As President Obama took to the road Wednesday promoting his plan for more federal aid for manufacturers, an industry official said the president could help businesses far more by agreeing on a budget deal with Congress.
Jay Timmons, president and CEO of the National Association of Manufacturers, told business leaders in Detroit that the administration’s inability to compromise with Republican lawmakers on looming budget cuts is causing manufacturers to pull back from hiring and expansion plans. The latest fiscal deadline in Washington is March 1, when $85 billion of spending cuts are due to take effect.
“Here we are again, just days away from a sequester that will indiscriminately chop away at the most productive parts of government spending without addressing our structural debt and deficit,” Mr. Timmons said at the Detroit Economic Club. “The uncertainty created by these never-ending budget showdowns is preventing manufacturers from taking risks and growing their business.”
Mr. Obama, visiting a Canadian-owned auto parts plant in Asheville, N.C., on the day after his State of the Union address, instead proposed $1 billion in federal aid to create a network of 15 “innovation institutes” nationwide. The proposal would bring together manufacturers with universities to foster more efficient business models, an effort the president said would help the middle class.
“I believe we attract new jobs to America by investing in new sources of energy and new infrastructure and the next generation of high-wage, high-tech American manufacturing,” Mr. Obama told workers at the Linamar Corp. “I believe in manufacturing. I think it makes our country stronger.”
Mr. Obama criticized Congress for failing to fund the program last year.
In Washington, Senate Minority Leader Mitch McConnell, Kentucky Republican, accused the president of still being in campaign mode.
“Everyone recognizes the president’s a good campaigner,” Mr. McConnell said. “Will he lead? Or will he continue his endless campaign?”
Republican lawmakers roundly panned Mr. Obama for failing to propose a solution to the fiscal deadline in his State of the Union address.
“We’re weeks away from the president’s sequester and the president laid out no plan to eliminate the sequester and the harmful cuts that will come as a result of it,” said Speaker John A. Boehner, Ohio Republican.
House Budget Committee Chairman Paul Ryan, Wisconsin Republican, said Mr. Obama “treats people of the other party as the enemy, not as partners.”
“If he really wanted to get things done and govern, he would come here and work with us instead of campaigning all around the country,” Mr. Ryan said on “CBS This Morning.”
Administration officials have noted that Mr. Boehner and other Republican leaders voted for the sequester, too.
On his visit to North Carolina, Mr. Obama called for a cut in the corporate tax rate from 35 percent to 25 percent to lure manufacturing companies back to the United States.
But Gene Sperling, director of the president’s National Economic Council, said the administration envisions corporate tax reform being revenue-neutral because the government would eliminate some business tax credits to help pay for the lower tax rate.
Mr. Timmons said cutting the corporate tax rate for manufacturers to 25 percent is only a start — Canada’s tax rate is 15 percent — and that Mr. Obama’s push for higher taxes on wealthy individuals conflicts with the goal of helping the manufacturing industry.
“We cannot forget that two-thirds of manufacturers pay taxes as individuals, through S-corporations,” Mr. Timmons said. “So when the president and others ask for more money from individual taxpayers and incite the specter of class warfare, they are specifically targeting manufacturers and others in the productive private sector.”
The head of the manufacturers association credited Michigan Gov. Rick Snyder, a Republican, for policies that encourage job growth, such as the state’s right-to-work law that Mr. Obama opposed.
“Whether through tax reform or, recently, adoption of a right-to-work law, policymakers can create a climate that generates growth,” Mr. Timmons said.
The president intends to cobble money from the Defense and Energy departments to start up three pilot manufacturing “innovation institutes” this year, but he said the public needs to pressure Congress to pass the full $1 billion appropriation.
“I’m doing what I can just through administrative action, but I need Congress to do their part,” Mr. Obama said. “I need Congress to take up these initiatives.”
Linamar is a Canadian-owned firm that opened its operation in North Carolina after Volvo closed a factory and laid off 228 workers. The president is advocating a style of public-private partnerships modeled after the Fraunhofer Institute in Germany.
Mr. Sperling said Fraunhofer’s example has been “very successful.”
“In Germany, they have 60 [institutes]; there’s no reason that we should not be able to try to get 15 or 20 in the next couple of years,” Mr. Sperling said. “I think we are catching up with the rest of the world. They have people competing like this, we need to be doing the same.”
The North Carolina stop was Mr. Obama’s first of three this week to sell the public on initiatives he outlined in the State of the Union address. He will visit an early-childhood education center Thursday in Decatur, Ga., and then travel to his home base of Chicago on Friday.