Good morning, and may I be one of the first to officially welcome you to the 2011 AED Summit, in this 92nd year of AED’s long
distinguished history of service to equipment distribution since our founding in 1919. Thank you for coming. We wish you a very productive couple of days, but more important, a year of growth and profitability.
Achieving that will be a challenge, and most if not all of you will prevail and succeed. But while some signs of optimism and increased activity are finally appearing, the path to real recovery remains somewhere in the distance. The reason of course is that many of the key markets that drive our businesses – notably residential housing, commercial construction, and infrastructure investment – remain depressed with little near-term improvement in sight. Since residential and commercial construction are mostly driven by supply-demand economics over which AED has little sway, let me focus for a moment on the one big driver that depends primarily on government policy decisions, and which AED can affect. I’m referring of course to infrastructure investment.
This past Monday, the advance teaser releases on the President’s State of the Union content suggested that the speech would be all about “innovation, education, infrastructure and jobs”. I got excited. I got on a plane for Orlando Tuesday night and couldn’t tune in, so I downloaded the text to read on the plane ride down here. I learned that what infrastructure investment primarily meant in the address is that 80% of Americans will have access to high speed rail. And although we need to repair our decrepit roads and bridges – in ways that are “fully paid for”, and with private investment, and with project priorities picked by someone in the Administration (not Congress), who knows best which projects are good for the economy.
That was it. And by the way, anything with an earmark will get vetoed. So much for infrastructure investment lifting your business and bringing back countless construction jobs, unless you happen to provide equipment to the railroads. Not a word about investments in expansion of surface transportation and water infrastructure capacity to meet the needs of a growing economy and provide the physical foundation for productivity and global competitiveness. We did hear that other countries are investing more than we are, and that our infrastructure gets a “D”, and that we need to “redouble” the efforts of the last two years. I’ll take these statements as encouragement that the Administration is thinking about highways and water, but with no commitment or specifics. At least some infrastructure support made it into his address.
As far as the highway program goes, that was all. A year and a half after the expiration of the last highway bill, we’re starting from scratch, or more appropriately, we’re starting from down in the hole. The hole is about $10 billion a year deep. That’s the difference between annual gas tax revenues going into the Highway Trust Fund, and the annual dollars needed to fund even the last program – SAFETEA-LU – which was enacted in 2004 and expired in September 2009, and which has been running on a series of short-term extensions ever since.
Up until now the difference has been made up by transferring money from the Treasury’s general fund to the HTF. But now the majority party in the House has made no secret that it is not disposed to continue to make these transfers under the current fiscal austerity climate. And the Chairman of the Transportation and Infrastructure Committee is floating the thought that maybe we need to do a new highway program that only spends what the trust fund takes in – in other words about $10 billion a year less on highways that what has been spent annually since 2004. In other words, if gas tax revenues shrink further, so will highway spending. And most members of Congress will tell you to forget about raising the gas tax. That’s no way to do multi-year transportation project planning.
Making matters even more difficult, yesterday the Congressional Budget Office dramatically upped its projection of the current fiscal year federal deficit – to about $1.5 trillion, up from last August’s estimate of about $1.1 trillion. That will be the biggest deficit in American history, in a year already being heralded as bringing us “the great recovery”.
Now the reason I’m sharing all this good news is simple: you need to know, if you didn’t already, that our job in Washington just got a lot harder. And by “our job”, I mean not only AED’s job, but your job as business people and constituents. Just about everyone in this room has at least one congressman and two senators. If you have facilities and employ people in more than one state or congressional district, multiply that by X. If we are to prevail, you have got to get in this fight – personally.
AED can have the best lobbyists in Washington to represent you, but we can’t get the job done unless we are talking to your members of Congress with you in the conversation. AED will take the initiative – but you must too. Don’t wait – we can arm you with all the background information and talking points you need. Knock down your congressman’s door – walk in and tell him what he or she needs to do to put construction people to work in the district and stop losing businesses to competitor states and countries that understand how important infrastructure is to competitiveness.
Big budget cuts are in the wind, and now the term “investment” is being demonized by some as a code word for “spend”. We must counter that catchy sound bite with the truth – that spending on infrastructure is an absolutely necessary investment in the American economy’s capacity to grow, to compete globally, and to put Americans to work.
So long story short, AED is not rolling over – instead we’re going to double down on our efforts. Never in my 20-plus years in the industry has there been more at stake for anyone who makes a living on the infrastructure market, nor has there been a tougher job ahead of us. That’s why AED has moved some of its headquarters operations to Washington – including a much bigger share of my own time and presence – to augment our already top-notch legislative office staffed by Christian Klein and his people.
But I’m calling on you to make this fight your own personal business. You can’t delegate it, or let others pull your load, and expect to prevail. If you join in this battle with AED, and with your colleagues and competitors, prevail we will.