Caesars CEO: Higher Taxes Would Impact Business
AUDIE CORNISH, HOST:
After President Obama's news conference today, he moved on to a meeting with the CEOs of a number of big corporations to talk about avoiding the fiscal cliff. We're going to talk now with one business leader who has advised the White House in the past, although he was not at today's meeting. Gary Loveman is the CEO of Caesars Entertainment, the worldwide casino company. He's been a member of President Obama's export council, and he's also part of the Fix the Debt campaign. Welcome to the program.
GARY LOVEMAN: Pleasure to be here, Audie.
CORNISH: Now, obviously the business community is not monolithic by any means. But there are some themes that appear to be emerging from corporate leaders. What exactly do CEOs like yourself want to make sure is on the table when the president negotiates with Congress?
LOVEMAN: Well, the CEOs are above anything else pragmatic. And what we're looking for, what I'm looking for, is a combination of three essential features. The first is a recognition the economy is very weak and we should not do anything to hurt it in the near term. Second, we need long-term fiscal reform that puts the federal government's budget on a sustainable path prospectively. And third, it needs to be done so in a way that provides some level of stability and predictability so that decision makers, households and businesses, don't believe that everything is a jump ball, literally, every month or every quarter.
CORNISH: At the heart of the debate so far, the argument between Democrats and Republicans has been over revenues, taxes, and Senate Republican Leader Mitch McConnell said yesterday that allowing tax rates to go back up for top earners would, quote, "destroy 700,000 jobs." Do you agree with that assessment?
LOVEMAN: It is certain that raising tax rates on any group of earners is retardant to job growth. I can't speak to the specific numbers that the minority leader proposed. But at a time when the economy is very weak, the last thing you want to do is to raise marginal tax rates on anyone.
CORNISH: So do you feel like you would cut jobs if income tax rates were to increase? I mean, would that force you into that position?
LOVEMAN: There would be a residual effect that would likely move us in that direction. So we're in the entertainment business. Our customers would be many of those paying the higher rates. As a result, they would spend less entertaining themselves, and I would have fewer jobs, fewer shifts, fewer hours to offer my employees as a result. There's no question there would be a feedback of that sort.
CORNISH: On the other side, we've head from labor leaders yesterday where they talked about wanting to protect entitlements. And obviously, there's been talk that there could be, in an agreement, some sort of tweaking to entitlement reform. Where are CEOs on that issue?
LOVEMAN: There has to be reform of entitlement programs. And while we all want to protect them, we have to recognize that we need to reform them. So take the two principal categories, Social Security and Medicare. These two programs were instituted at a time when 65 was a pretty good marker for the later stage of your life. Today, with life expectancies dramatically longer, these programs are underwriting a very substantially longer portion of all of our lives. Unfortunately, they're simply not economically capable of doing so. So what we need to do is to modify the period at which these benefits commence, and we need to introduce a level of competition in the way that they're delivered so that these benefits can be delivered efficiently.
CORNISH: Looking forward to the next few months and thinking of your company in particular, the casino entertainment business, what does the prospect of going over the fiscal cliff look like to you?
LOVEMAN: It looks disastrous. I mean, I don't mean to speak in hyperbolic terms, but it looks really ugly. If you see the preemptive actions of sequestration and what people have to do to anticipate that, you see a significant rise of marginal tax rates across both income-earning classes. The effect of that on the economy will be immediate and very substantial, and that will then lead to a sell off in asset markets. The budding increase in the housing market will immediately expire. And whatever momentum we have going forward would be pushed backward, and that would be very tough on a discretionary business like ours.
CORNISH: Gary Loveman is CEO of Caesars Entertainment, the casino company. He's also been a member of President Obama's export council and a part of the Fix the Debt fiscal leadership council. Gary Loveman, thank you so much for speaking with us.
LOVEMAN: Thank you, Audie.
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