“Are we so focused on our entitlements that we’ve forgotten what has made us great?” posed the keynote speaker at the National Journal’s “Back in Business Forum” on June 19^th.

Honeywell chairman and CEO, David Cote

David Cote spoke with determination about returning the United States to greatness in a speech and interview with Ron Brownstein entitled, “How to Move Forward.”  The Honeywell chairman and CEO firmly stated throughout his address that “we need an American competitiveness agenda.”

Mr. Cote noted that the global economy “will move forward with us or without us” and discussed his six keys for the United States to restore its competitiveness.

His top priority was debt reduction. Although most Americans are fed up with the debt conversation, it is a real problem, and lawmakers cannot continue their dilatory policies indefinitely. Cote noted that increasing healthcare costs are at the heart of the issue. It will require both tax reform (last comprehensively done in 1986) and entitlement reform (to mitigate the rising costs of Baby-Boomer retirement).

Cote did not call for austerity measures, however. Short-term stimulus and a long-term debt solution, he claimed, can still be “mutually compatible,” rather than mutually exclusive. Cote argued that not all spending is good, and that it is most effective when private industry is incapable of doing itself. This type of spending, Cote believes, has a larger multiplier effect on the economy than transfer payments.

Energy efficiency and innovation can both be achievable

A comprehensive energy policy would make the United States more competitive by lowering the cost of electricity and gasoline, Mr. Cote argued. This would encourage more GDP growth and consumer spending. He acknowledged the potential of the shale boom to provide increased revenues and create new jobs. Energy policy does not have to be a choice between innovation and efficiency; Americans would benefit from both.

Free trade, particularly with China, is another key to American competitiveness. Cote seemed dumbfounded by those who continually doubt the economic impacts of trade. He noted that China cannot be labeled as only a “partner, competitor, customer, or supplier,” but rather all four. As economic growth continues in Asia, the United States must be able to evolve and cooperate with the emerging markets.

Cote additionally encouraged the government to develop a more effective policy for STEM education in the United States. He joked that “we need more engineers, not lawyers” and emphasized that we should do more to coordinate and measure the many STEM programs in the United States. Cote also felt that United States tends to have an elitist attitude towards education, and that for those with vocational interests, college is not the best option.

Increased infrastructure spending is another step the United States can take to restore its competitiveness. While developing nations spend 9% of their GDP on infrastructure and Europe 5%, Cote pointed out that the United States spends just 2%. Infrastructure reform should include both repairing roads and advancing broadband capabilities.

Improving infrastructure would make the US more competitive

Cote’s final step to American competitiveness was tort reform, which he noted was an enigma to the international world, is tort reform. He argues a better balance must be reached between being fair for companies and for those who have been wronged. The current system is a major deterrent for international companies looking to do business in the United States.

More important than the proposed solutions of Cote’s speech was his sense of urgency. American competitiveness needs to be addressed immediately. The discussion is picking up momentum with recent reports by both policy experts (here at the American Security Project) and academics (at the Harvard Business School). Consequently, it is incredibly encouraging to see a David Cote, a business leader with private interests, joining the conversation. Our nation’s competitiveness cannot be ignored any longer.

To watch Cote’s keynote, click here.

To watch the forum’s other discussions, click here.

To read ASP’s competitiveness report, click here.

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