Full Interview with FedEx CEO Fred Smith
Bret Baier talks with business leader about the economy
- Duration 17:44
- Date Mar 14, 2013
Bret Baier talks with business leader about the economy
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Fred thanks for being -- glad to be here.
As head of FedEx you have the sense about where things are going to operate around the world obviously.
But you have a real sense about where the US economy he is currently.
What's your assessment of where the -- the economy's.
US economic growth is relatively modest.
Our chief economist -- lying who's very good one.
-- -- -- about 2% this year about 2.3 percent.
Fourteen that's a long time off.
About 2.4 percent worldwide GDP growth this year.
Maybe going up to 3%.
Next year lot of enthusiasm at the moment because some of the numbers that are coming out about housing and retail.
Sales in all -- are -- bit stronger.
But you've also got the tremendous.
Because of the physical situation in.
Administration and congressional stalemate here in March -- very concerning to business and we have.
Which keeps hundreds of billions of dollars.
American companies money -- And not being invested -- nice day we hear that word a lot uncertainty.
Mean that's real for businesses sure of course.
I mean when you when you -- -- a large enterprise where you have.
Lots of people's lives.
Wrapped up in in.
In in the business.
And your spending lots of money on on assets four future.
Which is by definition unknowable.
You have to be cautious.
-- -- Can imagine at the board level.
What the uncertainty.
I mean that he -- natural.
Because if you're on cautious.
You know you can go broke.
It's it's not like -- government where you just print some more money so you have to taking to -- That scenario and that's what the people -- they missed.
In norms so uncertainty hasn't cost and that cost is.
Restraint in terms of of the economic activity if Democrats Republicans got their act together and came together on some.
Kind of solution -- a couple things that you would say.
You would do to stimulate.
Well I think the most important thing the United States can do to stimulate the economy is number one continued to you.
Promote -- production.
This oil and gas revolution and we've been through in the last few years is fantastic.
It's lowering our.
-- need to import oil.
That money stays in our economy.
When we produce a barrel of oil or natural gas in this country we get about eighty or 90% of the benefit if we have to import.
Energy it's about it and iron.
So it has a multiplier affect on our economy second we need to reform our corporate tax code it's unfair it's.
Not productive most importantly it this way needs.
Capital investment and capital investment is almost perfectly correlated with job creation.
And that's why we we still have very.
Unemployment relative to.
Past recoveries is we don't have enough investment.
To overcome the meltdown in the housing market.
The reduction in an it infrastructure spending because -- government doesn't have money to them.
Do you think is as a businessman running a big company that.
The nation's debt the deficit.
Deficits are our problems of course -- big problems.
They will become.
An enormous problem if the trajectory isn't change we're the world's reserve currency.
We have the ability to do things that other countries don't.
When we put.
Our dollars out there and -- tradable in the -- goods in any other currency that you might have.
A lot of problems that.
Other countries have around the world is they they don't have a reserve -- But at certain.
Wealth that we have in this country.
Becomes problematic when you.
As much as your GD BG DP produces in a single year.
And history would show and and there's no question about this if you don't get control -- that at some point.
You'll have significant -- -- inflation which is.
Cruelest tax that you can impose on the people was what caused.
Tremendous problems in Germany you know after one.
So we have to keep our debt as any reasonable.
Proportion of GDP -- we we get out of balance that way it seems every year we talk about tax reform.
You think that that could change the dynamic.
On the corporate tax -- is an individual for the account you know that problem that we have in the tax side.
Is that in 1986.
Personal taxes and corporate taxes.
And that was a very good idea during the Reagan administration we at about 13%.
Of our economic activity related to two global.
Today that's 30%.
And so what's happened is other countries have a much more.
Simple and competitive corporate tax rate.
And we are of the highest now all the industrialized countries.
And they tax rate at the corporate level determines the level of capital expenditures that top 1000.
Companies in the United States account for about 60% of all of the capital the computers the planes to trucks the factories and machines the things that put people to work.
And so where their corporate tax rate of 35%.
The rest of the world it's more advantageous for the big companies headquartered in America to invest in China or Brazil.
So we have to resolve that now as of January 1.
When the president got his tax bill -- an increase that he.
-- tax rates only highest earners in the United States for the first time since 1986.
That connection was broken.
And so the advantages of filing as a small businesses.
Partnership for a so called sub chapter S company are now.
No longer they're it's better to file as -- C corporation so we don't see any reason why the corporate tax rate.
Could not be changed get rid of all of the special deals and exclusions lower the corporate tax rate make it revenue neutral.
And that along with our oil and gas production would be the greatest stimulus to the United States.
Economy that you can -- -- you know this town you talk to the administration -- to Capitol Hill.
There is any of that realist.
I think it is realistic the president says he's for it he came to the so called territorial system we in chillier in the only two countries have a worldwide tax system which means it.
These dollars that term in Europe or or China by American companies never come back to the United States because it would be taxed in our.
Tax rate they left off -- to you to be reinvested someplace else and produce jobs for their services so it's it's really.
Not -- a wise policy.
Speaker Boehner is is endorsed it.
Chairman baucus and Senate Finance Committee is endorsed it.
Chairman camp of the house Ways and Means Committee she had ever once saying that I think the problem is they're trying to do.
Personal rates which the Democrats absolutely -- being forward.
Or any of the exclusions like mortgage interest or charitable deductions being given up -- -- them.
So I do think you could carve out the corporate.
Which only provides about 10% of the government revenues people are always astounded when they find that out.
So it it's really.
Decision to keep our corporate tax rates and an uncompetitive levels when we could fix -- if we just put my awful on the side did it.
The standoff in Washington how much do you think that hurts.
Or the economy overall -- -- -- I think it hurts business alive or I should say it hurts the economy.
Probably more than any thing because uncertainty.
Means that businesses and that's less.
There are more reluctant to hire there -- more cautious about taking on a new product development or whatever the case may be because.
Date they don't know the days the outcome of this -- sustainable fiscal situation so that has a huge cost.
You're heading to China and a few days.
And obviously have.
A lot of business over there what's you're sense of China where things.
I think China is.
In the midst of of a big change obviously they have new leadership.
That's just taken over.
China and the middle part of the of -- first decade of this century made some policy changes.
Which I think have been.
Not good for the world trading system they promote.
Other companies it may be operating there and they college indigenous innovation they're trying to build -- economy and a in -- more.
Managed fashion rather than opening up a lot of their markets which I think would be much better for the world and much better forward for China itself.
So they have number of problems which there.
Very vocal about and trying to address and hopefully it will.
Liberalize some of these.
Things and and and be one of the great.
Locomotives is pulling the train of economic prosperity for those people around the world.
I've heard you said that of the countries where businesses could could really take off regions North America is actually.
The biggest you know North America has has so much going for -- I mean take Canada and the United States and Mexico.
Years ago during during the Clinton administration we came up -- the free trade agreement NAFTA.
Which was highly controversial at the time but in retrospect.
Has been one of the great engines.
Economic prosperity just.
Look at the results and in Mexico and in Canada -- about reform the United States because -- -- Their policies in many layers are much more business friendly than -- But despite that.
You now have.
-- an enormous economy where the rule of law prevails.
And and on the way to becoming energy self sufficient.
And in fact maybe even significant.
And that's very compelling story.
And -- that continues yes of course you know Mexico the new president.
Has suggested legislation.
To open up there oil and gas sector chief foreign investment.
Now that may not sound like much of people -- -- -- Mexico.
But they have a holiday.
That recognizes the day in 1938 when a national office -- oil and gas business.
In prohibited foreign investment they -- -- all partners that's.
She change in in attitude when targets pastor -- But if it does.
Energy resources in Mexico -- -- on cap which will create enormous wealth for.
Mexico and for that -- trading partners looking ahead of the future you know we've done a lot of stories about you -- these unmanned aerial vehicles.
Is there -- on men and prospect.
For business for your business cargo business.
I suspect that.
While it's technologically possible if it's not in the cards because -- social logical and security concerns.
Do you think that you'll see the huge.
Ground based co pilots if you will to -- onward.
Pilot or pilots.
But I think that that it it's not.
Something that you'll -- in the near future where you'll have a completely autonomous.
Large airplane I think it's more likely you'll -- -- vehicles before you actually completely drone.
Cargo -- you look at your crystal ball -- it.
Four transportation horror -- all.
You know -- if the United States can get its fiscal house in order.
Given me energy revolution that's that's taken place.
I think that the prospect for.
-- -- is very very substantial.
But most of the problems.
That the Democrats and the Republicans fight about in martian.
Our most easily solved -- Faster growth rate I mean just look at the government's revenues now vs last year it's because of the economic.
Activity -- increased over the period of time.
So I think that the most important thing that the United States could do is to adopt pro growth policies.
Competitive tax rates reestablish United States leadership and trade which we.
Which we have had for many years.
Built on the philosophy rate Tennessean Cordell Hull who won -- -- plan that -- did cross borders -- rarely do.
And I think the opening up of -- markets around the world lifted hundreds of millions of people out of poverty and China and devastated countries of World War II so we need to get back to that you do those three things.
-- Energy production.
And and get a competitive.
Tax system for our.
-- him -- and invest.
And take the leadership back on trade -- -- these growth rates up and that solves the physical problem.
Much faster and then in the any deal between Democrats and Republicans.
This -- big question Washington.
FedEx Field Washington -- What your thoughts.
Well we have and isolating the -- -- shareholders meeting every year about.
About the worst and Redskins -- -- and our responses we have a long term contract with the worst and Redskins.
We're not involved in the -- it's a very good sponsorship for our shareholders and so we'll leave that up to the people -- to decide I was just asking about the team that -- gonna do -- -- well Super Bowl I think no question I mean with a quarterback like we've got my goodness.
I think it's going to be in all seriousness -- a great team we've got great coach we've got great players Robert -- arguably the most popular man in Washington may be in the country.
Got that smile injury as that.
Greg general manager.
Dan Schneider and everything he -- try to.
There to make it -- great -- so when he thirteen just might be our year.
Last thing you have a big fan yet it's ten kids yet.
And one of your daughters is -- Hollywood producer she is.
Molly Molly via the blind side PS I love you know she did in the good -- with -- Reese Witherspoon who lost what is Sudan's great story.
And that's now and your family Hollywood blood -- -- you you -- a star and yes I thought I I thought I was big part of success -- eighteen seconds streaking.
But Tom Hanks is the best in Bob zemeckis and build world did that movie and when it used.
The FedEx background of Tom Hanks -- that it's a classic for you had a convention.
They did have to convince me to do it and and I was so bad they cut my part to eighteen seconds and me on the TV screens so.
I learned that I didn't have much feature is the -- cast.
Fred thanks so much thank you really appreciate our.