Business issues, foreign trade, jobs and taxes are certain to be at the top of the agenda through the end of 2012 and into 2013 as Congress works to avoid potentially devastating cuts in defense and other discretionary spending and prevent significant scheduled tax increases from taking effect.
U.S. Rep. Pete Visclosky, D-Merrillville, has been looking out for Northwest Indiana companies and residents on such issues in the U.S. House since first taking office in 1985.
BusINess sat down with the Congressman prior to the Nov. 6 elections for a wide-ranging interview on where the nation, state and region stand on economic and business issues and what the future might hold.
The following questions and answers have been edited for clarity and space.
Q: One thing on everyone's mind is the economy and whether it is improving. There seem to be some indications that it is. Is that something you're seeing as well, and if so what role did the federal government, through the stimulus and similar programs, play in helping improve economy?
Visclosky: I think that the economy continues to improve at a very modest rate and I anticipate that during the coming year, barring some type of intervening event – that could be Europe, that could be China, that could be the Middle East, that could be the complete failure of the federal government to resolve some of the fiscal and other issues outstanding – that would continue through 2013.
As far as the federal role I think there are a number of them. One is we need to introduce certainty into the economic climate. We have an issue between now and the end of the year on the debt ceiling. You have an issue at the end of the year about the Bush tax cuts. You have an issue at the end of the year about sequestration, which are automatic across-the-board cuts on discretionary spending, which is one-third of the federal budget. It doesn't touch the so-called mandatory programs, such as interest on the debt, Social Security, Medicare. I'm convinced that one of the retardants on the economy today and why it is not growing more robustly is that the government collectively and institutionally has not met that responsibility. As to the extent that you have a have a significant degree of uncertainty hanging over the economy, it is harmful.
Secondly, I believe as far as economic vitality, as far as wage rates, making a living wage, we need to be much more focused on maintaining and encouraging manufacturing in the United States, both as far as an investment issue, as well as recognizing the world internationally is a global market but it is a very great place. I testified before the International Trade Commission (on Oct. 17) on 99,000 tons of steel. Somebody suggested to me it's a small issue. I said here's 75 jobs. Every one of those is important to the people who lost their jobs.
Third, and I think this translates to states as well, and I would include Indiana as a resident of this state, to invest in our economic infrastructure. The American Society of Civil Engineers has indicated that we have a shortfall of about $2.2 trillion in infrastructure investment. ... In their survey, they indicate that in Indiana alone, for example, 4,091 bridges are obsolete or deficient, not unsafe or defective. The example I use locally, of course everybody thinks about Cline Avenue, is NIPSCO is investing a half billion dollars at a plant at Wheatfield. That's a lot of money. You cross the bridge over the Kankakee River between Jasper and Porter County to get to that site and you have to have a stoplight on the bridge because you can only get one car or truck on the bridge at a time. When you think about the number of people, the investment, the economic energy down there and you've got a bridge with a stoplight because it has limited capacity. ... I do believe that has been a classic failure of the federal government and parenthetically, the states.
Q: Where does the money come from to pay for infrastructure improvements? In June, Congress passed a new transportation bill that keeps funding level through 2014 so there's no new additional money, we're going to have more fuel efficient cars so there will be less gas tax money, Indiana's Major Moves money (from the lease of the Indiana Toll Road) is gone, so how do you pay for it?
Visclosky: It costs money. We have not raised the gas tax in Washington since 1993. ... I am not saying that's the perfect answer. Gas is, for the average consumer, a very costly product at this point in time. But it is costly sitting in a traffic jam, it is costly getting your car repaired because you hit a pothole, it is costly when I have to detour around Cline Avenue or I cannot go over the Borman Expressway on Martin Luther King Drive. I have used more gas than potentially I'd have paid in a gas tax.
I'm not saying we should raise the gas tax by any particular amount, but it is time to stop dancing around some of these issues and to be honest with people and to say, 'Listen, this is going to take more revenue.' This is an investment! I just came from Griffith. You drive down Broad Street in Griffith; it is a joy to drive down Broad Street. ... It has made that community more viable. That costs money. So how you distribute that, whether you do it at the wholesale or retail level, what the range is, people have to discuss that and come to a compromise. But we have to be honest and we have to make this investment.
Q: You mentioned sequestration, that would obviously hold up a lot of money for a lot of different things. Do you think this lame duck Congress will find a way to put off the automatic budget cuts or find a new compromise? There doesn't seem to be much room for compromise in the House or Senate lately.
Visclosky: I would suggest to you, at best, Congress will kick the can down the road for three months. ... And that's an open question ... I agree with the conventional wisdom that people won't let this happen, but I cannot construct to you legislatively how they will avoid it. What is wrong here is sequestration is mindless because everybody gets cut the same, and all programs are not alike. ... With the Department of Defense, I'm on defense appropriations, each ship is a line item. Well each ship is a different size, different defense function, different number of personnel, different needs, different state of repair or disrepair – the same cut. In departments, a lot of it would be personnel. Well somebody has to be there to answer the phone, answer those emails, to do something.
Q: What will prompt the necessary institutional change to avoid that?
Visclosky: I have devoted my life to public service, and I wouldn't trade a day of it, and to do that you've got to be a hopeful person. Not Pollyanna, but hopeful. I do believe that one person can lead the world a little bit better, and not me, just all of it. If I wasn't hopeful that there's an ebb and flow – you think about what Congress looked like in the 1850s, we had tough times. I mean people walked over to the Senate and beat people nearly to death, people carried guns onto the floor – so there's an ebb and flow here. ... Somebody is going to get elected president of the United States. Whoever that person is ... has got to step up to the plate, and that has not happened in this debate in a meaningful fashion. ... You need to have one voice that says, "OK, time's up, and the can is now too heavy to kick."
There's about 150 people in the House that are kind of in that middle core. Put us in a room, figuratively speaking, and we'd take care of this. What we have been doing, probably by and large most actively since the summer of 2011, is trying to accrete more people. We have dinners, we have lunches, we have briefings from economists and others and we have accreted additional people. ... In the House, as you know, you need 218 votes on a good day. So I'm still 70 votes short and I may be a little optimistic, but you've got a core. And it's so necessary to do something. I think you get that core, leadership calms down a bit and whoever is president says, "OK, now we've got to do something." We can do it.
Q: Closer to home, the recently released One Region Quality of Life Indicators Report showed Northwest Indiana is basically running in place in nearly every category, from education to employment, health to culture. What two or three things do you think region business leaders and elected officials should focus on to improve quality of life?
Visclosky: It's almost a mirror image of what the debate is in Washington D.C. – what kind of state do you want to live in? People are going to have to address that issue. I don't want to see county roads in the Congressional District I represent revert back to gravel. I don't want to see bridges over interstates closed. I don't want to see a U.S. highway in Hammond over a rail yard down to two lanes instead of four because we don't have enough money. That is an investment. The reason we have industry here is because this is the perfect place for them to be at. That's what we've got to accentuate.
I am very big on transformational projects. This area was transformed 100 years ago when somebody came in and built that first rail mill and built that first refinery. They transformed a bunch of dune and swale and marsh and wetlands and nothing much else, and then you end up having the greatest industrial concentration, from my perspective, in the United States of America. Because somebody made an investment and then you needed roads, you needed rail yards, you needed overpasses, you needed sewer systems, you needed harbors. All of that infrastructure is right here. So we need to do some transformational things.
From my perspective one of those is the (Gary) airport and people are working there today, so that's happening. We need, as the footprint for our industry changes along the lake, to recover our lakeshore and promote the public use. ... I want the South Shore to go to Lowell and Valparaiso in the worst way. I can visualize that train going down those tracks. ... We have to anticipate the future for those who are going to come after us. ... Young people want mass transit. We unfortunately today have less bus service than we had a year ago. That's appalling.
I'm talking jobs here, too, and keeping those mills. The idea that this is the Rust Belt, it makes me madder than heck when somebody says that out there. People are walking in there with laptops, not lunch buckets. You go down to that rolling mill, you've got five people down there for a half mile and running the whole place. You're talking technology here. Purdue has that computational visualization center. They are doing work today for industry, particularly on the energy side: how can I produce steel, how can I do petroleum and save a little bit of BTU. That's private investment coming and Purdue making an investment on that campus in Hammond. Graduate students getting an education. The industry in Northwest Indiana being more efficient, more stable here and money flowing back-and-forth.
Q: You talked about the mills changing. What does Northwest Indiana manufacturing look like in 25 years? Will it still be the engine of this region's economy?
Visclosky: There will probably be less people employed in basic steel production in Northwest Indiana, and they will be producing more steel than they do today on a smaller footprint. ... If we do our job right, while I would predict you will have fewer people in basic steel, my goal and my hope would be you have ultimately more people, 25 years from now, employed in manufacturing in Lake and Porter counties than there are today. That you would slowly reverse that trend. It would be a different type and a more diverse manufacturing base.
Q: Has basic manufacturing been lost to China forever?
Visclosky: I refuse to subscribe to that, but it is a very difficult proposition and, I must tell you, it is a very concerning issue to me. It's not just the manipulation of currency, it is not just no environmental standards, it is not just wage rate or lack of any type of worker safety and health requirements. It is state-sponsored, full-bore, no-holds-barred, government-sanctioned industrial espionage. ... And it's happening every day. The government has to do a better job as far as sharing information where businesses will feel more comfortable coming in to the government if they think something happened, or looking for help to prevent them from getting pillaged.
Q: How can that be prevented?
Visclosky: I'm tired of dialoguing with China. I have saved some old "China Today" newspaper inserts from the Washington Post that say "dialogue is the way of the future," "dialogue will happen," and we've had people from Treasury come in before the Steel Caucus and tell me about their dialogue. I'm tired of it. You're dialoguing us to death. If somebody has manipulated their currency, I'm tired of dancing around the bush. ... We've got to compete. Sometimes having a lower wage rate is an absolutely fair advantage under international law, no question about it. Cheating is not. Breaking international trading standards is not. And it has been a bipartisan failure of every administration I've served with. ... People understand we have to be more alert and much more active.
Q: Any final thoughts on attracting businesses to Northwest Indiana?
Visclosky: As far as businesses wanting to locate in communities, everyone always talks about taxes and all these other things, and I'm sure they all matter. But if you don't have the infrastructure, I'm not even going to look at you. I use Gary as an example, but it is Northwest Indiana. You have four interstates in Gary, two U.S. highways, every rail line east of the Mississippi, an international port on the largest body of freshwater in the U.S. ... You can't pick up Lake and Porter counties and move them any place else. You've got to do it here.