REMARKS AS PREPARED FOR DELIVERY - BEN ERULKAR DEPUTY ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT U.S. CHAMBER OF COMMERCE BUSINESS CIVIC LEADERSHIP CENTER - NEW ORLEANS, LOUISIANA

THURSDAY, MARCH 23, 2006

AS PREPARED FOR DELIVERY

Introduction by Stephen Jordan, Vice President and Executive Director, U.S. Chamber of Commerce Business Civic Leadership Center.

Thank you, Stephen, for that kind introduction. On behalf of Commerce Secretary Carlos Gutierrez and Assistant Secretary Sandy Baruah, thank you and the U.S. Chamber for inviting the Department of Commerce and the Economic Development Administration to be a part of this important event. Thank you as well to the U.S. Chamber for your leadership and the important role you play in keeping America open for business.

I am very pleased to be in New Orleans today to talk about the national interest and the role of the private sector in the economic recovery of the Gulf Region in general, and Louisiana in particular.

I want to begin today by setting forth some basic principles that govern the Commerce Department’s and EDA’s vision in their Gulf Coast recovery and redevelopment work. These principles derive from the perspective that EDA brings to all of its investment work, that of long-term economic development or redevelopment, but I think you’ll see in them the strong roots of President Bush’s visions on how the Gulf Coast recovery effort should proceed, and the roles of the private sector and government in the economy. Following that, I’d like to take a moment or two to talk about what’s going on in EDA’s and the Commerce Department’s corner of the world with respect to Gulf Coast recovery. Finally, I’m going to leave you with a few words about the importance of regionalism and regional economies in the context of long-term Gulf Coast economic redevelopment. This is important, because regionalism addresses directly how you make today’s decisions stick, how you make them resound, so that the decisions you make today or tomorrow have the same relevance and beneficial effect ten, fifteen years from now. That’s right – even in the midst of today’s hardship and trauma, the choices we face today represent a remarkable generational opportunity. It’s my hope that twenty years from now the next generation will look back on the choices we make today and tomorrow and throughout the recovery period and say, “Yes – they made the right call. Thank goodness they rebuilt Louisiana like this. Isn’t the Gulf Coast great.”

Let’s begin with those basic principles, and the first principle is really basic, but I believe it’s worth repeating, and I do repeat it to myself fairly often. Our Nation needs to rebuild New Orleans, Louisiana and the Gulf Coast simply because it’s the right thing to do. This isn’t about policy, or about economic theory or about what governments are doing – this is about the lesson our mothers taught us when we were young. You do unto others as you would have them do unto you. And that means that when someone gets knocked down, you reach out a hand and help pick ‘em up. There’s a lot of work to do around here, and all of us across the nation – governments, businesses, schools and universities, faith-based organizations, other non-profits and individuals – need to pick up a shovel and help rebuild this neighborhood.

But I’m not here to preach – OK, maybe I’m here to preach a little. We’re here to talk economics, right? So let’s talk economics. Second principle: If rebuilding New Orleans, Louisiana and the Gulf Coast is the right thing do, it’s also the vital thing to do, economically speaking, for this region and for the Nation. You know the statistics – the Gulf Coast is intimately linked to our national prosperity, representing:

• 3.2% of GDP;

• 12% of national employment before the storms (over 15 million workers);

• 47% -- nearly half -- of petroleum refining capacity;

• 11% of waterborne exports and 13% of waterborne imports;

• and 20% fully one-fifth -- of national commercial fisheries production.

So even for those who discount the moral imperative part of my principles, there’s simply too much at stake economically here not to rebuild the Gulf Coast.

Third principle – and now we’re firmly in full economic mode here – when you’re thinking in terms of long-term economic prosperity, the private sector is best-equipped to drive and sustain Gulf Coast redevelopment through market-based decisions. I submit to you that the innovation, competitive drive and pure power of our nation’s businesses – large and small -- constitute one of the most powerful forces at work in the world today. The private sector’s ability and willingness to invest in the area determine job opportunities and the scale of economic recovery. The private sector employs most of us, and provides the wages that pay the mortgages, make the car payments, and put our children through college. In the final analysis, it is the force of our private economy that has the capacity and staying power over time to overcome the force of nature that landed here six months ago.

Now that we’ve established the role of the private sector, what about the proper role of government? Well, that’s a complicated question, or should I say, the question is fairly simple, but the answers can get quite complicated, especially in the context of disaster recovery. Can government really create investor confidence following a disaster? And what about that moral hazard thing, about accounting properly for the cost of potential future disasters, should those occur?

Well, those are important issues, but when I’m confronted with a difficult question I find it useful to boil things down to their basic elements, if only to try to get my arms around the simple issues as a way to confront the complexities later. And the basic point here – my fourth and final principle -- is the one President Bush has espoused since assuming the Presidency – “the role of government is to create conditions in which jobs can be created.” Not to create jobs, mind you – job creation is first and foremost a function of the private sector, of our Nation’s businesses. But government has a proper role to create conditions – in this context, to remove impediments to economic recovery -- by the measured, targeted and efficient use of public resources, so that the private sector can do its thing. And by the way, I accept and live by the President’s credo that all government efforts should be transparent, performance-oriented and fully accountable for successful implementation.

So those four principles give us a useful framework to assess the national interest in Gulf Coast recovery and redevelopment. Let me spend a few moments detailing what EDA and the Commerce Department have been doing to give life to those principles.

First, I’m going to tip my hat to the Office of the Federal Coordinator for Gulf Coast Rebuilding, headed by Chairman Don Powell, who will be speaking here tomorrow. I am personally honored to serve as Co-Chair of the Economic Development Working Group of the Office of the Federal Coordinator – one of eight interagency Working Groups established to understand, evaluate and counsel on local recovery initiatives. Through this effort, EDA and the Office of the Federal Coordinator aim to provide the policy tools needed in the region for a vital economic recovery that draws on national best practices in economic development.

The Commerce Department has also joined forces with the Office of the Federal Coordinator. In early May, Chairman Powell and Secretary Gutierrez will lead a delegation of national business leaders to Louisiana and Mississippi on a “Gulf Coast Business Investment Mission.” At Commerce, we conduct trade missions to foreign countries all the time – but this will be the first time that a Secretary of Commerce has led a business mission within our American borders. This unique effort will highlight promising investment opportunities in the Gulf Coast, including how best to take advantage of “GO Zone” tax incentives recently signed into law by the President. My colleague Dan McCardell will be speaking later this afternoon about this promising initiative, so please be sure to check out his presentation.

The Commerce Department has heard the President’s call to action and is helping the Gulf Coast region carry out recovery activities as a supporting player. We may not be a large financial player in these efforts, but we are a committed partner and we will continue to look for innovative ways to be helpful within our authorities.

NOAA, the National Oceanic and Atmospheric Administration, has been a great success story in the Federal response to Hurricane Katrina. While the President has been clear that the response to the storm was not up to his expectation – clearly there were failures – NOAA stands out as example of what went right. NOAA’s important task was to predict the strength, timing, path and impact of the hurricane and it did so in exemplary fashion. NOAA’s accurate forecasts and clear communications saved lives, pure and simple.

Of course, NOAA, like the rest of the Department of Commerce, is focused on preparing for the future. NOAA is actively preparing for Hurricane Season 2006, which is rapidly approaching. In fact, the President now has before Congress a “supplemental request” for $21 million for NOAA to:

• Develop fishing effort reduction and market-based approaches to fisheries management ($8 million);

• Provide mapping and technical assistance with debris removal and oyster bed rehabilitation ($8 million);

• Assess fishery resources and monitor seafood contaminant levels ($4 million); and

• Develop multi-hazard risk maps to assist redevelopment ($1 million).

While NOAA was one of the Department’s most visible elements in responding to Katrina, other agencies at Commerce continue to play important supporting roles.

The International Trade Administration launched the Hurricane Contracting Information Center to provide a central point of reference for businesses to become educated on Federal contracting opportunities in the Gulf Coast region.

Our Minority Business Development Agency conducted outreach to over 1,500 minority local businesses, assisted over 250 displaced minority firms and counseled approximately 640 businesses on Gulf Coast procurement opportunities. And MBDA is working to establish a Minority Business Opportunity Center right here in Louisiana.

EDA is also proud to be a supporting player in the Federal effort to help get people back to work, businesses – both large and small – back on their feet, and to help build long-term strategies for economic revitalization. We’ve invested thousands of staff hours, on the ground and at regional EDA offices, in this cause. EDA employees at all levels and in all of our offices sincerely care about what’s happening here in the Gulf Region, and are personally committed to doing everything they can to help.

To-date, EDA has invested $9 million in Gulf Coast rebuilding, with over $4 million going to Louisiana. And here are some of the good things Louisiana has done with EDA investments:

• Rebuild business and investor confidence by letting America know that Louisiana is “open for business.” EDA funds have paid for advertisements placed in The New York Times, The Wall Street Journal and USA Today to communicate to America that there is great opportunity here in Louisiana;

• Establish Business Counseling Centers throughout the State to assist local businesses plan their recovery strategies and obtain assistance;

• Conduct the Gulf Coast Business Reinvestment Forum that was organized by the U.S. Chamber of Commerce and held in Washington D.C. on November 28 and 29;

• Provide technical assistance to economic development organizations in the State to get them back on their feet and focused on new development strategies in the post-Katrina world;

• EDA has also redirected $2.8 million in Revolving Loan Funds here in Louisiana to provide bridge loans to small businesses to help them restart their operations, hire their workforce and plan for the future.

And this is just the beginning. Currently there are investment applications totaling over $6 million in EDA’s regional offices for this region. EDA is actively evaluating these investment opportunities and Secretary Gutierrez and Assistant Secretary Baruah look forward to announcing good news on many of these investments in the weeks and months to come.

[I know that EDA’s Austin Regional Office is presently conducting official reviews of two very important investment opportunities – one from the U.S. Chamber's Center for Corporate Citizenship and a second from our local hosts, the Greater New Orleans, Inc. and its President, Mark Drennen.] For those of you who are currently working on applications with our Austin and Atlanta Regional Offices, I encourage you to keep those lines of communications open. We may have more will than wallet, and we may not be able to say “yes” to every good idea, but I assure you that EDA is taking all of these applications very seriously.

As the recovery efforts progress, EDA will continue to leverage our available resources for the purposes of effective revitalization efforts that result in real, meaningful, quantifiable, and long-term economic outcomes. And this is important, because we are looking for ways to provide targeted assistance that has lasting impact. We’re not just concerned about tomorrow – but next year, the next 10 years, and beyond.

Which brings me to the final part of my talk today, the importance of regionalism in today’s economy. President Bush understands – as I am sure you do – that the competitiveness of our nation will increasingly depend on the competitiveness of America’s economic regions. The key to competing successfully in a new era of worldwide competition is regional collaboration. In order for America’s companies to be fully competitive, the regions in which they do business must be competitive as well.

The Federal Reserve Bank of Kansas City recently concluded, “Regions can develop only by exploiting their distinct economic assets, seizing unique opportunities in rapidly shifting markets, and fostering the entrepreneurs that make both happen at once.”

What the Federal Reserve Bank folks know, and what you and I know, is that in our global economy, our competition is not next-door in the next parish, the next county or the next State. Put it this way -- Katrina, Rita and Wilma had no regard for the political boundaries of the Gulf Coast. Neither does the global economy. In fact, our neighbors need to be and are our strength, not our competitors. Regional competitiveness means that as a nation, we are stronger working together than standing alone.

This is not some new call to federalism in economic policymaking, and you should recognize by now that this is not protectionism hiding under the cloak of economic nationalism. It is, though, increasingly clear that by thinking in terms of broader economic regions that are defined by economic instead of political boundaries, we can build on our strengths to better align a critical mass of local resources to spur innovation. And innovation cultivated in a climate of entrepreneurship leads to regional – and ultimately to national – competitiveness.

To achieve this, development efforts must be based on sound economic development strategies that involve not only State and local officials, but also the region’s key institutions such as LSU, Tulane, UNO, and the business community. Business leaders and public sector officials must share a common long-term vision for the rebuilding of the Gulf Region.

We focus on these critical components of the economic development puzzle because of the inherent truth of the following equation:

Entrepreneurship drives innovation…

Innovation drives productivity…

Productivity drives higher wages and higher standards of living.

And that higher standard of living is exactly what we want our children to benefit from decades from now, when they come upon this part of the world.

I first came to New Orleans when I got out of college a couple of decades ago, and at that point in my life, my parents, who were both born abroad, had afforded me the great privilege of seeing other parts of the world. So when I arrived here, I’d actually seen more of other countries than I’d seen of this one, and New Orleans was the farthest west I had traveled, well west of just about anywhere off the East coast. I ended up living and working here for about 18 months, and after I’d taken my measure of the place I pretty much concluded that New Orleans stood up to any of the great cities in the world that I had seen. I hold that belief today, and I share the President’s hope and confidence that New Orleans, Louisiana and the Gulf Coast will again be a vibrant and dynamic place to raise a family, to own a business, and to visit.

So let’s rebuild this region. Let’s do it right, let’s do it quickly, and let’s do it with a clear eye on the long-term economy that can support it for generations to come. But most important, let’s just do it. Thank you.