CEOs of large, high profile companies like Intel tend to be averse to making strong political stands, especially during election season. They understand that their companies can quickly become targets for regulation that can end up costing shareholders millions (or billions of dollars). Most CEOs tend to throw some money at candidates who are expected to win and keep their heads down. Which is why Intel CEO Paul Otellini's total evisceration of Obama's understanding of the economy in the middle of an election season was such a shocking breath of fresh air today.
"The decisions so far have not resulted in either job growth or increased confidence. When what you're doing isn't working you rethink it and I think we need to rethink some plans," he said at the Intel Developers Forum in San Francisco.
Otellini credited the White House for listening to him and other business leaders. "I really think they're trying," he said, adding that he doesn't think there is anti-business sentiment from the administration.
But Otellini said the $787 billion economic stimulus package passed last year has not done enough to solve problems in the job market. He argued that money not yet spent from that program might be better off allocated elsewhere and took the administration to task for focusing on short-term projects.
"It doesn't seem to be working the way it is. Swimming pools in Mississippi are not going to create lasting jobs."
** snip **
Otellini is also one of the first Fortune 500 CEOs to speak publicly about President Obama's newly proposed $350 billion economic recovery plan. He said that proposal, which includes tax breaks for businesses and research and development incentives, is not the right plan either.
The way Otellini sees it, Washington must decide what the industries of the future are. "We still subsidize trains and agriculture -- industries of the 19th century. We should decide what's important to us going forward and make sure we've got the education system in place and the capital incentive system in place to do the investment here."
Otellini also said that a major problem for companies is that they are being held back by high corporate tax rates.
Otellini says it costs Intel (INTC, Fortune 500) $1 billion more to build a factory in the U.S. than abroad because of a lack of U.S. tax incentives. The company has a multi-billion dollar factory slated to open in China this October.
"You have to weigh the advantages of working here, the security of working here in this country...against that billion dollars."
Otellini questioned why global business leaders would want to do business in the U.S. due to the cost, saying it is critical to incentivize foreign countries to invest in America. "Our corporate taxes are twice what they are in the rest of the world. You want corporations to invest here."
Gee. It seems that one party was talking about the corporate tax rate being too high all the way through the 2008 election. The other was busy talking about penalizing ExxonMobil for making too much profit. The end result is that when the financial sector tanked, the party in power did nothing to change the corporate tax rate and instead spent billions of dollars on "shovel ready" projects; i.e., completely unnecessary construction projects. These provided some level of short-term boon to construction companies, who built the projects in question and then were promptly left standing around twiddling their thumbs again. Meanwhile, companies with sustainable business practices and profitability like Intel move more and more American jobs overseas because of the hostile business climate that Barack Obama and his cronies don't even understand, much less know how to fix.
Until America elects an administration and a Congress that has a better plan for fixing the economy than confiscating money from profit (read: job) producers like Intel and throwing it at farm subsidies and construction make-work, you can count on Austan Gooslbee being right: double-digit employment will be a more-or-less permanent feature.