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Howard Schultz on Budget & EconomyStarbucks CEO; independent candidate for President until July 2019 |
This is a moral abdication--because the burden of that debt is going to fall on the shoulders of your generation. We already spend more on interest on the debt--this is an amazing number, $500 billion of interest expense every year--than we do on all federal programs to help the children of our country. It's insane. It's reckless. It's wrong. It's a lack of leadership. It's a lack of responsibility. And once again, it's emblematic of how broken the system is and both parties are complicit. That figure is only going to increase in the years to come unless somebody decides to fix it.
Politicians postured in front of cameras. Congressional votes were called, then cancelled. Blame was abundant.
Two things in particular plagued me. First, missing the deadline, or hitting the ceiling, meant that some of the country's most vulnerable and deserving citizens--people on Medicare, veterans, and federal pensioners--would have late, partial, or missed payments. People would immediately feel the painful effects of political gamesmanship.
Second, raising the debt ceiling was a false goal. What the nation needed was not more debt but a comprehensive, balanced budget, coupled with a bipartisan economic plan that spurred long-term economic growth.
We found a reputable partner, a trusted nonprofit. The money we raised in Starbucks stores would pass 100 percent to [small lenders] around the country. That money would be equity to borrow more money against and lend to any organization that provided jobs in the community. On average, [the total amount lent would be] seven times the original amount of a grant they received.
Starbucks, in turn, would reimburse operating costs to ensure that 100 percent of every dollar raised from our customers went into communities. In addition, the Starbucks Foundation would make an immediate donation of $5 million, rather than wait for customer donations to add up.
Raising the debt ceiling was a false goal. What the nation needed was not more debt but a comprehensive, balanced budget, coupled with a bipartisan economic plan that spurred long-term economic growth, increased jobs, and helped more citizens help themselves by lifting stagnant wages for the dwindling middle class, getting more young people through college, putting entrepreneurs back in business.
They were fighting over the wrong thing. Instead of coming together to address these very real needs of the American people, politicians were arguing about whether to accumulate more debt and whether to raise or lower taxes. These are important macro decisions, but they are not growth strategies.
I had striven for honesty, trusting our people to honor the realities of the situation Starbucks was in. [The press release continued]:
"Throughout the history of the company, we have always aspired to put our people first. This makes our decision to close the stores more difficult. At the same time, we recognize that we must make decisions that will strengthen the U.S. store portfolio and enable us to enter fiscal 2009 focused on enhancing operating efficiency, improved customer satisfaction and ensuring long-term shareholder value for our partners and customers."
Six days after the announcement, on July 7, 2008, our stock fell to a 52-week low of $14.95 a share.
"Is [the stimulus] going to be helpful in terms of getting the consumer out of this funk?" Maria asked me. My perspective, which I shared with her, was that its most immediate effect would be to lift consumer confidence, which was so critical for people to feel comfortable enough to spend money again. I also said that I did not think the current climate was going to dramatically improve anytime soon, something that all companies had to accept.
At Starbucks, we continued the incredibly complicated, sometimes painful work of cost cutting and making our processes more efficient. Revamping the supply chain. We were closing 300 more stores than previously planned. Most difficult was that we had just gone through another round of layoffs.