CEOs in bullish mood

Trump policies and tax code reform seen as removing business impediments    American chief executive officers are bullish on the U.S. economy because of a new pro-growth political agenda in Washington focused on lower taxes, rolling back unnecessary regulations and infrastructure investment, according to the Business Roundtable.
  Companies have sharply raised their plans for hiring, investment and sales expectations, during the next six months, the group’s survey of 141 corporate chiefs showed.
   The Economic Outlook Index jumped 19.1 points from the fourth quarter of last year to 93.3 in the current quarter, the largest increase in business confidence since the fourth quarter of 2009.
   It is the first time in seven quarters the index has moved above its historical average of 79.8. Readings above 50 indicate economic growth.
   Seventy-nine percent of respondents identified tax reform and regulatory reform as the best way to create a positive environment for their company’s growth.
   The Business Roundtable CEOs now project the U.S. economy to grow 2.2 percent in 2017, a 0.2 percent increase over their prediction in December and up from the government’s official estimate of 1.6 percent growth in 2016.
   The winter storm slamming the Mid-Atlantic and Northeast this week could cause a 10 percent to 20 percent decrease in economic output for the region, or an economic impact of about $2.4 billion in lost wages, that will not be recoverable, according to Oxford Economics. It forecast the lost output would knock 0.1 to 0.2 of a percentage point off real GDP in the first quarter.
   In a conference call with reporters, Business Roundtable Chairman Jamie Dimon, the head of J.P. Morgan Chase, said business leaders believe America is not consigned to be stuck in continuous low growth if the government follows through on tax reform and regulatory changes.
   Tax reform is never easy, but “we think this is the once-in a generation opportunity” to make businesses more competitive, which will increase wages, Business Roundtable President Joshua Bolton said.
   A top industry goal is to change U.S. policy from a worldwide to a territorial tax system so companies that operate overseas aren’t taxed twice – once in another country and then at home. The existing system helps drive capital and research dollars out of the United States, business leaders say.
   Last week, U.S. Chamber of Commerce President Thomas Donahue expressed similar hopes for business tax reform at the organization’s board of directors’ meeting.
   “We’ve got a once-in-a-generation chance to do tax reform, and if we do it right, it can be the single most important step our leaders take to drive economic growth,” he said, according to remarks released by the Chamber. “The process of overhauling our tax code is as complicated and controversial as the tax code itself – which is why it hasn’t happened since 1986. As the debate unfolds, we’re going to urge lawmakers to ensure that reform is designed to maximize growth.”
   The Chamber’s priorities for comprehensive tax reform are to lower tax rates for all businesses, change depreciation to incentivize capital investment, adopt a territorial tax system, make code changes that are permanent and simple, and avoid picking winners and losers by maintaining industry-specific neutrality with regard to special tax benefits and penalties.
   “There are going to be some provisions that divide our members,” Donahue. “But if tax reform is pro-growth . . .we’re going to champion it.”
   One area of division is the Border Adjustment Tax proposed by House Republicans, which the Chamber did not reference in its statement. Importers and exporters would be impacted much differently by what amounts to an across-the-board import tariff.
   The Trump administration is off on the right regulatory foot, putting a fine-tooth comb to existing regulations and requiring agencies to eliminate two regulations for every new one proposed, Bolton said.
   “That seems on its face kind of gimmicky,” he said, “but sets the right tone for the agencies and tells them to provide the protections needed and cut the burden on those providing the jobs in this country.”