In the State of The Union address Tuesday night, President Obama issued a bold agenda for strengthening the American economy this year. Uneasy business leaders trying to navigate through the current financial climate were especially concerned with what the president had to say. Listed below are CEO responses to whether major issues were adequately addressed by the president.
Job Creation & Taxes
In an effort to spur job growth, Obama put forth several sweeping initiatives including raising minimum wage to $9.00 (from $7.25) and enacting a corporate tax overhaul. He also praised several companies for creating jobs on the home front through manufacturing.
“After shedding jobs for more than ten years, our manufacturers have added about 500,000 jobs over the past three,” Obama announced. “Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. And this year, Apple will start making Macs in America again.”
From the First Lady’s box, Apple CEO Tim Cook smiled at the shout out. And Caterpillar CEO Doug Oberhelman told CNBC the mention was surprising but, of course, welcome. He was more concerned with how the president plans to overcome significant barriers to kindling desperately needed growth throughout the U.S. and around the world.
“If we really want growth . . . we need some of these things cleared off the deck,” Oberhelman said. “We’ve got to get the debt off the front page.”
As far as an overhaul of the corporate tax code, Oberhelman strongly agrees:
“The tax code here is 30 years old. It’s a mess . . . Clear it out, lower the rate, broaden the base and watch the revenues flow.”
The president’s tone on taxes, however, didn’t sit well with Don Peebles, CEO of the Peebles Corporation.
“I thought the method in which he approached new revenue in terms of taxes—increasing taxes—again was spoken with a sense of disdain, and I find that a bit of troubling,” Peebles voiced to CNBC. “Look, 70 percent of the billionaires in this country happen to be self-made, and that’s all part of the American dream.”
In regards to raising the minimum wage, Oberhelman thinks the president’s initiative is beside the point.
“Let’s grow the economy and add all kinds of jobs, and we don’t have to worry about minimum wage,” he said. “The Fed talks about a 6.5 percent [unemployment] rate—that’s still high historically. We just got to worry about getting people back to work. That’s the best minimum wage increase there is.”
Sam Zell, Chairman of Equity Group Investments, opposed the minimum wage raise altogether, saying it would make the job market even more difficult for such workers.
“Raising the minimum wage doesn’t necessarily put any more dollars in the business and doesn’t necessarily cover anything, and it’s just adding to the inflation and making it more difficult for people to get hired.”
Zell also disagreed with Obama’s approach to reforms aimed at revolutionizing the manufacturing industry.
“The real issue is training,” Zell said. “If you need to find someone who knows how to read plans, [they’re] hard to find. So I don’t understand, you’re going to have a manufacturing renaissance, what run by robots? What does that do for employment?”