Two CEOs share important observations about the impact of Washington-induced uncertainty on investment, economy and jobs.
Appearing on CNBC's Squawkbox this morning, Randall Stephenson of AT&T first reminded viewers of the harm posed by the ever-growing federal debt, saying that the Simpson-Bowles deficit-reduction plan was a reasonable approach and calling it "disheartening" that Washington was unable to coalesce around the plan. And what's affecting his company and its prospects?
From our standpoint, it's uncertainty – and if you think about a business like ours, it invests $20 billion a year, that’s what will invest this year. It’s more than any company that will invest in the United States this year, $20 billion. The things you ask are what are the things that influence that investment? From our standpoint, taxes on investment are really important. If you want more of something, if you want more investment, you need to tax it less. We’re in a situation where the taxes on investment -- dividend taxes, capital gains taxes, corporate profit taxes – all of those are up in the air.
We know most of those are going up, dividend and capital gain taxes, but it causes a lot of uncertainty in terms of how you play in your capital investment, it causes a lot of uncertainty in terms of how you return cash to your shareholders. What should your dividend policy be, what should your share buy-back policy be? How much should you invest in capital? So there's just a big overhang.
I believe in business today, and I tell people this a lot: We do not have a jobs crisis in America. What we have is a capital investment crisis. If you're not investing in America you're not hiring in America, so we need to do things to bring certainty to companies that are investing, certainty in our tax policy and in our regulation.
Uncertainty was also a central theme in a recent op-ed by Dawne S. Hickton, vice chair, president and chief executive officer of RTI International Metals Inc. in Pittsburgh. The company specializes in advanced titanium products used in the defense, aerospace and energy industries, and Hickton is understandably concerned about the impact of sequestration demanded by last year's deficit-reduction agreement.
For our company, the immediate impact of the actions and inactions on spending is the uncertainty that the constant tug of war is creating. At best, the inability to compromise in Washington is delaying hiring. At worst, it is costing jobs.
For example, RTI has a new plant in Virginia waiting to staff up, but until our company knows what’s coming next from Washington, we cannot fill approximately 150 new jobs we want to create there.
It is long past time for our congressional leaders to stop blaming the “other side” and to take action. Kicking the deficit-reduction can down the street into the election year ahead is a dangerous strategy.
For those of us running businesses, we can’t wait until the next election to make the business decisions that will impact not only our customers but the lives of thousands of our employees and the shareholders that invest in our companies.
That final observation echoes one often made by Business Roundtable's president, John Engler.
The rest of the world knows we’re having an election in November, but they’re not taking the year off because we’re having an election. They’re continuing to make changes, they’re continuing to try to improve their competitive posture. In April, Japan’s tax rate will drop, and we’ll have the highest corporate tax rate in the OECD nations. But in Congress, the White House -- more inaction.
Business groups step up push for fast-track authority - The Hill's On The Money http://t.co/Z4rhAggr1X
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