Capital Markets

The Way Forward: CFOs Speak Out

What advice would you give the next president?
David KatzMarch 27, 2008

Dear Sen. McCain:

Please know that we support you by a wide margin over both the Democratic contenders combined. So if it were up to us, a Barack Obama and Hillary Clinton “dream ticket” wouldn’t hold a candle to you.

In short, we’re with you on the issues that most concern us. True, we’re aware that the two remaining Democratic presidential candidates, for example, have better reputations as defenders of the environment—if only because they’re Democrats. But we’ve heard you acknowledge that climate change is real and sound the alarm about the dire economic and security effects of our dependence on Middle Eastern oil. So we’re hopeful that you’ll be a staunch warrior in what we regard as the key barrier to economic recovery: the cost of energy.

We’re also hopeful about your stand on tax policies, which, along with our energy concerns, are uppermost in our minds when we think about ways to extract our companies from the current economic quagmire they’re in. We know you’re an aggressive tax-cutter when it comes to our employers, since your web site proclaims the need for a reduction in the corporate tax rate from 35 percent to 25 percent.

You’re also marching with us when it comes to the battle to make the 2003 tax cuts on such things as dividends, long-term capital gains, and personal income permanent. We’re aware that before you became a candidate you were a staunch opponent of the Bush tax cuts, but hell, you’re more reliable on that score than any Democrat could possibly be. Those are just some of the reasons we’re behind you all the way to November.

Keep the faith, (Signed) CFOs of America.

While the above letter was never composed by any group of chief financial officers, it might well have been. After all, in a survey conducted at the CFO Rising Conference in Orlando earlier this month, 58 percent of 123 finance chiefs said that John McCain is the candidate who would make the best president, while 29 percent and 13 percent favored Obama and Clinton, respectively.

Of course, CFOs have a few other things on their minds than energy and taxes. That is apparent from video interviews with five prominent finance chiefs who were asked what advice they would give the next president. For instance, Kurt Kuehn, CFO of UPS is concerned about “protectionist measures that might impede trade flows.” The incoming president “must realize that Fortress America won’t be competitive long-term.”

Some were worried about the depth of the current liquidity freeze. “It’s really important that the consumer has the right amount of funds available for them to be able to live their life comfortably,” said John Richardson, the CFO Qwest Communications International. That opinion is understandable coming from a finance executive who has helped his company turn things around from a situation in which it was $26 billion in debt.

Still, the CFO survey suggested that the price of oil and war in the Middle East are weighing heaviest on the minds of senior financial executives. By a wide margin, they regard the cost of energy as the most serious roadblock to economic prosperity, with a whopping 62 percent of 135 finance chiefs expressing that view. The housing market slump and the federal budget deficit, both at 40 percent, and the descent in the value of the U.S. dollar, at 37 percent, trailed far behind.

When it comes to delivering a boost to the economy, the finance chiefs also look to the environment, with 72 percent of 141 respondents saying that “providing incentives for alternative energy use and development” would have a positive effect. But they favor a green carrot a whole lot more than a green stick: thirty-eight percent said that “capping greenhouse gas emissions” would have a negative result.

If he sticks to his post-candidate tax policies, McCain seems a sure bet to be a winner with the nation’s CFOs. Sixty-nine percent of the respondents said that cutting corporate tax rates would boost the economy, while 66 percent said that maintaining the 2003 tax cuts would have a positive effect.