FedEx Founder Fred Smith Is Bullish on Football but Not on the Economy
The Redskins co-owner talked the Super Bowl, tax rates, the fiscal cliff, and oil at an Economic Club luncheon.
Fred Smith, the founder of FedEx, knows all about how to get a package from one side of the world to the other, in record time, and with its journey tracked by the minute. But does the man who is a co-owner of the Washington Redskins, and who has naming rights to the stadium, also know how to predict the future? Let’s hope so, because in an appearance today before the Economic Club of Washington he said it “wouldn’t be the strangest thing” for the Redskins to make it to the Super Bowl this season. He gave credit to the “quarterback we have, and the running back, and the defense,” and that “we have a great coach.”
Apart from the shout-out to quarterback Robert Griffin III and a promise to Mayor Vincent Gray, who was in the audience, that “all our parking tickets are paid,” that was it for levity at the luncheon appearance, as Smith issued cold, hard opinions about the state of the American economy. He was at the White House Wednesday, meeting with President Obama as a member of the Business Roundtable, an elite group of 100 business executives. He also met with members of Congress. “Washington is an important part of FedEx,” he said, and vice versa. “The Federal Reserve calls us and asks what we’re seeing. We have a unique perspective,” stemming from moving tens of millions of packages all over the planet and doing business in every global economy, whether it’s “opaque” China or “no growth” Europe.
Smith said the issue he discussed with lawmakers was how to restore economic growth in the US, which, while not contracting like Europe, is still sitting at a growth rate of only 1 percent GDP. He said there was “not much chance” of it growing to 2 percent without changes in US economic and tax policies and absent some sort of shock in the Middle East. He was adamant that “entitlements are not sustainable.”
“The problem is not solved by simplistic sound bite solutions,” he told the Economic Club’s members while they nibbled on salad and salmon at the Reagan Building. “The small-business community is the backbone of the economy. I was a small business, I know what it’s like to have to make payroll, and then I became a big company.” He disparaged the so-far fruitless debate on Capitol Hill regarding, among other issues, the fiscal cliff.
Smith proposed three solutions that he said “get to the heart of the matter,” turning the economy around.
- Create jobs. The way to do that is “invent, innovate, and invest,” he said. “Small or large, it’s investment that creates jobs.”
- Reduce the corporate tax rate from its current 35 percent down to 25 percent. “We now have the highest corporate tax rate of any country,” he said, which is one reason “95 percent of customers and services are not in the US.” He said, “We have to be able to compete.”
- Reduce US dependence on imported petroleum. “We must produce more oil and use less of it in the US,” Smith said. “Our oil production is 9 million barrels a day. Our demand is 19 million barrels per day.”
The matter of trade was also discussed by Smith, both in his remarks and in a Q&A with the Economic Club’s president, David Rubenstein of the Carlyle Group. He lamented that while the US buys $400 billion from China, China buys $100 billion from the US. “The United States must insist on fair trade.”
Rubenstein asked Smith whether he thought Congress and the White House would come to an agreement on the fiscal cliff. “I think the odds are that we will have a deal. Both sides want to reach a deal. I’m cautiously optimistic.” With the world headed into the holiday season, he said FedEx would move “about 19 million packages,” which compares impressively with the 186 packages handled their first year of business in 1971. He’s big on what he calls the “triple seven,” the Boeing 777 jet airliner, which, depending on the model, can travel almost 10,000 nautical miles. “Its a fantastic flying machine,” he said, noting that 22,000 suppliers provided the parts and pieces that make the jet.
Smith is a native of Memphis, but his ties to Washington are strong beyond co-owning the football team. His son, Arthur, was formerly a coach for the Redskins but is now with the Tennessee Titans. One of his daughters works in the Washington office of Google. Would he want to live here on a more consistent basis, he was asked, perhaps as an elected official? “No,” he said without missing a beat, explaining he has “neither the temperament, passion or family situation” for that role.
Rubenstein ended with a question that may seem obvious but still has an appealing curiosity factor. Has FedEx ever lost a Smith package? “No,” he said. A package or two was misrouted over the years, “but nothing lost.”