Harvard Business School Senior Fellow Bill George examines the financial outcomes of Florida Governor Ron DeSantis revoking Disney’s special tax status and Disney’s values.
DAVE BRIGGS: It’s almost pay per view worthy, Disney versus DeSantis. It is the battle dividing Florida along party lines. But across the country, CEOs in all industries are eyeing the daily developments here, wondering how it might impact their company, how they should navigate these choppy political waters. Bill George is the former chairman and CEO of Medtronic, now a professor at the Harvard Business School. He joins us now. Good to see you, Bill.
BILL GEORGE: Thank you.
DAVE BRIGGS: Let’s go back, if we can, to the start of this mess. Disney CEO Bob Chapek wanted to stay out of the controversy over Disney’s so-called Don’t Say Gay legislation, but the combination of angry employees and former CEO Bob Iger coming out against the law. He really had no choice. He offered this relatively mild statement. How do you think he handled it?
BILL GEORGE: Well, he should have thought about all these things first, I believe. I don’t think he did his homework. We’re in a different world today. He was acting like he was back in the 1990s. In this world of 2022, you have all kinds of stakeholders who expect you to take a position, especially your employees. Employees have found their voice. And particularly, in this post-COVID world, they want to be respected, whether it’s a Minneapolis CEO when George Floyd was murdered or people on the LGBTQ+ side that want to be respected and heard from. They want their CEOs to speak on their behalf.
And when they don’t do that, as Bob Chapek didn’t, they get very upset and it leads to the kind of uproar we’ve had. And then they get to the worst case, which is a political crossfire with the politicians. And that’s the last thing any company wants to get into. And Disney is right in the thick of it, and it’s struggling to get out of this mess, as you called it.
DAVE BRIGGS: Even after the statement, he had the employee walkout. So what could Bob have done to keep them his employees happy and somehow stay out of the crosshairs of the governor?
BILL GEORGE: He should have gone back months before, talked to his board, talked to his leadership team. What do we stand for? Disney has always been very pro-family, but also very gay-friendly, if you will. And they should have made those points very clearly. And when this legislation started in Florida, they should have had a position ready to go. And they didn’t have to lead with their chin, but they should have had a position that was true to their mission and values of what Disney is that accepts everyone for who they are.
DAVE BRIGGS: So, as I mentioned, CEOs across the country are shaking a bit in their boots. What are you hearing from them, and what’s your advice?
BILL GEORGE: Well, they’re very concerned. They don’t want to get caught into this crossfire either. But they are all going back now, I think, in really thinking about, what do I stand for? What issues should I get involved in? And when shouldn’t I get involved in? And how do I avoid getting in the crosshairs of some politicians. They may get caught anyway, but if they’re true to their mission and values, this is a question of, should I get out of Russia because of the Ukraine war?
These things are coming up every way right now, and CEOs today need to know how to lead through a crisis because we go from one crisis to the next. We go to from COVID to George Floyd to Russia and Ukraine. And there’s probably another one just around the corner. So they need to be prepared to deal with these and have a position that’s true to their company.
For instance, Johnson & Johnson has taken a very clear position that we’re there to help people. And so if that means we’re going to stay in Russia, we have lifesaving drugs, we don’t want to get out. Hey, I respect that position. It goes to their credo. That’s what each CEO should do, to go true back to their mission and values.
DAVE BRIGGS: A fascinating poll came out last week showing the majority of the country is against the government punishing business over their political beliefs. But the fascinating part within this is Democrats were far more supportive of business than were Republicans. What do you make of that political dynamic we have today?
BILL GEORGE: I’m smiling because when I was a boy growing up, the Republicans were seen as the party of big business. And Democrats are seen as the party of the working class, the blue collar workers. And things seem to have flipped. And we’re much more into cultural wars. Businesses are not interested in that. They’re interested in helping their customers make a difference in their lives, whether Disney is bringing fun to people or organizations in the apparel business, bringing joy to them, or Medtronic providing good healthcare to help save lives. That’s what they want to do. But they need to represent all their employees and all their stakeholders. And I think that’s what they’ve lost sight of here.
DAVE BRIGGS: What’s fascinating is, I read this statement, and I want you to guess what party it comes from. A senator– it’s very simple. We need to see a majority of American corporations as American. They don’t act in the best interests of the country. They act in the best interest of shareholders, period. Was that a Republican or a Democrat?
BILL GEORGE: I have no idea. I probably would have normally would have guessed a Democrat today, maybe a Republican. But I’ll tell you this. It’s not just the shareholders today. It’s not just the world it was in the ’80s and ’90s, the shareholder primacy. It’s the world of stakeholders. They have to operate in the best interests of their customers. They have to operate in the best interests of their employees. And they need to find an alignment with those interests with their shareholders’ interests.
DAVE BRIGGS: That statement continued. We are, as policymakers, we need to be acting in the best interest of the country, not big business. It sounded like Elizabeth Warren, it was Marco Rubio. Stunning when I got to the finish of it. How do you think this plays out for Disney? Their special exemption wouldn’t actually go into effect until June 2023. Can they wait out the governor?
BILL GEORGE: Yes, they may have to. There’s this billion dollar question about who’s paying off the bonds, which legally have to be paid off. And if that’s not clear, I’m not sure Orange County has the money to do that, the Orlando County. And so they are going to have a continued battle. But understand the governor has different objectives than Disney. And so Disney can’t meet all of his needs because he is working a whole political angle here.
And that’s why I say, they don’t want to get caught up in that, but they have to run a great Disney World, I can tell you that, that welcomes everyone to their premises. And that’s the most important thing for them. And they have to make sure this doesn’t turn against them. And they probably have some legal recourse on this whole latest legislation that had to do with pulling back that special district. And there are many unintended consequences, frankly, that have not been thought through there that it will give Disney more ammunition.
A good example is Ed Bastian at Delta a few years ago, the Georgia legislature, withdrew a $41 billion– a million dollar tax break that they got on a fuel savings. They’ve been giving it for 30, 40 years. And he stood up, and he said Disney’s values are not for sale. A year later, the legislature restored that and retroactively.
So in the end, Disney didn’t really throw out– Delta didn’t really get hurt by that. So I’m optimistic that Florida needs Disney World. I can tell you that. It’s a huge revenue producer. I was just in Orlando, actually, for a soccer game, not for Disney World. But I can tell you, it’s created everything around there. They need that. And all the merchants, all the hotel owners, and all the restaurants desperately need Disney World. They– Florida can’t do without Disney World. So it’s a question, who needs who more?
DAVE BRIGGS: 70,000 plus jobs as well. Bill George–
BILL GEORGE: Exactly.
DAVE BRIGGS: –Harvard professor, former chairman, and CEO of Medtronic, it is tricky times to be a CEO. Thank you, Bill.
In private meetings and coaching sessions over the past few weeks, top business leaders have been asking a version of the same question: How can we avoid becoming the next Walt Disney Co.?
The fallout from the recent political spat between Disney and Florida Gov. Ron DeSantis has alarmed leaders across the corporate sphere, according to executives and their advisers, and heightened the challenges for chief executive officers navigating charged topics.
At many companies, vocal employees have in recent years pushed bosses to take public stands on social and political issues. Florida’s pushback against Disney has raised the stakes.
“The No. 1 concern CEOs have is, ‘When should I speak out on public issues?’ ” said Bill George, former chairman and CEO of Medtronic PLC and now a senior fellow at Harvard Business School. “As one CEO said to me, ‘I want to speak out on social issues, but I don’t want to get involved in politics.’ Which I said under my breath, ‘That’s not possible.’ ”
Some executives might be relieved. The old idea that CEOs should focus on shareholder returns and stay out of politics lingers in some corporate suites, even in a politicized age of public social-media discussions and more-activist workforces.
Certainly the consequences of weighing in appear to be changing. Lawmakers for years have expressed displeasure when companies take public stands on issues such as voting access, through critical tweets, public remarks and, in some cases, calls for public boycotts. Disney’s experience shows a willingness to go further, corporate advisers say, by challenging arrangements that have helped a company to operate.
Ron Williams, former CEO of Aetna, says, ‘It’s not enough to know what you want to do. You have to be artful in how you do it.’
David Berger, a partner who specializes in corporate governance at law firm Wilson Sonsini Goodrich & Rosati, said politicians seem increasingly comfortable taking on business when it is advantageous for them. “It used to be that Republicans especially—but both parties—liked big business,” he said. “And now what you’re seeing is both parties like to use big business as political footballs one way or the other.”
Some executives say they have learned to monitor issues that could consume public attention and increase pressure for some response. Some use employee affinity groups to help flag potentially troublesome issues.
“You make it a safe forum where people feel comfortable talking about concerns or whatever, and out of that, there’s really a kind of responsibility on our part to pick up on things that really do demand some attention,” said Nancy Langer, CEO of Transact Campus Inc., a financial- technology company based near Phoenix. “I look at that as a feedback loop for us.”
Some of the topics of employee pressure involve Republican-backed measures, such as the new abortion law in Texas and new voting laws. Democrats have pushed executives to weigh in, and Republicans have pushed them to keep out. Climate and diversity issues also are hot buttons, as is the Jan. 6, 2021, riot at the U.S. Capitol.
But Disney’s recent experience in Florida has captured the attention of C-suite executives at companies big and small, given the impact on its operations, many say.
“I think probably anybody sitting in a leadership role follows it to some degree,” said Julie Schertell, chief executive of Alpharetta, Ga.-based manufacturing company Neenah Inc., which has around 2,500 employees.
Ms. Schertell said the Disney drama reminds her as a CEO that she must look at situations from every angle. “Because I want folks to assume positive intent, like ‘Here’s what we’re trying to do, and if it feels like a misstep, let’s talk about that. And of course, correct on it,’ ” she said.
Staying silent has its own risks. Disney initially declined to take a public stance against the Florida bill, which bans classroom instruction on sexual orientation and gender identity through third grade. Disney CEO Bob Chapek told employees he didn’t want the company to become a “political football.” That sparked an outcry from some employees, and Disney reversed course and spoke out against the bill.
Washington veterans advise that building relationships with political leaders in advance, particularly in off-cycle election years, can be helpful during times of crisis. Ron Williams, the former chairman and chief executive of Aetna who sits on the boards of Boeing Co., Johnson & Johnson and American Express Co., said he counsels CEOs to find advisers who know how to navigate the political terrain.
“Companies often deal in substance, and politicians often deal with foils,” he said. “And so, you know, companies can inadvertently become a foil for different political issues. It’s not enough to know what you want to do. You have to be artful in how you do it.”
Most current CEOs rose by gaining customers or boosting profit margins, not navigating hot-button social issues, and so aren’t trained on how to respond, Harvard’s Mr. George said. They must prepare quickly.
“It is an even more challenging job,” Mr. Williams said. “Running the business turns out to be table stakes.”
Leadership Kudos this week go to John Hope Bryant, founder, chairman and CEO of Operation Hope, the nation’s leading non-profit organization committed to financial literacy. Since founding Operation Hope in 1992, Bryant has raised more than $500 million to help the poor achieve financial literacy. He is vice chair of the President’s Advisory Council on Financial Literacy, appointed by former President George W. Bush and reappointed by President Barack Obama. Bryant is a Young Global Leader of the World Economic Forum and author of Love Leadership. With HRH Crown Prince Haakon of Norway and Finnish philosopher Pekka Himanen, Bryant founded Global Dignity Day, which has had global impact in restoring dignity for all people of the world. Most recently, Bryant started the Silver Rights Movement to help all people achieve financial literacy and 5MK – or Five Million Kids – to help children become financially literate. He is a remarkable leader: compassionate, passionate, and focused on helping the poor around the world.
Leadership Gaffes go to Corporate Lobbyists for their attempts to water down the Foreign Corrupt Practices Act (FCPA). While some clarifications in definitions may be necessary, we shouldn’t lose sight that FCPA has been an important force for the integrity of U.S. corporations in doing business overseas, setting a higher standard than those practiced by many other nations. The act has given the United States more than the moral high ground, it has also given American companies a competitive advantage. By taking a higher road of ethical standards and focusing on product and service superiority, rather than paying bribes, U.S. companies outmatch non-U.S. companies in terms of real value creation. Indirectly, FCPA is having the impact of encouraging other nations also to set high standards of business practice. Reducing the U.S. standards for integrity would be a major mistake.
The fate of the fiscal stability of the United States was sealed on the weekend of December 4-5, 2010. The previous Thursday President Obama received the long-awaited report of his National Commission on Fiscal Responsibility and Reform, co-chaired by Democrat Erskine Bowles and Republican Alan Simpson. The report of the commission received a favorable vote with an 11-7 majority, but fell short of the 14 votes required for a mandatory “up-or-down” vote by Congress.
The commissioners delivered a balanced report that reduced U.S. deficits by $4 trillion over ten years – $3 trillion from spending cuts and $1 trillion from revenue increases. It received favorable consideration from both Republicans and Democrats on the commission. President Obama had the perfect opportunity to restore stability to U.S. finances by endorsing the plan and sending it to Congress.
For the President it was the perfect political setup, complete with “air cover.” He appointed a bipartisan commission. It had delivered a bipartisan proposal. Surely, he could rally the country behind it by going directly to the American people. While the deficit reduction plan would have faced opposition from the extreme right and extreme left, President Obama had the opportunity to demonstrate his leadership and garner the support of fiscal conservatives, moderates and independents around the country.
What did the President do? Nothing.
The silence from the White House was deafening. The President ignored the commission’s report entirely. He chose the politically expedient route and, in so doing, failed to lead the country by improving its long-run fiscal health.
Actually, what he did was worse than nothing. Over that weekend, the President negotiated with Republican congressional leaders a $4 trillion increase in the nation’s deficits over ten years ($858 billion for the first two years, with the remaining $3.2 trillion projected over the next eight years). The added deficits came from a combination of tax cuts and spending increases – just the opposite of what the Bowles-Simpson commission recommended.
This new deal was passed by Congress over the objections of Democratic congressional leaders, who felt left out in the cold. On December 18, 2010 the President signed the deal into law, thereby killing any hope of deficit reductions coming from the Bowles-Simpson recommendations.
In one weekend our nation’s leaders swung from a plan to reduce the deficit $4 trillion to actions that increased it $4 trillion – an $8 trillion unfavorable swing. This proves the old political adage that it is easier to cut taxes and raise spending that it is to demonstrate fiscal responsibility, as long as you’ve got a plan to get out of town before the sheriff comes.
The sheriff didn’t take long to arrive. Realizing this President wasn’t prepared to take tough fiscal actions, Republican leaders next played brinksmanship with appropriations. That brought the federal government to the verge of shutting down at midnight on April 8, 2011. A last minute deal to cut the budget by $38 billion averted the shutdown. President Obama hailed the agreement as “the biggest annual spending cut in history.” Hmmm. Seems pretty paltry compared to $4 trillion over ten years.
Republican leaders, seeing blood in the water, attacked again like sharks on a rampage in August, 2011. Demanding more spending cuts with no revenue increases, Republicans held the line against raising the debt ceiling until the August 1st deadline. A last-minute compromise reflected the agreement to disagree. At the 11th hour, the President and congressional leaders passed the Budget Control Act, appointing a Congressional “super committee” with the requirement to reduce the deficit by $1.2 trillion by November 23, 2011.
Concerned by feckless political behavior, Standard & Poor’s took the historic step of reducing the U.S. sovereign debt rating from AAA to AA+. “The political brinksmanship of recent months,” the company said, “highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”
This paved the way for the super-committee’s failure on Monday. If committee members were ever serious about compromise, it wasn’t evident. Republicans refused to agree to any revenue increases, causing Democrats to back away from spending and entitlement cuts they had offered. Now $1.2 trillion in automatic cuts go into effect next September. Speaking on CNN, political commentator David Gergen called the move “an irresponsible, reckless gamble.”
The consequence of this gridlock? The financial troubles of the U.S. get worse, the country’s competitiveness continues to slip, and the prospect of a future deal is even further away.
And it all started with an $8 trillion reversal one weekend last December.
Gov. Mark Dayton’s jobs summit last month was a remarkable example of the extraordinary collaboration taking place between business leaders and government officials to rebuild Minnesota’s jobs machine.
Historically, Minnesota has benefited from diverse industries including agriculture and food products, financial and professional services, health care, education, and high-technology manufacturing that allowed us to offset economic downturns. But after outpacing the nation for 30 years in job creation, Minnesota has fallen behind since 2003.
The 800 business and civic leaders who jammed into the ballroom at the Crowne Plaza in St. Paul engaged in serious discussions about how to stimulate job growth in Minnesota and re-create the Minnesota Miracle. This convergence of business and government leaders was a welcome contrast to the political gridlock that shut down state government in July.
At the summit the governor wasted no time in making his position clear: “It is the task of private enterprise to create jobs and wealth,” he said. “The government’s role is to create the environment and rules that make that possible.” Dayton put substance behind his pledge, announcing a $100 million fund for small business loans, distributed through 300 Minnesota community banks.
These efforts are none too soon. Alarmed by declining job trends, a group of leading CEOs and civic leaders formed the Itasca Jobs Task Force in 2009. Chaired by Ken Powell of General Mills and Marilyn Carlson Nelson of Carlson Companies, their 2010 report highlighted three strategic initiatives to improve the region’s competitiveness:
•Address the cost of doing business.
•Develop a vision, strategy, and approach for regional economic development.
•Enhance entrepreneurship and innovation.
To implement the report’s recommendations, Itasca formed a team of 60 participants, chaired by HealthPartners CEO Mary Brainerd. “For us, this is the most important thing we have been part of,” Brainerd said. “The commitment to a thriving community is really extraordinary.”
In addition, the Minnesota Business Partnership, which includes the heads of 150 local companies, formed three task forces of its own under the leadership of Ecolab CEO Doug Baker Jr. The partnership made concrete recommendations to the governor and Legislature regarding fiscal policy, health care, and education.
Also last month, 12 large companies joined with local municipalities to launch Greater MSP, with Baker as its chairman. A $2 million budget was established, with 70 percent from the 12 companies and the remainder from government units. Its mission is to recruit out-of-state and international companies to locate in Minnesota and to encourage local companies to expand locally. Michael Langley was hired as executive director, coming from Pittsburgh, where he led a comparable initiative.
These remarkable efforts are a testament to the quality of Minnesota’s leaders. Our state is blessed to be home to 20 Fortune 500 companies led by progressive leaders who understand that Minnesota’s quality of life and a well-educated workforce are essential to their success — and necessary to offset negatives like high taxes, high cost of living and weather.
Historically, Minnesota’s strength has been the quality of its workforce. Thanks to efforts put in place 50 years ago, the Twin Cities leads the nation with 93 percent of citizens holding high school diplomas, and is third in bachelor’s or graduate degrees with 37 percent. Ecolab’s Baker notes, “Ultimately, the education and skills of the workforce are MSP’s competitive advantages.”
But this advantage appears to be at risk. The Itasca report forecast a gap by 2030 of 322,000 skilled workers that could constrain the region’s growth. Bush Foundation President Peter Hutchinson notes that these other efforts will be in vain unless the region has the right workforce. He favors investments in infrastructure, K-12 schools, and higher education.
“It’s a painful reality that many of the 215,000 Minnesotans without jobs don’t have the education needed for the new economy,” said Steven Rosenstone, the new chancellor of Minnesota State Colleges and Universities (MnSCU). “By 2018, 78 percent of Minnesota’s jobs will require postsecondary education.”
Minnesota has its challenges. But given the remarkably committed leaders we have today, I feel confident that these new initiatives will bear fruit and create the second Minnesota Miracle.
Leadership Kudos this week go to Erskine Bowles and Alan Simpson, co-chairs of President Obama’s Deficit Reduction Commission. Last December they proposed a $4 trillion reduction in U.S. deficits over ten years with a balanced plan of spending and entitlement cuts, and revenue increases. Although the commission passed the plan with an 11-7 vote, it was not enough for a mandatory Congressional vote. The thoughtful plan was ignored by President Obama and Congressional leaders in both parties. A great tragedy that led to the historic downgrading of U.S. sovereign credit ratings this past summer.
Leadership Gaffes go to Congressional Super-Committee for failing to come to a compromise agreement to reduce U.S. deficit by $1.2 trillion, setting the stage for automatic across-the-board cuts to go into effect. Confidence in Congress has dropped to 9%, and deservedly so. Congressional leaders continue to put party politics ahead of the needs of the country, as our financial state erodes and we lose competitiveness to many other countries. When will our politicians wake up and put their country first?
Leadership Kudos for the week go to Germany Chancellor Angela Merkel and French President Nicholas Sarkozy. Their tenacity and political courage enabled them to forge a deal to prevent the pending default in Greece and requiring the bankers to take a reduction of 50 percent in the value of their bonds. This was not an easy sell politically in either country, but they both recognized the importance of the Euro and keeping a single trading group in Europe. Only time will tell whether Europe’s other high-debt nations like Spain, Italy and Portugal will move aggressively to get their economies in order and reduce their debt, but Merkel and Sarkozy have sent an important signal of what is required to save the Euro.
Leadership Gaffes go to MF Global and CEO Jon Corzine for taking the firm into bankruptcy by betting $6.3 billion on the sovereign debt of Italy and Spain, refusing to listen to colleagues who pleaded with him to reduce the risk, and declaring “our positions have relatively little underlying principal risk.” In this volatile era solid risk management, adaptability to changing markets, and high levels of liquidity are essential for survival.
Tonight President Obama addresses the nation at a joint session of Congress about his plans to expand job growth. Here’s what he should say:
My Fellow Americans:
Our country is facing a jobs crisis of major proportions, the greatest since the 1930s. This nation’s strength is based on its strong economy and the global corporations that dominated their industries and fueled growth throughout the world. But now that strength is waning, as other nations, from China, India, Singapore, and Brazil to Germany and Switzerland, threaten to outstrip us in competitiveness.
In the 1990s our economy produced 23 million jobs and three consecutive years of budget surpluses. The combination of the Bush tax cuts and spending to finance two wars and entitlement plans created an enormous debt burden that future generations will be forced to carry. The historic downgrade of the U.S. debt rating from AAA to AA+ by Standard and Poor’s is a warning we cannot ignore.
The excesses of the past decade have imperiled our fiscal stability and left 25 million Americans – 16.2% of the workforce – unable to find full-time jobs. As a result, the United States has its smallest full-time workforce – less than 55 percent – and hundreds of thousands are dropping out each month.
When I came into office, I inherited a broken economy. Our banks, insurance companies and automobile makers were on the brink of bankruptcy. We took aggressive steps to stop the bleeding, and prevented the world from depression. I launched a $893 billion stimulus package but it had limited impact on the structural jobs crisis.
A robust recovery must start with jobs growth. Recent figures confirm that jobs are not growing, and there is no indication they will return without aggressive actions on our part. Yet we continue to get pulled off course by partisan showdowns over the budget and debt ceiling.
We need to stop making it difficult to grow businesses and hire workers in America. In response to excesses of the past, we overregulated our industries. With domestic growth approaching zero and the challenging regulatory, tax and political climate, companies are investing instead in rapidly growing emerging markets in Asia, Latin America and Middle East.
As a result, the jobs crisis is more severe than ever. The U.S. has sunk further into debt, and the country has reached the limits of its borrowing capacity. Our political stalemate has paralyzed our ability to take decisive action.
Therefore, I will use the powers entrusted in me as your President to take the actions required to put Americans back to work and restore domestic growth. All these steps must be taken without increasing the budget deficit.
Here is my plan:
Restore fiscal stability by implementing the proposals of the Simpson-Bowles Commission to bring revenues and expenditures in line and reduce deficits by $4 trillion.
With the recent debt downgrade, the government cannot subsidize federal jobs; therefore, I am appointing John Bryon, my Secretary of Commerce nominee and a former CEO, as Jobs Czar to work closely with American employers, large and small alike, to stimulate domestic investment and create 10 million jobs over the next decade.
To create a positive climate for business investment like that of the 1980s and 1990s under Republican presidents Ronald Reagan and George H. W. Bush and Democrat Bill Clinton, I am ordering all federal agencies to reduce or suspend unnecessary regulations and focus instead on expanding private sector jobs in the energy, transportation, health care, information technology, and financial service industries, as well as small businesses.
To prepare unemployed Americans for 21st century jobs, I will reprogram existing funds to invest in retraining and vocational/technical education.
To make America more attractive for investment, I propose reducing the corporate rate to 20 percent, while eliminating complex deductions and credits.
For the remainder of my term, I will suspend taxes on repatriated foreign profits for corporations that reinvest their portion of the $1 trillion in cash trapped overseas in manufacturing, research, and job creation.
I will expand the number of H1-B visas, travel visas and green cards to make America an attractive place for immigrants to visit, work and start companies.
To expand exports, I will implement a free trade policy by moving ahead with free trade agreements with South Korea, Columbia and Panama, while working with nations of this hemisphere to turn NAFTA into the Americas Free Trade Agreement.
As your President, I am prepared to put my re-election on the line to put Americans back to work, reignite economic growth, and restore America’s competitiveness. While my plan will not please the extremes of either political party, I ask all Americans to join me in this commitment by putting their country ahead of partisan politics.
Leadership Kudos this week go to Howard Schultz, founder and CEO of Starbucks,for his courageous restoration of Starbucks to a pioneering coffee house, nowexpanding around the world under Schultz’s leadership. When Schultz returned as CEOin early 2008, most observers were predicting that the Starbucks mystique was waning and its growth was doomed. Schultz jumped in and addressed the problems head on, even closing all stores for a day to get his employees retrained on customer focus. Since then, Starbucks’ revenues have grown in double digits, earnings have tripled, andfrom its low point in the fall of 2008, Starbucks stock has quintupled. Who says founders can’t successfully go back home?
Leadership Gaffes go to House Speaker John Boehner for explaining Republicans hard line on the debt ceiling on talk radio, “A lot of them believe enough chaos would make opponents yield.” He and his fellow Republicans were certainly successful in causing chaos and contributing to the historic downgrade of the U.S. credit rating from AAA to AA+. But the deeper issue here is that Boehner sees everything as a win-lose contest between parties and isn’t focused on the country’s pressing problems: jobs, growth, and deficit reduction. With 25 million Americans unable to find full-time jobs, don’t we have enough chaos?
This week’s agreement to increase the U.S. debt ceiling is no cause for celebration.
Regardless of what the spin doctors tell us, there are no winners here. The political landscape is covered with the blood of all the politicians who were losers in this “no win” battle. Among the losers are:
The President, who lost the leadership on U.S. deficits last December when he ignored the thoughtful recommendations of the bipartisan Bowles-Simpson Commission, leaving deficit reduction up to the politicians in Congress.
The Republican Party, which let itself be dominated by Tea Party extremists, ignoring the wishes of the majority of Americans, walking away from a sound agreement and demonstrating its willingness to let the country sink for political gain.
The Democratic Party, which has rigidified into the party of more spending and higher taxes while ignoring the country’s mounting deficits. It even undermined its President as he attempted to negotiate an agreement with House Speaker John Boehner.
The United States, which has lost credibility in the eyes of the world as a constructive democracy and sound fiscal system which other countries can look to for leadership of the global economy.
The last minute agreement to avoid an historic default did not solve anything. It merely postponed the disagreements and set up yet another committee to resolve these complex issues.
“Gridlock” has become the new order of U.S. politics. Politics as the art of compromise has been abandoned by the current group of politicians who are willing to jettison the country’s best interests in order to gain short-term political advantage.
This is the third time since the November elections that the country has been traumatized by political deadlock:
In a single weekend last December, shortly after the Bowles-Simpson Commission proposed a bi-partisan $4 trillion deficit reduction plan, the President and Congressional leadership went in the opposite direction. They lowered taxes and increased government spending by a combined $4 trillion, intensifying the problems that lay ahead.
In April, unable to agree on a budget for this fiscal year, the politicians once again took the country to the brink of shutting down the government. The midnight agreement involved more compromises that kept the country running on an empty tank.
For the past month the country has been paralyzed by the artificially-created debt ceiling duel. While mounting deficits are a growing concern, the politicians on both sides of the aisle were far less concerned about reducing them than they were in gaining political advantage through an historic game of “chicken.”
The biggest loser in all this is the United States and its citizens. Why? Because we are losing confidence in our elected leaders to put the interests of the country ahead of their political ideology and to reach sound agreements that enable the country to grow and produce jobs while putting the country on a sound fiscal footing.
Meanwhile, this debt ceiling tug of war distracted our leaders from the real issue: the sagging U.S. economy and jobs crisis. The U.S. continues to slip into a “no growth, no jobs” malaise, as recent GDP growth figures prove and twenty-six million Americans (16.2% of the work force) are unable to find full-time jobs. Until people get back to work and the economy starts growing, we will just continue to fight over a shrinking pie, as deficits continue to mount. The only solution to this dilemma is to get the private sector growing once again in the U.S.
However, the CEOs of companies, both large and small, that I have talked to in recent weeks are completely fed up by the political struggles in Washington. They are turned off and tuned out. They want to have no part of the debate, unless they feel that they have to weigh in to protect their best interests.
These CEOs are pragmatists, not political idealists. In the absence of domestic growth opportunities, they are looking overseas where great growth potential exists. Meanwhile, they are shedding U.S. jobs in favor of productivity gains, which are substantial. Privately, they don’t believe that the President or either party in Congress is committed to building the private sector and removing the myriad barriers that are preventing growth in the U.S.
How can this dilemma be resolved? By presidential leadership, in which President Obama puts himself and his re-election on the line by taking a series of actions to restore private sector jobs and growth while cutting the deficits. President Obama is an extremely smart, savvy leader who knows what to do. Now he must take the political risk to do it because the risks to the country of inaction are far greater.