News & Politics

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 addresses the audience at the luncheon of the Economic Club of Washington. Photograph by The Economic Club of Washington, DC / Ralph Alswang.

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.”