US chemical makers, others urge reforms on Obama prior to speech

27 January 2010 20:30  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical makers, other producers and energy leaders on Wednesday called for President Barack Obama to improve manufacturing conditions, open oil and gas resources and ease export restrictions in order to restore jobs.

Several industry officials urged Obama to address employment and economic issues in the president’s first State of the Union address, to be delivered to a joint session of Congress on Wednesday evening.

Usually presented each January, the annual report to Congress on the nation’s situation is traditionally used by the president to set policy and legislative goals for the year ahead.

Obama’s state of the union speech is seen as having particular weight because it will be the president’s first outline of his major policy goals since last week’s upset election victory for Republicans in Massachusetts.

Republican Scott Brown won the 19 January Massachusetts special election to fill the US Senate seat formerly held by the late Ted Kennedy, a leading liberal Democrat and Obama ally who had held the seat for nearly 50 years.

The Massachusetts election was expected to be a no-contest win for Democrats, and the loss is seen by many as a repudiation of Obama and his policies.

In his speech tonight, Obama is expected to refocus his administration on economic issues. 

Although he is not expected to abandon his longstanding policy goals - such as the year-long effort to get a health insurance reform bill through Congress or the parallel but also unsuccessful effort to get climate change legislation passed - the president is likely to put more emphasis on jobs creation.

“We expect President Obama will devote much of tonight’s speech to economic issues,” said Bill Allmond, vice president of government relations at the Society of Chemical Manufacturers and Affiliates (SOCMA).

“We hope the president will offer plans to grow manufacturing capability more this year, such as a permanent R&D tax credit,” Allmond said.

The US research and development (R&D) tax credit expired at the end of 2009, and chemical makers and other manufacturers want that tax incentive expanded and made permanent.

The R&D tax credit allows companies to deduct from their tax bill sums spent on development or improvement of a product. The credit typically is renewed each year by Congress but often amid disputes that, as with last year, allow the incentive to expire. Manufacturers want the credit made permanent so they can have some certainty in R&D planning and spending.

“For chemical manufacturing, we would like President Obama to make international trade part of his jobs plan,” Allmond added. “Creating barriers for US exports hurts jobs here at home and undermines the competitiveness of US goods as other countries more open to trade become the preferred trading partner.”

Chemical makers and the broad US manufacturing sector have been urging Obama and the Democrat-majority Congress to approve long-pending free trade agreements with Colombia, Panama and South Korea.

The National Association of Manufacturers (NAM) also called on Obama to use his state of the union address to urge Congress to make the R&D tax credit permanent. The association, whose 14,000 member firms include many chemical and plastics companies, additionally asked that Obama work to reduce trade restrictions and cut US corporate income tax rates.

NAM noted that at 35%, the US corporate income tax rate is the second-highest among industrialized nations. NAM wants the US rate lowered to 22%, which is equal to the average corporate tax rate of industrialized countries.

Jack Gerard, president of the American Petroleum Institute (API), called on Obama to open more oil and natural gas resources on federal lands to energy development, saying that would improve employment, federal revenues and the nation’s security.

“We hope the president takes the opportunity to recognize the potential of energy development to create more jobs,” Gerard said.

“It will take common-sense adjustments to energy policy so companies can invest more of their own dollars producing more of the nation’s domestic oil and natural gas,” Gerard said. “This won’t require taxpayer dollars or government handouts - we don’t need an earmark or stimulus, just an opportunity.”

Gerard and others in the US energy sector have accused the Obama administration - chiefly the Department of the Interior and its chief, Ken Salazar - of imposing increasing restrictions on drilling over the past year.

“In his state of the union address,” said Gerard, “the president will correctly focus on what the administration can do to lessen the burden on America’s working class.”

“Surely part of that plan should include increasing, not decreasing, supplies of affordable and reliable domestic oil and natural gas,” he added.

The US petrochemicals sector and downstream chemical makers are heavily dependent on natural gas as a feedstock and energy fuel.

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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