�47�percent�of�total�U.S.�private�employment.�
More�than�70�percent�of�the�worldwide�employment,�investment�and�production�of�U.S.-based�international�
companies�and�their�majority-owned�foreign�affiliates�are�in�the�United�States.�
More�than�half�of�all�U.S.�exports�—�$491.5�billion�in�2005�—�were�associated�with�trade�by�U.S.-based�
international�companies.�A�10�percent�increase�in�sales�by�foreign�affiliates�is�estimated�to�increase�exports��
by�U.S.�parents�to�their�foreign�affiliates�by�5�percent.�
Because�foreign�affiliates�of�U.S.�companies�frequently�rely�on�supplies�exported�by�the�U.S.�parent,�expansion�
abroad�increases�the�demand�for�U.S.�workers.�When�the�typical�U.S.-based�international�company�expands�
operations�in�its�foreign�affiliates,�each�dollar�of�additional�wages�paid�in�the�foreign�affiliate�is�estimated�to�
increase�U.S.�wages�by�$1.84�as�U.S.�parent�operations�expand.�
American�companies�cannot�rely�solely�on�exports�to�penetrate�foreign�markets.�Foreign�operations�may�be�
necessary�to�market�products�effectively�to�foreign�consumers,�cut�transportation�costs,�avoid�tariff�barriers�and�
meet�local�content�requirements.�Approximately�90�percent�of�the�sales�of�U.S.�foreign�affiliates�are�to�foreign�
customers.�Services�provided�by�foreign�affiliates�often�cannot�be�exported�and�must�be�supplied�locally.�In�2005,�
foreign�affiliates�in�service�industries�represented�61�percent�of�all�U.S.�foreign�affiliates�and�48�percent�of�
employees�in�foreign�affiliates.�
�
�
�
��Action�Recommended�� Business�Roundtable�believes�that�foreign�activities�of�American�companies�enhance�economic�activity�
in�the�United�States,�lead�to�higher�wages�for�American�workers�and�promote�growth�of�the�U.S.�
economy.�Business�Roundtable�does�not�support�policies�that�would�increase�the�current�taxes�paid��
by�American�companies�on�their�foreign�earnings.�Proposals�to�require�current�U.S.�taxation�on�the�
earnings�of�foreign�subsidiaries�of�American�companies�would�reduce�the�international�competitiveness�
of�American�companies�and�their�workers�relative�to�foreign�competitors�and�—�contrary�to�certain�
expressed�views�—�would�lead�to�a�loss�in�jobs�and�reduce�American�living�standards.��
(continued)�
3
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn�
Business�Roundtable�
202-872-1260�
�INTERNATIONAL�ENGAGEMENT�
Taxation�of�Foreign�Earnings�of�U.S.�Corporations�
�
�
�Resources�Business�Roundtable�international�tax�deferral�papers,�April�2008,�www.businessroundtable.org/sites/default/�
files/4.7.08_BRT_ITDP_1-8_Deferral_Papers.pdf.��
Taxing�U.S.�Corporations�in�the�Global�Marketplace,�June�2006,�www.businessroundtable.org/sites/default/files/�
20060509001TaxingUSCorporationsintheGlobalMarketplace.pdf.��
�
� The�current�deferral�rule�generally�ensures�that�foreign�subsidiaries�of�U.S.-based�companies�pay�the�
same�tax�rate�as�their�competitors�in�the�country�in�which�they�are�doing�business,�and�not�a�U.S.�
corporate�tax�rate�that�often�will�be�much�higher.�By�providing�a�level�playing�field,�deferral�allows�
U.S.�companies�to�increase�sales�in�world�markets,�leading�to�more�and�better�paying�jobs�for�
American�workers.�Studies�show�that�the�foreign�operations�of�American�companies�increase�the�
demand�for�American�products�and�services,�thereby�leading�to�more�exports�from�the�United�States�
and�more�jobs�for�Americans.��
� Maintaining�deferral�is�important�to�ensuring�the�competitiveness�of�U.S.�foreign�operations.�All�major�
trading�partners�of�the�United�States�(e.g.,�all�OECD�countries)�either�provide�deferral�or�exempt�the�
foreign�earnings�of�their�companies�from�taxation.�Restrictions�on�deferral�in�the�United�States�would�
be�a�disadvantage�for�American�companies�and�American�workers.�
1
�INTERNATIONAL�ENGAGEMENT�
Expiring�Business�Tax�Provisions�
Introduction�
A�large�number�of�tax�provisions�will�expire�at�the�end�of�2009,�including�important�corporate�provisions�such�as�
the�research�and�development�(R&D)�tax�credit�and�provisions�affecting�the�taxation�of�foreign�subsidiaries�of�
American�companies�(the�active�finance�exception�and�look-thru�rules).�
Background�
A�large�number�of�tax�provisions�are�extended�on�a�nearly�annual�basis.�Because�these�provisions�are�not�
permanent,�it�is�difficult�for�businesses�to�make�long-term�plans.�For�example,�the�absence�of�permanency�for�the�
R&D�tax�credit�means�a�company�planning�the�location�and�size�of�a�research�facility�or�other�long-term�research�
project�cannot�be�certain�that�future�R&D�expenditures�will�qualify�for�the�R&D�tax�credit.�Therefore,�these�
provisions�have�smaller�incentive�effects�because�businesses�cannot�count�on�receiving�tax�benefits�in�future�years.�
Temporary�provisions�may�be�advisable�if�time�is�needed�to�evaluate�the�effectiveness�of�the�new�incentive.�
However,�the�R&D�credit�was�first�enacted�in�1981�and�has�now�been�extended�13�times�—�most�recently�in�
October�2008.�While�the�credit�has�been�modified�from�time�to�time,�lack�of�permanency�is�unnecessary�to�update�
the�credit�over�time.�
Technological�advancement�made�possible�through�private�R&D�performed�in�the�United�States�is�a�key�
contributor�to�America’s�productivity�gains�and�our�nation’s�rising�standard�of�living.�A�permanent�research�tax�
credit�will�promote�jobs�and�manufacturing�in�the�United�States�—�nearly�half�of�the�companies�claiming�the�
research�tax�credit�are�manufacturers�—�and�will�help�the�United�States�maintain�its�competitive�advantage.��
An�Organisation�for�Economic�Co-Operation�and�Development�(OECD)�survey�shows�that�R&D�credits�are�being�
used�increasingly�by�both�OECD�and�non-OECD�countries�to�stimulate�research�by�businesses.�In�2006,�20�OECD�
countries�had�R&D�tax�credits,�up�from�18�in�2004.�International�comparisons�show�that�U.S.�R&D�incentives�are�
among�the�least�generous.�According�to�the�OECD,�in�2007,�the�United�States�ranked�23rd�out�of�25�nations�in�
terms�of�the�cost�reduction�provided�by�the�R&D�tax�incentives.�Between�1999�and�2007,�20�OECD�countries�—�
but�not�the�United�States�—�increased�the�value�of�their�R&D�tax�incentives.�
Two�significant�international�provisions�are�set�to�expire�at�the�end�of�2009:�the�active�financing�exception�and�
the�look-thru�treatment�for�payments�between�American-owned�foreign�subsidiaries.1�These�provisions�help�level�
the�playing�field�for�American�companies�as�they�seek�to�expand�their�sales�of�products�and�services�to�foreign�
customers.�Expansion�by�American�companies�in�foreign�markets�increases�the�demand�for�American�workers�and�
raises�American�living�standards.�
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
Expiring�Business�Tax�Provisions�
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn��
Business�Roundtable�
202-872-1260�
�
1�The�active�finance�exception�permits�certain�types�of�foreign�income�derived�from�the�active�conduct�of�a�banking,�finance�or�insurance�business�to�be�reinvested�in�the�foreign�location�without�incurring�current�U.S.�tax�liability.�This�provision�generally�results�in�U.S.-owned�financial�services�paying�the�same�current�tax�as�foreign-owned�companies�operating�in�the�same�foreign�location.�The�look-thru�rule�permits�certain�payments�of�dividends,�interest,�rents�and�royalties�among�related�controlled�foreign�corporations�to�be�reinvested�without�incurring�current�U.S.�tax�liability�when�the�underlying�source�of�income�is�from�active�earnings�also�eligible�for�deferral.�In�effect,�the�provision�“looks�through”�the�form�of�payment�to�the�underlying�source�of�income.�The�provision�was�adopted�to�permit�foreign�subsidiaries�of�U.S.�companies�to�redeploy�active�foreign�earnings�in�a�manner�similar�to�that�permitted�by�most�U.S.�trading�partners.�
��Action�Recommended�� Business�Roundtable�recommends�that�the�R&D�tax�credit�be�extended�and�enhanced,�and�it�as�well�as�
expiring�international�provisions�be�made�permanent.�If�permanency�cannot�be�achieved�in�the�near�
term,�a�long-term�extension�of�these�provisions�should�be�enacted.�At�a�minimum,�these�provisions�and�
other�expiring�business�provisions�should�be�extended�as�early�as�possible.�Continuing�these�provisions�
has�an�immediate�beneficial�effect�on�American�job�creation�by�reducing�significant�uncertainty�about�
the�tax�rules�that�will�apply�in�the�future�on�investment�projects�undertaken�today.
1
�INTERNATIONAL�ENGAGEMENT�
Individual�Taxes�on�Dividends�and�Capital�Gains�
Introduction�
In�2003,�Congress�enacted�a�new�lower�maximum�tax�rate�on�dividends�and�capital�gains�income.�Unless�extended�
by�new�legislation,�the�reduced�rates�will�expire�at�the�end�of�2010.�
Background�
Corporate�income�in�the�United�States�is�subject�to�two�levels�of�taxation.�Earnings�of�a�corporation�are�first�
subject�to�corporate�income�tax�(with�graduated�rates�up�to�35�percent).�Dividend�distributions�paid�by�a�
corporation�to�its�individual�shareholders�are�then�subject�to�a�second�level�of�tax.�Gains�realized�on�the�sale��
of�corporate�stock�and�other�assets�are�taxable�to�individuals�as�capital�gains�income.��
Long-term�capital�gains�income�(i.e.,�gains�from�the�sale�of�assets�held�more�than�one�year)�of�individuals�has�
historically�been�taxed�at�a�reduced�rate.�Prior�to�legislation�enacted�in�2003,�long-term�capital�gains�were�subject�
to�a�maximum�tax�rate�of�20�percent.�In�contrast,�prior�to�2003,�dividend�income�was�generally�taxed�at�the�same�
rate�as�other�ordinary�income.�
To�minimize�the�double�taxation�of�individual�shareholders�and�to�encourage�investment�by�corporations�financed�
through�the�issuance�of�new�shares,�special�reduced�tax�rates�on�dividends�received�by�individual�shareholders�
were�enacted�in�2003�(and�extended�in�2006).�The�same�reduced�rates�were�applied�to�income�from�long-term�
capital�gains.��
Currently,�dividends�and�long-term�gains�are�subject�to�a�maximum�tax�rate�of�15�percent�for�individuals.�This�rate�
is�reduced�to�zero�for�individuals�who�face�a�tax�rate�of�15�percent�or�less�on�their�ordinary�income�(in�2009,�the�
zero�rate�for�dividends�and�capital�gains�generally�applies�to�joint�returns�with�taxable�income�less�than�$67,900�
and�for�singles�with�taxable�income�less�than�$33,950).�In�the�absence�of�new�legislation�to�extend�these�reduced�
rates,�beginning�in�2011,�dividend�income�will�be�taxed�at�the�same�tax�rate�as�other�ordinary�income,�while�capital�
gains�income�will�be�subject�to�a�maximum�tax�rate�of�20�percent.�
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
Individual�Taxes�on�Dividends�and�Capital�Gains�
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn�
Business�Roundtable�
202-872-1260�
�
��Action�Recommended�� Business�Roundtable�believes�that�the�reduced�tax�rates�for�dividends�and�capital�gains�should�be�
made�permanent.�The�reduced�tax�rates�help�lessen�the�double�taxation�of�corporate�earnings�on�
equity-financed�investments.�The�reduced�tax�rates�provide�incentives�for�companies�to�finance�more�
of�their�investments�through�issuance�of�new�shares�and�the�use�of�retained�earnings�relative�to�the�
use�of�debt�finance.�Reductions�in�the�double�taxation�of�equity�earnings�also�help�mitigate�against�
the�incentive�companies�have�to�use�excessive�levels�of�debt�financing.�High�ratios�of�debt�finance�
can�make�companies�prone�to�insolvency�and�bankruptcy�during�an�economic�downturn.�In�addition,�
reducing�the�double�taxation�of�corporate�earnings�results�in�a�more�efficient�allocation�of�capital�in�
the�economy�by�reducing�the�tax�disadvantage�to�corporate�investments�relative�to�lesser�taxed�forms�
of�investment.�
� By�reducing�impediments�to�the�flow�of�equity�capital�to�the�corporate�sector,�the�U.S.�economy�can�
produce�more�for�any�level�of�savings,�and�corporate�investments�can�expand�over�time,�providing�
higher�wages�for�American�workers.�
1
�INTERNATIONAL�ENGAGEMENT�
Budget�Deficits�and�Spending�Controls�
Introduction�
In�September�2008,�the�Congressional�Budget�Office�(CBO)�estimated�that�the�2009�deficit�would�be�$438�billion,�
or�about�3�percent�of�gross�domestic�product�(GDP).�Subsequent�legislation�and�an�economic�downturn�not�
included�in�the�CBO�forecast�raise�the�prospects�for�budget�deficits�exceeding�$750�billion,�or�more�than�5�percent�
of�GDP�in�2009.�Beyond�the�near�term,�CBO�forecasts�that�under�current�tax�and�spending�plans�significant�
deficits�will�arise�in�future�decades,�due�almost�entirely�to�growth�in�spending�on�Social�Security,�Medicare�and�
Medicaid.�
Background�A�slowdown�in�economic�activity�in�late�2008�and�unprecedented�measures�taken�by�the�federal�government�to�
achieve�stability�in�financial�markets�are�expected�to�lead�to�a�significant�budget�deficit�in�2009,�likely�exceeding�
$750�billion�or�5�percent�of�GDP.�In�contrast,�the�budget�deficit�over�the�past�40�years�has�averaged�2.4�percent�
of�GDP.�
Budget�deficits�are�appropriate,�and�indeed�desirable,�during�an�economic�downturn.�Tax�reductions�or�spending�
increases�can�provide�additional�resources�to�accelerate�an�economic�recovery�and�reduce�unemployment.��
Over�the�longer�run,�the�concern�about�budget�deficits�is�that�the�required�financing�of�this�debt�lowers�American�
living�standards.�It�can�do�this�in�two�ways.�First,�borrowing�by�the�federal�government�directly�crowds�out�funds�
for�private�investment�because�domestic�or�foreign�savings�are�diverted�to�finance�the�growing�government�debt.�
Second,�even�if�inflows�of�foreign�capital�are�sufficient�to�keep�private�investment�from�declining,�the�return�on�
this�capital�—�either�from�the�ownership�of�productive�private�capital�or�from�the�holdings�of�government�debt�—�
is�transferred�to�foreign�investors.�In�either�case,�through�a�reduction�in�the�productive�capacity�of�the�economy,�
our�American�standards�of�living�decline.�
Projections�beyond�the�next�10�years�show�that�spending�on�mandatory�programs,�largely�Social�Security,�
Medicare�and�Medicaid,�is�expected�to�increase�significantly�in�the�absence�of�policy�action.�The�CBO,�the�trustees�
of�the�Social�Security�and�Medicare�programs,�and�other�professional�bodies�that�have�examined�the�matter�all�
predict�that�federal�spending�on�retirement�and�health�will�eventually�overwhelm�the�federal�budget�and�the�
economy�if�the�programs�are�left�to�operate�under�the�provisions�of�current�law.�
Total�federal�government�spending�in�fiscal�year�2008�for�all�programs�governmentwide�was�$2.979�trillion,�or�
about�21�percent�of�GDP.�Between�2008�and�2030,�CBO�estimates�that�spending�on�Social�Security,�Medicare�and�
Medicaid�will�increase�from�8.5�percent�of�GDP�to�14.1�percent�of�GDP.�And�by�2050,�CBO�estimates�these�three�
programs�will�absorb�18.1�percent�of�GDP.�Under�many�scenarios,�spending�on�Social�Security,�Medicare�and�
Medicaid�together�could�equal�or�exceed�total�federal�government�spending�as�a�share�of�GDP�today.�The�most�
significant�growth�over�this�period�will�be�in�the�Medicare�and�Medicaid�programs,�which�today�represent�less�than�
(continued)�
2
�INTERNATIONAL�ENGAGEMENT�
Budget�Deficits�and�Spending�Controls�
CEO�Chair�
James�W.�Owens��
Chairman�and�CEO�
Caterpillar�Inc.�
�
Staff�Contact�
Brigitte�Schmidt�Gwyn��
Business�Roundtable�
202-872-1260�
half�of�spending�on�these�three�programs�but,�under�CBO’s�projections,�will�represent�more�than�two-thirds�of�the�
total�cost�of�these�three�programs�by�2050.�
Maintaining�such�rates�of�spending�growth�would�cause�federal�government�debt�burdens�to�explode�to�
unsustainable�levels�because�lenders�would�recognize�the�government’s�inability�to�finance�this�debt.�Even�before�
such�a�breakdown,�large�deficits�would�crowd�out�private�investment�and�reduce�economic�growth�for�Americans.�
Although�reductions�in�discretionary�spending�can�help�reduce�the�deficit,�they�cannot�solely�offset�the�magnitude�
of�the�growth�in�mandatory�spending.�Similarly,�unprecedented�tax�increases�would�be�required�if�an�attempt�were�
made�to�reduce�the�deficit�through�tax�increases.�Such�tax�increases�would�stifle�economic�growth�and�reduce�
living�standards.�
�
�
��Action�Recommended�� Business�Roundtable�has�always�placed�a�high�priority�on�deficit�reduction�to�enhance�sustained�
economic�growth.�However,�to�avoid�a�prolonged�and�potentially�deeper�recession�than�the�country�
has�experienced�in�recent�times,�a�short-term�increase�in�the�deficit�in�2009�is�an�acceptable,�
although�unfortunate,�outcome.�This�does�not�mean�that�Congress�can�ignore�deficits�now,�or�when�
the�economy�recovers.�Measures�to�control�future�spending�will�be�even�more�important�given�the�
increased�debt�this�nation�is�now�incurring.��
� Business�Roundtable�believes�that�future�government�spending�must�be�restrained�to�ensure�that�
future�taxes�do�not�exceed�their�historical�average�as�a�share�of�GDP.�We�encourage�Congress�and�the�
administration�to�consider�the�adoption�of�explicit�spending�caps�for�discretionary�spending�to�ensure�
acceptable�spending�limits.�With�respect�to�Social�Security,�Medicare�and�Medicaid,�we�encourage�
reforms�be�adopted�to�slow�the�growth�in�spending�on�these�programs.�
Sustainable Grow
th
1
�SUSTAINABLE�GROWTH�
Building�Efficiency�
Introduction�
Commercial�and�residential�buildings�are�responsible�for�about�39�percent�of�primary�energy�use�in�the�United�States.�
Twenty�percent�of�the�nation’s�natural�gas�and�72�percent�of�the�nation’s�electricity�are�consumed�by�commercial�and�
residential�buildings,�more�energy�than�is�used�by�either�the�transportation�or�the�industrial�sectors�of�our�economy.�
While�many�cost-effective�technologies�to�make�commercial�and�residential�buildings�significantly�more�energy�
efficient�are�available�today,�market�barriers,�discussed�further�below,�have�blocked�these�products�from�moving�into�
homes�and�commercial�buildings�on�the�scale�that�would�be�economically�justified.�
�������Source:�Energy�Information�Agency,�www.eia.doe.gov/emeu/aer/pdf/pages/sec1_3.pdf�
Background�
The�U.S.�economy�has�steadily�become�a�more�efficient�user�of�energy�(energy�use�per�unit�of�gross�domestic�
product�has�declined�by�more�than�50�percent�since�1970),�but�there�is�significant�untapped�potential�for�greater�
efficiency�through�the�widespread�adoption�of�available�and�cost-effective�technology.�While�building�codes�have�
gotten�more�stringent�in�recent�years�and�appliances�and�electronic�equipment�more�efficient,�the�increasing�size�
(continued)�
2
�SUSTAINABLE�GROWTH�
Building�Efficiency�
of�U.S.�homes,�additions�to�commercial�floor�space,�and�the�proliferation�of�electronic�devices�within�homes�and�
commercial�facilities�have�largely�offset�energy�savings�from�newer�homes�and�appliances.��
Lack�of�consumer�knowledge�and�understanding�is�probably�the�largest�single�barrier�to�greater�energy�efficiency.1�
Many�consumers�are�not�aware�of�how�much�more�efficient�today’s�appliances,�HVAC�systems,�furnaces�and�
windows�are�compared�to�those�on�the�market�just�five�years�ago.�In�addition,�small�steps�that�cost�little�—�such�
as�adding�additional�attic�insulation�and�sealing�gaps�around�pipes�and�wires�—�often�are�overlooked.�This�is�
particularly�important�in�view�of�estimates�that�up�to�30�percent�of�energy�used�for�heating�and�cooling�is�lost�
because�of�cracks�and�gaps�in�the�building�envelope.�Additionally,�consumers�often�do�not�understand�the�
concept�of�investment�“payback”�when�making�purchasing�decisions.�Energy�audits�by�qualified�professionals�and�
assistance�in�“buying�down”�the�initial�cost�of�upgrades�have�been�shown�to�be�highly�effective�in�motivating�
consumers�to�make�cost-effective�efficiency�investments.�
The�Energy�Policy�Act�of�2005�and�the�Energy�Independence�and�Security�Act�of�2007�provided�tax�incentives��
for�efficiency�investments,�updated�appliance�efficiency�codes�and�lighting�standards,�and�required�the�federal�
government�to�purchase�and/or�lease�only�energy-efficient�products�and�space.�In�the�Emergency�Economic�
Stabilization�Act�of�2008,�Congress�extended�certain�expiring�tax�provisions�relating�to�energy-efficient�investments�
in�products�such�as�appliances,�insulation,�windows�and�“green�buildings.”�Further�congressional�action�may�occur�in�
2009�to�spur�increased�building�efficiency,�but�much�of�the�activity�currently�is�occurring�in�the�states.�
�
��Action�Recommended�� Business�Roundtable�supports�federal,�state�and�local�efforts�to�significantly�strengthen�and�
continuously�update�and�enforce�building�codes;�state�regulatory�policies�to�make�the�delivery��
of�energy�efficiency�a�core�part�of�a�utility’s�business;�full�funding�for�energy�efficiency�programs�
authorized�in�the�Energy�Independence�and�Security�Act�of�2007;�the�promotion�of�“green�
mortgages”�by�lenders;�and�programs�to�extend�“energy�audits”�to�homeowners�and�owners�of�
commercial�buildings.��
� Business�Roundtable�believes�that�widespread�adoption�of�existing�technologies�and�continued�
technological�improvements�can�reduce�our�energy�intensity,�reduce�greenhouse�gas�emissions�and�
strengthen�our�economy�by�improving�productivity�and�efficiency.�There�are�no�“silver�bullets”�or�
“home�runs”�in�the�building�efficiency�area.�Increasing�energy�efficiency�is�often�a�series�of�small,�
cost-effective�steps.�Thus,�all�levels�of�government�need�to�be�involved.�
� The�federal�government�can�lead�by�example,�by�basing�its�purchasing�decisions�in�part�on�energy�
efficiency,�encouraging�state�utility�regulators�to�adopt�policies�to�make�the�delivery�of�energy�
efficiency�a�core�part�of�utilities’�businesses,�and�encouraging�state�and�local�governments�to�
continuously�update�and�enforce�modern�building�codes.�The�federal�government�also�needs�to�
(continued)�
3
�SUSTAINABLE�GROWTH�
Building�Efficiency�
CEO�Lead�Energy�Efficiency�Campaign�
Michael�Thaman�
Owens�Corning�
�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
�
�Resource�More�Diverse,�More�Domestic,�More�Efficient:�A�Vision�for�America’s�Energy�Future,�June�2007,�
www.businessroundtable.org/sites/default/files/Business_Roundtable_Energy_Report_06062007.pdf.��
� continuously�update�appliance�efficiency�standards,�aggressively�promote�the�Energy�Star�labeling�
program�and�“green�buildings”�initiatives,�and�continue�to�provide�favorable�tax�treatment�for�
efficiency�investments.��
� Concerted�action�by�all�levels�of�government�—�federal,�state�and�local�—�as�well�as�by�state�utility�
regulators�will�be�required�to�realize�the�full�potential�of�greater�building�efficiency.�In�2007,�Business�
Roundtable�released�its�comprehensive�energy�recommendations,�More�Diverse,�More�Domestic,�
More�Efficient:�A�Vision�for�America’s�Energy�Future.�Specifically,�the�Roundtable�called�for:�
� Improving�energy�efficiency�in�the�commercial,�residential�and�electric�power�sectors.�The�United�States�should�reduce�energy�intensity�by�at�least�25�percent�above�the�anticipated�business-as-usual�rate�by:��
• Substantially�boosting�the�efficiency�of�new�and�existing�commercial�and�residential�
buildings;��
• Deploying�a�broad�portfolio�of�energy-efficient�technologies�for�building�operations�and�
appliances;��
• Increasing�the�efficiency�of�the�transmission�and�distribution�system;��
• Optimizing�the�power�grid�with�new�or�advanced�technologies�to�save�energy�and�
improve�reliability;��
• Encouraging�smart�metering�and�other�strategies�that�reduce�peak�period�demand�on�
the�grid;��
• Improving�the�efficiency�of�the�nation’s�power�plant�fleet�through�upgrades�at�existing�
units�and�by�constructing�new�advanced�technology�units;��
• Accelerating�the�deployment�of�wind�and�solar-thermal�power�generation;��
• Increasing�reliance�on�efficient�combined�heat�and�power�units�at�industrial�facilities;�and�
• Challenging�individual�companies�to�set�and�meet�ambitious�energy�efficiency�goals.��
1�Alliance�to�Save�Energy,�Winter�Tips,�www.ase.org/content/article/detail/924,�and�Summer�Tips,�www.ase.org/content/article/detail/1078;�No-Cost�Low-Cost�Tips�for�Saving�Money�&�Energy,�www.ase.org/content/article/detail/965.�
1
�SUSTAINABLE�GROWTH�
Building�a�“Greener”�Energy�Infrastructure�
Introduction�
The�United�States�faces�a�myriad�of�economic,�energy�and�environmental�challenges�in�the�years�ahead.�While�oil�
prices�have�declined�materially�in�recent�months�as�a�result�of�the�worldwide�economic�slowdown,�thus�providing�
much�needed�relief�to�consumers�and�businesses,�low�prices�historically�have�paved�the�way�for�even�higher�peak�
prices�in�subsequent�years�as�investment�in�new�and�alternative�resources�is�curtailed,�increased�efficiency�ceases�to�
be�a�priority,�and�complacency�becomes�the�norm.�Today’s�current�low�energy�prices�may�in�fact�lead�to�greater��
U.S.�dependence�on�oil�imports�in�the�years�ahead�as�investment�in�marginal�U.S.�production�is�curtailed.��
In�addition�to�our�oil�import�dependency,�there�is�increasing�concern�over�the�effects�of�global�climate�change.�
Addressing�this�challenge�will�require�greater�energy�efficiency,�a�larger�contribution�by�renewable�sources�of�energy,�
and�the�development�and�deployment�of�low�or�zero�carbon�fuels.�Casting�a�pall�over�the�policy�changes�that�will�be�
required�to�lessen�our�dependence�on�imported�fuels�and�reduce�greenhouse�gas�emissions�is�the�worldwide�
economic�recession�that�threatens�to�get�worse�before�it�gets�better.�Investing�in�a�“greener”�energy�infrastructure�
(renewables,�transmission�to�connect�renewables�to�the�grid,�a�smarter�grid�and�greater�building�efficiency)�can�help�
lessen�our�dependence�on�imports,�reduce�greenhouse�gas�emissions,�improve�our�energy�efficiency,�and�create�and�
sustain�thousands�of�needed�jobs.�
Background�
Our�new�President�Barack�Obama�has�indicated�that�one�of�the�highest�priorities�of�his�administration�will�be�
enacting�new�energy�policies�that�will�reduce�our�energy�dependence,�promote�energy�efficiency�and�renewable�
energy,�and�combat�climate�change�by�capping�and�reducing�carbon�dioxide�and�other�greenhouse�gas�emissions.�
The�new�president�and�congressional�leadership�also�have�discussed�the�possibility�of�providing�increased�incentives�
for�“green”�energy�(renewables�and�energy�efficiency)�infrastructure�as�part�of�an�economic�stimulus�bill�likely�to�be�
considered�by�Congress.�Although�the�timing�of�these�initiatives�is�uncertain,�it�is�likely�that�an�economic�
stimulus/“green�jobs”�bill�will�be�considered�soon�after�the�111th�Congress�convenes�in�January,�followed�by�longer-
term�energy�and�climate�proposals.�
�
��Action�Recommended�� Business�Roundtable�believes�that�while�the�issues�highlighted�below�do�not,�on�their�own,�represent�a�
comprehensive�energy�infrastructure�or�climate�policy,�they�will�make�an�important�down�payment�on�a�
more�secure,�more�diverse,�more�sustainable,�lower�carbon�energy�future.�
(continued)�
2
�SUSTAINABLE�GROWTH�
Building�a�“Greener”�Energy�Infrastructure�
�
� �Increase�Production�of�Renewables�
� The�tax�code�provides�either�production�tax�credit�or�investment�tax�credit�subsidies�for�a�variety�
of�renewable�fuels,�including�wind,�solar,�biomass,�geothermal�and�small�hydroelectric�resources.�
In�October�2008,�Congress�extended�solar�investment�tax�credits�through�2016.�However,�wind�
production�tax�credits�(currently�equal�to�2�cents�per�kilowatt�hour)�were�extended�only�through�2009.�
Wind�holds�the�potential�of�providing�as�much�as�20�percent�of�our�electric�generation�by�2030,�given�
the�right�incentives�and�investment�in�infrastructure.�While�wind�is�our�most�economical�renewable�
resource,�it�is�still�more�expensive�than�conventional�resources�in�most�areas.�Business�Roundtable�
supports�extension�of�the�wind�production�tax�credits�for�an�additional�three�to�four�years.�
� Modernize�the�Electric�Grid�
� The�most�abundant�renewable�resources,�including�wind,�solar�and�geothermal�resources,�often�
are�located�in�remote�locations,�far�from�existing�load�centers.�Without�a�substantial�expansion�
and�modernization�of�the�transmission�system,�the�United�States�will�not�be�able�to�realize�the��
full�potential�of�our�renewable�resources.�Unfortunately,�multistate�high-voltage�transmission�
lines�are�difficult�to�site�and�build,�in�part�because�of�a�balkanized�planning,�cost�allocation�and�
siting�process�designed�for�a�different�era.�The�American�Wind�Energy�Association,�the�American�
Electric�Power�Company�and�others�have�called�for�new�legislation�that�would�expand�the�role�of�
the�Federal�Energy�Regulatory�Commission�to�include�overseeing�the�planning�of�long-distance,��
high-voltage�transmission�facilities;�allocating�costs;�and�ensuring�the�siting�of�these�facilities.�
Business�Roundtable�supports�legislation�embodying�these�principles.�In�addition,�a�smarter,��
more�controllable�transmission�and�distribution�system�will�help�utilities�and�their�customers��
more�optimally�use�electricity�and�generation�resources.�The�Roundtable�supports�full�funding��
for�the�Department�of�Energy’s�smart�grid�demonstration�programs�authorized�in�the�Energy�
Independence�and�Security�Act�of�2007.�
� Improve�Building�Efficiency�
� Commercial�and�residential�buildings�are�responsible�for�about�39�percent�of�primary�energy�use�in�
the�United�States.�Commercial�and�residential�buildings�consume�20�percent�of�the�nation’s�natural�
gas�and�72�percent�of�the�nation’s�electricity�—�more�energy�than�is�used�by�either�the�transportation�
or�industrial�sectors�of�our�economy.�While�building�codes�have�gotten�more�stringent�in�recent�years�
and�appliances�and�electronic�equipment�more�efficient,�the�increasing�size�of�U.S.�homes,�additions�
to�commercial�floor�space�and�the�proliferation�of�electronic�devices�within�homes�and�commercial�
facilities�have�largely�offset�energy�savings�from�newer�homes�and�appliances.��
� The�Energy�Policy�Act�of�2005�and�the�Energy�Independence�and�Security�Act�of�2007�provided�
tax�incentives�for�efficiency�investments,�updated�appliance�efficiency�codes�and�lighting�
standards,�and�required�the�federal�government�to�purchase�and/or�lease�only�energy-efficient��
(continued)�
3
�SUSTAINABLE�GROWTH�
Building�a�“Greener”�Energy�Infrastructure�
CEO�Chair�
Michael�G.�Morris�
Chairman,�President�and�CEO�
American�Electric�Power��Company,�Inc.�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
�
�
�
� products�and�space.�In�the�Emergency�Economic�Stabilization�Act�of�2008,�Congress�extended�
certain�expiring�tax�provisions�relating�to�energy-efficient�investments�in�products�such�as�
appliances,�insulation,�windows�and�“green�buildings.”��
� Preliminary�Business�Roundtable�economic�modeling�results�have�confirmed�what�other�studies�have�
found:�Increasing�the�efficiency�of�our�buildings�is�one�of�the�most�effective�and�cheapest�ways�to�
reduce�our�energy�usage�while�lowering�our�carbon�footprint.�Existing�building�stock�does�not�turn�
over�rapidly;�accordingly,�stringent�new�building�codes�and�new�building�technologies,�while�
essential,�will�have�little�immediate�effect�on�overall�building�stock�efficiency.�To�achieve�full�
potential�in�this�area,�existing�building�stock�retrofits�need�to�be�targeted.��
� Business�Roundtable�supports�increased�weatherization�assistance�funding�for�low-income�
consumers,�increased�educational�efforts�targeted�at�homeowners,�training�assistance�for�workers�to�
perform�activities�in�these�areas,�state�regulatory�policies�to�make�the�delivery�of�energy�efficiency�a�
core�part�of�a�utility’s�business,�full�funding�for�energy�efficiency�programs�authorized�in�the�Energy�
Independence�and�Security�Act�of�2007,�programs�to�extend�“energy�audits”�to�homeowners�and�
owners�of�commercial�buildings,�and�the�updating�and�adoption�of�new�building�codes.�
1
�SUSTAINABLE�GROWTH�
Climate�Change�
Introduction�
The�majority�of�scientists�believe�that�man’s�activities�have�contributed�to�a�recent�increase�in�global�temperatures,�
which,�if�sustained,�can�have�far-reaching�negative�effects�on�our�world.��
The�United�Nations’�Intergovernmental�Panel�on�Climate�Change’s�2007�synthesis�report�says:1�
• Warming�of�the�climate�system�is�unequivocal,�as�is�now�evident�from�observations�of�increases�in�global�
average�air�and�ocean�temperatures,�widespread�melting�of�snow�and�ice,�and�rising�global�average�sea�
level.�
• Global�greenhouse�gas�emissions�due�to�human�activities�have�grown�since�preindustrial�times,�with�an�
increase�of�70�percent�between�1970�and�2004.�
• Most�of�the�observed�increase�in�global�average�temperatures�since�the�mid-20th�century�is�very�likely�
due�to�the�observed�increase�in�anthropogenic�greenhouse�gas�concentrations.�
In�Congress,�the�debate�over�climate�change�has�moved�from�a�debate�over�the�science�to�the�more�difficult��
and�contentious�issue�of�what�the�appropriate�legislative�and�regulatory�response�should�be�to�minimize�the�
contribution�of�man�to�predicted�future�warming�trends�while�also�minimizing�the�economic�cost�of�any�legislation.��
Also�contributing�to�the�likelihood�of�climate�legislation�is�a�series�of�court�decisions�and�mandated�actions�under�
the�Clean�Air�Act,�the�Endangered�Species�Act�and�the�National�Environmental�Policy�Act�that�will�require�the�
administration�to�make�decisions�that�could�lead�to�broad�regulation�of�greenhouse�gases�under�those�statutes.�
Background�
Many�of�the�“leading”�climate�scientists�and�the�environmental�community�have�urged�the�United�States�to��
reduce�its�greenhouse�gas�emissions�to�at�least�60–80�percent�below�2005�levels�by�2050�to�minimize�the�risk��
of�irreversible�warming.�In�2006,�according�to�Environmental�Protection�Agency�data,�the�United�States�was�
responsible�for�7.054�billion�metric�tons�of�greenhouse�gases�on�a�carbon�equivalent�basis.�Approximately��
34�percent�of�these�emissions�were�from�electric�power�plants;�28�percent�were�from�the�transportation�sector;��
19�percent�were�from�industry;�and�19�percent�were�contributed�by�the�residential,�agricultural�and�commercial�
sectors.��
The�top�two�U.S.�sector�emissions�contributors�—�electric�generation�and�transportation�—�contribute�
approximately�62�percent�of�all�U.S.�greenhouse�gas�emissions.�To�put�the�enormity�of�the�challenge�into�an�
understandable�context,�if�100�percent�of�emissions�were�eliminated�from�the�electric�and�transportation�sectors,�
the�United�States�still�would�be�approximately�18�percent�short�of�the�80�percent�reduction�goal,�even�assuming�
no�increases�in�emissions�in�the�years�ahead.�Obviously,�such�a�goal�envisions�a�massive�overhaul�of�our�
infrastructure�and�economy.��
(continued)�
2
�SUSTAINABLE�GROWTH�
Climate�Change��
Even�if�the�United�States�were�to�reduce�its�greenhouse�gas�emissions�substantially,�this�alone�would�make�a�
negligible�contribution�to�global�greenhouse�gas�concentrations.�Unlike�most�other�“pollutants,”�greenhouse�gases�
do�not�affect�health�or�the�environment�on�a�local�or�even�regional�scale.�Their�effect�is�global�because�they�
increase�the�concentration�in�the�atmosphere�of�heat-trapping�gases.�Unilateral�action�by�any�one�country�may�
simply�serve�to�transfer�jobs,�economic�activity�and�greenhouse�gas�emissions�to�other�countries�that�do�not�have�
similar�emissions�reduction�requirements.�Unless�all�major�emitting�countries,�including�China�and�India,�take�
action,�global�greenhouse�gas�concentrations�may�not�decline�materially,�regardless�of�U.S.�policy.��
�Options�OPTION�1 : � Adopt�comprehensive�cap-and-trade�or�carbon�tax�legislation�that�would�gradually�increase��
in�stringency�in�a�time�frame�consistent�with�technology�development;�be�coordinated�
internationally�to�minimize�competitive�and�trade�dislocations;�pre-empt�conflicting�state�
programs;�and�in�the�case�of�a�cap-and-trade�bill,�contain�effective�cost�containment�
mechanisms.�
Pro:�While�any�legislation�must�reduce�carbon�emissions�in�a�manner�consistent�with�science,�we�
also�have�to�make�sure�that�technologies�necessary�to�make�reductions�will�be�available�by�the�
time�they�are�mandated.�Mandating�reductions�on�an�unrealistic�time�frame�will�simply�drive�up�
costs�unnecessarily�and�reduce�economic�output,�thus�costing�the�United�States�needed�jobs.��
Con:�The�longer�we�wait�to�make�greenhouse�gas�reductions,�the�more�difficult�and�expensive�it�
will�be�for�us�to�avoid�dramatic�climate�change,�which�could�cost�us�much�more�than�a�stringent�
greenhouse�gas�reduction�program.��
OPTION�2: � Do�not�enact�higher�carbon�taxes�or�a�cap-and-trade�bill.�Instead,�continue�to�fund�aggressively�
the�development�and�deployment�of�nuclear,�renewable�and�clean�coal�technologies�while�
encouraging�greater�efficiency.��
Pro: �Cleaner�technology�ultimately�will�be�the�solution�to�the�climate�change�challenge.�Taxes�
and�carbon�“quotas”�only�accelerate�the�time�when�these�technologies�are�economical�while�
imposing�unnecessary�costs�in�the�interim.�
Con:�Without�the�“stick”�of�higher�taxes�or�carbon�costs,�these�technologies�are�not�likely�to�be�
deployed�soon�enough�to�avoid�damage�to�our�climate.�In�addition,�this�option�does�not�deal�
with�the�impending�decisions�that�must�be�made�under�the�Clean�Air�Act�regarding�regulation�of�
carbon�dioxide�as�a�pollutant.�
�
�
(continued)�
3
�SUSTAINABLE�GROWTH�
Climate�Change�
CEO�Chair�
Michael�G.�Morris�
Chairman,�President�and�CEO�
American�Electric�Power��Company,�Inc.�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
�
�
�Resources�Climate�Change:�Business�Roundtable�Supports�Actions�to�Address�Global�Warming,�September�2007,�
www.businessroundtable.org/sites/default/files/publications/energy_efficiency/Business_Roundtable_�
Climate_Change_Statement.pdf.��
More�Diverse,�More�Domestic,�More�Efficient:�A�Vision�for�America’s�Energy�Future,�June�2007,�
www.businessroundtable.org/sites/default/files/Business_Roundtable_Energy_Report_06062007.pdf.��
��Action�Recommended�� The�two�most�frequently�debated�options�are�identified�on�the�previous�page,�but�consensus�on�one�
or�the�other�of�these�options�is�not�clear.�However,�Business�Roundtable�believes�action�is�called�for�
now�and�recognizes�that�science�provides�growing�evidence�that�Earth’s�climate�is�warming�and�that�
the�consequences�for�society�and�ecosystems�are�potentially�far-reaching.��
� Business�Roundtable�believes�that�any�climate�legislation�must�meet�some�important�benchmarks.�
These�include:��
• Reducing�the�U.S.�carbon�footprint�in�an�economically�sustainable�manner�without�
competitive�imbalances�that�threaten�economic�growth;��
• Minimizing�costs�and�maximizing�certainty�and�predictability,�which�are�essential�for�
rational�business�planning�and�investment�—�in�particular,�access�to�verifiable�offsets�
originating�outside�the�United�States,�liberal�opportunities�for�banking�and�borrowing�so�
that�businesses�can�minimize�compliance�costs,�and�other�cost-containment�measures;��
• Pre-empting�of�all�state�requirements�that�conflict�with,�or�add�burdens�to,�the�operation��
of�federal�cap-and-trade�requirements;�and��
• Paying�attention�to�international�competitiveness�issues�and�distortions.��
1�Intergovernmental�Panel�on�Climate�Change�Synthesis�Report�2007,�www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf.�
1
�SUSTAINABLE�GROWTH�
Domestic�Energy�Supply�
Introduction�
Today,�the�United�States�produces�roughly�5�million�barrels�of�crude�oil�and�consumes�approximately�20�million�
barrels�of�petroleum�products�per�day.�Although�the�United�States�is�the�world’s�largest�oil�consumer,�domestic�
production�has�steadily�declined�since�the�1980s,�and�our�imports�of�crude�oil�and�petroleum�products�have�
steadily�increased,�making�us�more�energy�dependent.�This�increasing�dependence�has�financial,�diplomatic�and�
security�implications.��
Background�
Virtually�all�Outer�Continental�Shelf�(OCS)�areas�other�than�offshore�Texas,�Louisiana,�Alabama,�Mississippi�and�
parts�of�Alaska�have�been�off�limits�to�oil�and�natural�gas�leasing�since�1982.�In�that�year,�Congress�first�enacted,�
as�part�of�the�annual�bill�funding�the�Department�of�the�Interior,�a�prohibition�on�the�use�of�funds�to�conduct�
leasing�activity�in�these�areas.�On�July�14,�2008,�President�George�W.�Bush�withdrew�the�presidential�directive�
barring�preleasing�or�leasing�activities�in�the�prohibited�areas�and�called�on�Congress�to�lift�its�annual�funding�
limitation.�Congress�passed�a�Continuing�Resolution�funding�the�Department�of�the�Interior�through�March�2009,�
without�the�OCS�moratorium�language.�However,�a�portion�of�the�Central�Gulf�of�Mexico�Planning�Area�and�most�
of�the�Eastern�Gulf�of�Mexico�Planning�Area�(Florida�coasts)�are�under�restriction�until�2022�as�part�of�the�Gulf�of�
Mexico�Energy�Security�Act�of�2006.�A�congressional�moratorium�on�the�development�of�shale�oil�lands�held�by�
the�Bureau�of�Land�Management�(BLM)�also�lapsed�at�the�end�of�fiscal�year�2008.��
Some�of�the�areas�holding�the�most�potential�for�oil�and�gas�production�are�located�on�the�OCS,�where�
approximately�80�percent�of�the�acreage�has�been�off�limits,�and�in�the�Coastal�Plain�area�of�the�Arctic�National�
Wildlife�Refuge�(ANWR).�According�to�the�Department�of�the�Interior’s�Minerals�Management�Service�(MMS),�
areas�currently�off�limits�to�leasing�on�the�OCS�total�19.1�billion�barrels�of�oil�and�83.9�trillion�cubic�feet�of�gas.��
By�way�of�comparison,�according�to�the�Energy�Information�Administration,�existing�proven�oil�and�natural�gas�
liquid�reserves�in�the�United�States�currently�total�approximately�29�billion�barrels�and�211�trillion�cubic�feet,�
respectively.��
ANWR�includes�19.6�million�acres�located�in�the�top�northeast�corner�of�Alaska.�One�and�a�half�million�acres�of�
ANWR�(the�1002�study�area�named�after�the�section�of�the�bill�categorizing�ANWR)�located�on�the�Arctic�Coastal�
Plain�have�been�set�aside�specifically�for�further�evaluation,�including�potential�oil�and�gas�exploration,�subject��
to�congressional�approval.�In�1998,�a�report�by�the�U.S.�Geological�Survey�estimated�that�there�were�between��
4.3�billion�barrels�and�11.8�billion�barrels�of�technically�recoverable�reserves�in�the�1002�area.�The�Department�of�
Energy�estimates�that�if�ANWR�exploration�and�production�were�permitted,�production�could�begin�in�2018�and�
would�peak�at�780,000�barrels�per�day�in�2027,�using�the�mean�U.S.�Geological�Survey�estimates�of�reserves.�Using�
the�U.S.�Geological�Survey�high�estimate�of�potential�reserves,�production�could�total�1.45�million�barrels�per�day�
in�2028.��
(continued)�
2
�SUSTAINABLE�GROWTH�
Domestic�Energy�Supply�
The�largest�deposits�of�oil�share�in�the�world�are�found�in�the�Green�River�Formation,�which�covers�parts�of�
Colorado,�Utah�and�Wyoming.�The�Department�of�the�Interior�estimates�that�the�Green�River�Formation�contains�
1.2–1.8�trillion�barrels�of�oil,�with�approximately�800�billion�barrels�of�recoverable�oil,�based�on�mean�estimates.�
This�is�three�times�greater�than�the�proven�oil�reserves�of�Saudi�Arabia�and�more�than�27�times�greater�than�
current�proven�U.S.�conventional�oil�reserves.�
The�lapse�of�the�OCS�leasing�moratorium�will�not�result�in�the�immediate�leasing�of�areas�originally�included�in�the�
moratorium.�MMS�conducts�all�offshore�leasing�activities�pursuant�to�a�five-year�plan.�The�only�area�currently�in�
the�five-year�plan�that�was�subject�to�the�moratorium�is�offshore�Virginia,�which�was�included�at�the�request�of�the�
state.�With�the�lifting�of�the�moratorium,�additional�areas�are�likely�to�be�included�in�MMS’�revised�five-year�plan.�
A�number�of�environmental�reviews�and�approvals�are�required�before�exploration�activities�can�commence�on�the�
OCS,�including�reviews�under�the�National�Environmental�Policy�Act,�Coastal�Zone�Management�Act,�Clean�Water�
Act�and�Clean�Air�Act.�Accordingly,�the�lapse�of�the�offshore�moratorium�will�not�result�in�additional�leasing,�
exploration�or�production�anytime�soon.��
Leasing�activities�cannot�occur�in�ANWR�without�explicit�congressional�authorization.�Leasing�on�BLM�lands�for�
shale�oil�development�can�proceed�unless�Congress�or�the�next�administration�suspends�activities.�
�Options�OPTION�1 : � � Do�not�extend�leasing�moratoria�to�OCS�or�shale�development�areas.�While�reducing�oil�demand�
and�increasing�the�use�of�alternative�fuels�can�help�reduce�our�oil�dependence,�a�long-term,�
comprehensive�energy�strategy�also�should�focus�on�increasing�production�from�our�own�
resources�in�an�environmentally�sensitive�way.�Increasing�production�will�reduce�our�oil�
dependency,�help�create�thousands�of�jobs�that�pay�well,�and�increase�federal�revenues�by�
billions�of�dollars�from�leases�and�royalties�on�production.�
OPTION�2: �� Enact�legislation�to�restrict�leasing�in�some�areas�but�allow�development�of�others.�This�would�
allow�Congress�to�tailor�legislation�to�reduce�potential�environmental�impact.�But�existing�
environmental�laws�require�all�potential�environmental�impacts�to�be�taken�into�consideration.��
In�addition,�the�Coastal�Zone�Management�Act�gives�affected�states�leverage�to�substantially�
reduce�or�de�facto�prohibit�leasing�activities.�This�option�really�is�just�another�way�of�severely�
limiting�further�development�of�OCS�resources.�
(continued)�
3
�SUSTAINABLE�GROWTH�
Domestic�Energy�Supply�
CEO�Chair�
Michael�G.�Morris�
Chairman,�President�and�CEO�
American�Electric�Power��Company,�Inc.�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
�
�
1�More�Diverse,�More�Domestic,�More�Efficient:�A�Vision�for�America’s�Energy�Future,�June�2007,�www.businessroundtable.org/sites/default/�files/Business_Roundtable_Energy_Report_06062007.pdf.�
��Action�Recommended�� Business�Roundtable�opposes�any�extension�of�OCS�or�shale�oil�leasing�moratoria�and�supports�
expanded�access�to�our�domestic�energy�resources.�While�we�cannot�drill�our�way�out�of�our�
problems,�increasing�U.S.�production�will�help�reduce�pressure�on�prices�and�keep�good,�high-
technology�jobs�in�the�United�States.��
� �Increasing�domestic�energy�resources�is�a�central�theme�of�Business�Roundtable’s�More�Diverse,�
More�Domestic,�More�Efficient:�A�Vision�for�America’s�Energy�Future.1�We�must�take�full�advantage�
of�domestic�resources�to�reduce�our�reliance�on�energy�imports�and�provide�a�supply�cushion�that�will�
ease�pressure�on�prices�in�the�global�market.�Investment�in�enhanced�oil�recovery,�coal-to-liquid�
plants�and�nuclear�power�will�contribute�to�this�goal�as�well.��
� �Business�Roundtable�strongly�supports�expanding�opportunities�for�drilling�on�the�OCS.�This�is�a�goal�
that�the�Roundtable�has�advocated�over�several�sessions�of�Congress.�Our�members�support�a�
broader�lifting�of�the�OCS�moratorium�to�allow�oil�and�gas�leasing�in�all�areas�off�the�Atlantic�and�
Pacific�coasts�and�in�the�Gulf�of�Mexico.�Similarly,�the�Roundtable�urges�Congress�to�improve�access�
to�public�lands�in�the�Rockies�and�in�Alaska.
� 1
�SUSTAINABLE�GROWTH�
Electric�Grid�Modernization�
Introduction�
The�nation’s�existing�electricity�transmission�system�is�aging,�highly�fragmented,�patchworked�and�overburdened,�
resulting�in�frequent�grid�congestion;�greater�threats�to�reliability;�and�limitations�on�the�ability�to�access�low-cost�
electricity�supplies�and�overcome�barriers�to�new,�renewable�generation.�Modernization�of�the�grid�to�upgrade�and�
expand�the�existing�transmission�and�distribution�network�and�the�deployment�of�advanced�technologies�to�make�
the�grid�smarter,�more�efficient�and�more�resilient�will�help�drive�energy�efficiency,�reduce�greenhouse�gas�
emissions�and�improve�reliability.���
Background�The�rate�of�investment�in�transmission�infrastructure�has�not�kept�pace�with�increasing�demand�for�electricity.�
Since�1996,�total�electricity�demand�has�grown�by�18�percent,�and�the�energy�sector�has�met�the�demand�with��
27�percent�growth�in�total�generating�capacity.�However,�transmission�infrastructure�growth�has�increased�by��
only�6.8�percent�in�the�same�period�—�and�only�12�percent�over�the�past�two�decades.�Investments�have�typically�
taken�the�form�of�small�upgrades�needed�for�reliability,�not�components�of�the�large,�high-voltage,�multistate��
and�inter-regional�transmission�network�needed�to�deliver�reliable�energy,�often�from�distant�generation�locales.�
Moreover,�investments�in�smart�grid�technology�have�been�minimal.1��
Advances�in�communications,�materials,�and�Internet�and�computer�technologies�have�made�possible�a�smarter�
electric�grid�—�a�national�electricity�delivery�network�that�incorporates�advances�in�digital�and�information�
technology�for�enhanced�operational�monitoring,�control,�intelligence�and�connectivity.�Embedding�smarter�
technologies�in�transmission�assets�can�greatly�improve�the�reliability,�security,�economy�and�efficiency�of�the�
electric�grid�by�permitting�greater�visibility�into�and�control�of�the�system.��
Congress�has�taken�a�number�of�initial�steps�to�advance�transmission�and�distribution�investments�and�a�smarter�
grid�in�recent�years.�The�Energy�Policy�Act�of�2005�included�a�number�of�smart�metering�provisions�such�as�
requirements�that:�
• States�and�nonregulated�utilities�consider�providing�time-based�rates�and�advanced�metering��
to�all�consumers;�
• Federal�Energy�Regulatory�Commission�(FERC)�conducts�an�annual�assessment�on�demand�response�and�
advanced�metering,�which�includes�a�national�survey�to�determine�the�penetration�and�saturation�of�
advanced�metering;�
• The�Department�of�Energy�issues�a�report�to�Congress�on�demand�response�potential;�and��
• All�federal�buildings�be�equipped�with�advanced�metering.��
The�Energy�Independence�and�Security�Act�of�2007�contains�various�provisions�designed�to�encourage�research,�
development�and�deployment�of�smart�grid�technologies,�including�requiring�the�National�Institute�of�Standards�
(continued)�
2
�SUSTAINABLE�GROWTH�
Electric�Grid�Modernization�
CEO�Chair�
Michael�G.�Morris�
Chairman,�President�and�CEO�
American�Electric�Power��Company,�Inc.�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
and�Technology�to�be�the�lead�agency�to�develop�standards�and�protocols;�creating�a�research,�development��
and�demonstration�program�for�smart�grid�technologies�at�the�Department�of�Energy�(the�Smart�Grid�Regional�
Demonstration�Initiative);�and�providing�federal�matching�funds�for�portions�of�qualified�smart�grid�investments�
(the�Smart�Grid�Investment�Matching�Grant�Program).�More�recently,�Congress�provided�as�part�of�the�financial�
rescue�package�(Emergency�Economic�Stabilization�Act�of�2008)�incentives�for�the�deployment�of�smart�meters��
by�accelerating�the�recovery�period�for�depreciation�of�smart�meters�and�smart�grid�systems.��
�Options�OPTION:� � Fully�fund�programs�that�have�been�authorized�by�the�Energy�Policy�Act�of�2005�and�the�Energy�
Independence�and�Security�Act�of�2007�and�are�designed�to�advance�smart�grid�technologies.�
Continue�to�encourage�FERC�to�exercise�its�authority�to�provide�incentives�for�upgrading�the�
nation’s�transmission�system.�
Pro: �Congressional�authority�already�exists�to�do�many�of�the�things�that�need�to�be�done.�
However,�Congress�needs�to�fully�fund�the�programs�it�already�has�authorized�to�establish�
standards,�promote�demonstration�projects�and�conduct�necessary�research.�Many�of�the�
technologies�are�ready�for�the�market�now.�Demonstration�projects�will�help�prove�these�
technologies�and�showcase�the�benefits�that�they�will�bring�to�our�existing�grid.�FERC�needs��
to�continue�to�use�the�authority�it�has�to�encourage�the�new,�high-voltage�transmission��
upgrades�necessary�to�connect�renewables�and�improve�reliability�and�market�access.��
Con:�This�area�is�one�best�left�to�the�private�sector�and�the�states.�
�
�1�A�smart�grid�is�a�transformed�electricity�distribution�network�that�uses�two-way�communications�to�improve�the�efficiency,�reliability�and�safety�of�power�delivery�and�use.�Smart�grid�is�called�several�other�things,�including�“smart�power�grid”�and�“smart�electric�grid.”�Deploying�the�smart�grid�became�the�policy�of�the�United�States�with�passage�of�the�Energy�Independence�and�Security�Act�of�2007�(Title�13).�The�law,�Title�13,�sets�out�$100�million�in�funding�per�fiscal�year�from�2008�to�2012�in�addition�to�other�reimbursements�and�incentives.�
�
��Action�Recommended�� Congress�needs�to�fully�appropriate�funds�authorized�for�modernization�of�the�grid,�including�the�
Smart�Grid�Regional�Demonstration�Initiative,�the�Smart�Grid�Investment�Matching�Grant�Program,�and�
efforts�by�the�National�Institute�of�Standards�and�Technology�to�help�develop�protocols�and�model�
standards�to�achieve�interoperability�of�smart�grid�devices�and�systems.�In�addition,�state�regulators�
need�to�be�encouraged�to�develop�predictable�cost�recovery�and�return�on�investment�methodologies�
for�regulated�utilities�making�investments�in�smart�grid�technologies.�Finally,�FERC�should�continue�to�
exercise�its�authority�under�existing�law�to�provide�incentives�for�upgrading�the�nation’s�transmission�
system�and�investing�in�advanced�transmission�technologies.
� 1
�SUSTAINABLE�GROWTH�
Wind�and�Solar�
Introduction�
According�to�the�Energy�Information�Administration,�U.S.�electricity�demand�is�expected�to�increase�between��
18�percent�and�39�percent�by�2030.�While�greater�efficiency�and�conservation�can�reduce�our�need�for�additional�
electric�generation�capacity,�substantial�new�electric�generation�clearly�will�be�essential�to�meet�the�needs�of�a�
growing�economy�and�to�replace�older,�less�efficient�generation�units�that�are�approaching�the�end�of�their�useful�
lives.�Policies�that�either�cap�or�establish�a�price�for�carbon�dioxide�emissions�will�accelerate�the�need�for�new�
generation�capacity.�Two�of�the�fastest-growing�nonfossil�fuel�alternatives,�wind�and�solar�energy,�are�zero�
emissions�generating�resources�with�“free”�fuel�costs.�These�two�technologies�can�help�significantly�reduce�our�
dependence�on�fossil�fuels�for�generating�electricity.��
Background�
Over�the�past�eight�years,�cumulative�wind�capacity�has�grown�an�average�of�27�percent�a�year.�As�of�September�
2008,�the�United�States�—�with�more�than�20,000�megawatts�of�installed�wind�electric�generation�capacity�—�
now�leads�the�world�in�the�amount�of�electricity�generated�from�wind.�However,�wind�supplied�less�than�1�percent�
of�U.S.�net�electricity�generation�in�2007.�The�Department�of�Energy�has�estimated�that�with�the�right�policies�it�
may�be�possible�to�generate�up�to�20�percent�of�our�electricity�with�wind�by�2030.�However,�substantial�
transmission�upgrades�will�be�necessary�to�reach�this�goal.��
Solar�electricity�generation�also�has�been�expanding�rapidly,�but�it�would�take�a�decade�of�50�percent�annual�
growth�for�solar�to�generate�the�1�percent�that�wind�generates�today.�Both�wind�and�solar�today�are�more�
expensive�(solar�substantially�more�so)�than�other�generation�resources�and�are�competitive�only�with�government�
support.�However,�continued�technological�progress�is�bringing�costs�steadily�down.��
Congress�has�provided�production�tax�credits�(PTC)�for�wind�generation�since�1992,�and�in�the�Emergency�
Economic�Stabilization�Act�of�2008,�credits�were�extended�for�facilities�placed�in�service�before�the�end�of��
2009.�The�PTC�currently�amounts�to�2�cents�per�kilowatt�hour�for�the�first�10�years�of�facility�generation.�Solar�
generation�also�has�received�tax�credits:�The�30�percent�investment�tax�credit�has�been�extended�to�2016,�and��
the�previous�$2,000�cap�on�homeowner�tax�credits�has�been�eliminated.��
�Options�OPTION�1 : � � Extend�the�wind�PTC�for�an�additional�three�to�four�years�and�provide�continued�research�and�
development�support�for�electricity�storage�technologies,�offshore�wind�application�and�solar�
technologies.�Consider�giving�the�Federal�Energy�Regulatory�Commission�(FERC)�greater�
authority�over�siting�of�regional,�high-voltage�transmission�lines.�
�
(continued)�
2
�SUSTAINABLE�GROWTH�
Wind�and�Solar�
CEO�Chair�
Michael�G.�Morris�
Chairman,�President�and�CEO�
American�Electric�Power�Company,�Inc.�
Staff�Contact�
Marian�Hopkins�
Business�Roundtable�
202-872-1260�
Pro:�In�optimal�wind�areas,�wind-generated�electricity�is�close�to�being�economic�today.�
However,�wind�is�intermittent�and�often�is�available�during�nonpeak�demand�time�periods,�thus�it�
commands�less�of�a�price�than�firm,�on-peak�power.�In�addition,�costs�of�transmission�upgrades�
and�materials�inflation�have�kept�wind�projects�on�the�margin�economically�without�the�benefit�
of�the�PTC.�Finally,�offshore�wind�installations,�where�operating�conditions�are�much�harsher,�are�
substantially�more�costly�than�onshore�applications.�Solar�generation�today�is�at�least�three�to�
four�times�more�costly�than�conventional�fossil�fuel�generation.�Even�though�technological�
advances�in�the�solar�industry�are�rapidly�driving�down�costs,�without�progress�on�transmission�
siting�issues,�renewables�development�will�be�stymied.��
Con:�Congress�has�provided�subsidies�for�wind�and�solar�production�since�1992.�In�addition,�
more�than�half�the�states�have�enacted�renewable�portfolio�standards�that�provide�a�further�
subsidy�in�the�form�of�a�market�set-aside�and�valuable�credits.�It�is�time�for�these�technologies�to�
compete�in�the�marketplace.�
OPTION�2: � Extend�the�wind�PTC�and�enact�a�renewable�portfolio�standard�requiring�each�regulated�electric�
utility�to�purchase�a�certain�amount�of�renewable�energy�for�its�energy�supply�portfolio.��
Pro: �This�would�provide�maximum�encouragement�to�wind�and�solar�technologies,�thus�speeding�
their�development.��
Con:�Congress�will�have�to�carefully�review�whether�onshore�wind�facilities�will�still�need�PTC�
support�if�a�renewable�portfolio�standard�is�enacted�into�law.�A�renewable�portfolio�standard�not�
only�will�create�additional�demand�but�also�will�have�credits�associated�with�production�of�
renewables�that�have�a�market�value.�Offshore�wind�and�solar�applications�probably�will�still�be�
above�market,�even�taking�into�consideration�the�market�value�of�renewables�credits.�A�
renewable�portfolio�standard,�however,�essentially�amounts�to�an�additional�subsidy�that�calls�
into�question�whether�the�PTC�is�still�warranted.��
�
��Action�Recommended�� Long-term,�stable�and�predictable�federal�policies�are�essential�for�the�private�sector�to�be�able��
to�make�the�investments�needed�to�fully�develop�the�potential�of�wind�and�solar�technologies.�
Accordingly,�Business�Roundtable�supports�extension�of�the�wind�PTC�and�continuation�of�the�solar�
investment�tax�credit.�In�addition,�federal�leadership�will�be�needed�with�respect�to�cost�allocation,�
planning�and�siting�for�the�necessary�new�transmission�lines.�The�Roundtable�urges�Congress�to�expand�
FERC’s�role�in�these�areas�and�encourages�the�Department�of�Energy�to�fully�exercise�its�existing�
authority�to�designate�National�Interest�Electric�Transmission�Corridors�necessary�to�integrate�wind��
and�solar�resources�into�the�grid.��
1717 Rhode Island Avenue, NW
Suite 800
Washington, DC 20036
Telephone 202.872.1260
Facsimile 202.466.3509
Website businessroundtable.org
Effective Leadership on the World StageCEO Memos to Congress
Effective Leadership on the Wo
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tage
CEO M
emos to Congress