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My lunch with George.

A Little Rock Businessman Offers Suggestions To The President For Turning Around The Economy

My assistant interrupted a business conference with a message one Tuesday afternoon late last year.

Because this typically is not permitted, I knew it must be of special significance.

The message said, "The White House is on line two. President Bush is inviting you to meet with him in Washington this Thursday. Do you want to go?"

The White House's liaison office to the Department of Commerce informed me that 10 small business owners from across the country had been selected to discuss the economy for an hour with the president, his economic advisers and Cabinet members.

Taking the assignment seriously, I put together a Wednesday luncheon meeting of almost 40 Arkansas business leaders. I wanted to solicit their views about the economy and the appropriate measures to revitalize it.

The corporations represented ranged in size from five employees to multibillion-dollar conglomerates.

The manufacturing sector, the service sector, financial institutions, insurance companies, investment brokerage firms, real estate agencies and a variety of other businesses were represented. Blacks, whites, males, females, large companies and small companies had a voice.

Those in attendance were asked to write down their thoughts about the condition of the economy from the perspective of the sector they represented. They also were asked to list three recommendations for improving the economy if they could enact government policy changes.

We had a great discussion lasting more than an hour. I flew to Washington that afternoon. On the plane, I wrote a summary of their opinions along with my impression of the economy and my recommendations to the president.

Thanks to modern technology, I was able to fax my handwritten notes to Little Rock the next morning for my secretary to type in final form.

While waiting on the completed report to be faxed back to me, I met with Rep. John Paul Hammerschmidt, R-Ark., who took time from his House Public Works and Transportation Committee meeting to express his views.

I later met with Sen. Dale Bumpers, D-Ark., who chairs the Senate Small Business Committee, and Pat Saiki, head of the Small Business Administration.

On My Way

With report in hand, I flagged a taxi and was on my way.

As I entered the White House briefing room amid the media fanfare, I was introduced to John Sununu, who at the time was the president's chief of staff.

I also met Richard Darman, director of the Office of Management & Budget, and Nicholas Brady, secretary of the treasury.

Others who attended the meeting were Saiki; Michael Boskin, chairman of the Council of Economic Advisors; and Robert Mosbacher, secretary of commerce.

The president immediately took charge. I was struck by his genuine concern about the condition of the economy.

After a 10-minute media circus, the press was ushered out, and we got down to serious conversations. We echoed much of what had been discussed in Little Rock.

Although leading economic indicators are showing some improvement, the U.S. economy indeed is struggling.

Of particular concern is the state of our financial institutions and the capital market in general. Small businesses especially are impacted by the credit crunch. These small businesses have been responsible for almost 80 percent of job growth in the United States during the past decade.

I voiced the following economic concerns:

* The lack of venture capital. This is particularly acute for young, entrepreneurial companies. It is caused by the unwillingness of banks to loan money despite their current liquidity and the fact that too many regulations are smothering the banking industry. It has become more profitable for banks to invest in government obligations than endure regulatory scrutiny, the cost of underwriting, loan reserves and bad debts.

* A crisis of confidence in the economy and its future.

* Tax policies that do not provide proper incentives for taking risks. Such policies curtail business investment in infrastructure, equipment, research and development.

General Concerns

I then voiced these general concerns:

* Our failing educational system. More human and financial resources must be devoted to the problem.

* Crime, drugs and illiteracy. They are inextricably linked to the country's moral and economic decay.

* A loss of confidence in government. We must put politics aside and move aggressively to correct our problems rather than playing political football with the future.

* Our focus on the next quarter corporately and on the next election politically. We must start looking further into the future as our competitors in the Pacific Rim have done for hundreds of years.

I made these recommendations:

* Create a better environment for small business development since 80 percent of jobs are created by businesses with less than 50 employees. The business environment can be improved with less bureaucratic red tape and fewer regulations. Also, the process for securing SBA financing must be simplified and made more accessible.

* Provide tax incentives to stimulate savings, investment and risk taking. These incentives could include investment tax credits to encourage investments in plants and equipment, thus improving productivity; job creation credits; full IRA deductions for couples; more latitude for early use of IRA funds if invested in housing or other depressed industries; capital gains reduction to spur investment; and research and development credits to stimulate futuristic thinking.

* Make an absolute commitment to education at all levels. We must channel resources into scholarship funds for higher education to encourage children to stay in school. We must also reward excellence in teaching and provide scholarships for students in return for service as teachers following graduation.

* Enact term limitations to restore confidence in government and bring elected officials closer to the people.

* Institute tort reform so there will be set limits on punitive damages. Our society has become so litigious that virtual paralysis has occurred in a number of industries fearing litigation.

In summary, government must become an ally rather than an adversary.

Because of the relatively short notice we were given to prepare for the meeting, I had the only written report for the president. He seemed pleased. He reviewed the report and the suggestions of Arkansas business leaders.

I am convinced the president will not rest until the economy is back on track. He wants the private sector to create meaningful jobs for the unemployed and create better jobs that will challenge and fulfill Americans who currently are "under-employed.

I have faith in our system of government. If we work together in a non-partisan manner, we can change the state of the American economy.

Jim Keet is a Litte Rock businessman. In 1990, he was the Republican congressional candidate in the 2nd District. He lost to Democrat Ray Thornton.
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Title Annotation:meeting with George Bush
Author:Keet, Jim
Publication:Arkansas Business
Date:Jan 6, 1992
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