Maryland Business Leaders React To The Budget Plan

August 11, 1993|By Ian Johnson and Kim Clark | Ian Johnson and Kim Clark,Staff Writers Staff Writer Jon Morgan, Mark Hyman and Ted Shelsby contributed to this article.

From the worlds of banking and publishing to crab cooking and trucking, Maryland business leaders are trying to figure out what President Clinton's new budget package means to them and their companies.

The plan, signed into law yesterday, was designed to slow the growth of the federal debt by $496 billion over the next five years. The bill's narrow passage was considered a crucial test of the new administration.

But many of the 19 chief executives surveyed by The Sun criticized the plan, saying its higher taxes could stifle the economic recovery and slow their companies' planned expansions. Several said the plan would delay new hiring.

Other executives, however, cautiously welcomed the plan. While disappointed it did not go further in cutting the deficit, it was at least a credible stab at a monumental problem, they said.

The executives surveyed represent companies based in Maryland or headquartered elsewhere with large local operations.

Norman R. Augustine

Chairman and CEO

Martin Marietta Corp.

Defense contractor

"Many of the [research and development] considerations will be helpful to many industries, but ironically not to the defense part of our business. Because of the way it was set up, you have to have increases in R&D in order to benefit and in the defense industry, with everybody shrinking, we don't have increases in R&D..."

"One element that will be helpful is the need to shrink our industry and consolidate it -- to put together mergers. There's a provision that let's us ... reduce the cost of mergers."

Owner

Obrycki's Crab House and

Seafood Restaurant

"It's certainly going to hurt the restaurant industry. I don't know why, but [lawmakers] think that when business people meet for lunch, they're having three martinis. It's not like that anymore. Ninety-five percent of business customers have just iced tea. You don't do business and have drinks -- that went out years ago."

"Nobody around here spends $150 on a meal. It's more like $12. Business is too tough nowadays. Maybe they have big lunches in Washington -- that's probably what they're basing their plan on." Chairman and CEO

The Rouse Co.

Real estate developer

"I really don't think it will have any impact, except it will encourage lower interest rates. And lower interest rates will have a benefit here in Columbia where the housing market will continue strong."

The increase in corporate taxes "doesn't bother us. We are mostly tax-sheltered...And we've been through a lot of energy-related things. [Despite the increase in gas taxes] people will still drive to our malls."

"In my life in business, a lot of dreadfuls never occur."

CEO

Waverly Inc.

Publishing

"It could have been a whole lot worse, whether you're looking at it from spending cuts or tax increases. My second reaction is that something had to get done. While I hope that they proceed with the cuts that they talked about at the end, at least it's a step in the right direction.

"In the short-term, [the new taxes' effect on the economy] will be a drag. On the other hand, it should be outweighed in the future by the economic growth, which continues to pick up."

Waverly's after-tax profits is expected to be cut 2 percent, he said, but "the company can handle this."

Leonard "Boogie" Weinglass

Chairman

Merry-Go-Round Enterprises Inc.

Clothing retailer

"I'm not overly crazy about the thing because it affects me. But if it helps the country and reduces this deficit, I'm for it. I'm lucky to be in that position" to pay the surcharge assessed the wealthiest Americans. But the corporate and gas tax increase won't affect business at Merry-Go-Round, he said. "I think it's going to be a non-event in fashion. We're not like a department store, we sell fashion. If you've got something people are going to want to buy, they will buy it."

Paul M. Silber

Chairman and CEO

In Vitro Technologies Inc.

Nonanimal drug and chemical testing.

"I'll take it as a dose of medicine, even though it's been hacked to death with terrible compromises to vested interests. I think it showed a lack of political courage and was disappointing to all business people and individuals who want to tame the deficit."

Because entitlements were not cut and the middle class was spared a heftier tax increase, the deficit was not slashed enough, he said. "I think it's better than nothing, but not much.

"This is also a significant tax penalty for small business....It flies in the face of what Clinton and his administration have said about supporting small business."

Leo H. Suggs

President

Preston Trucking Co.

Trucking and transportation

"This is certainly going to have a substantial impact. Fuel is our second-largest expense."

Preston would probably not be able to pass on the $1 million-a-year increase in fuel expenses because of tough competition: "All you have to have is one company that says 'I'm going to hold the line.'...We are just going have to search for other ways to overcome this expense."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.