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7 Shaping the New Agenda 7
THE JOURNAL REPORT
s 2008 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Monday, November 24, 2008 R1
CEO COUNCIL
What should President Obama do? As he prepares to take office,
The Wall Street Journal convened some of the country’s top
CEOs and policy makers to come up with their priorities for the
new administration and Congress. Inside, you’ll find what
they think should be on that to-do list—and why.
Finance & America in the
The U.S. Economy Global Economy
TOP PRIORITY: TOP PRIORITY:
A QUICK STIMULUS PACKAGE A NEW TRADE AGENDA
R5 R6
Energy & Health
The Environment Care
TOP PRIORITY: TOP PRIORITY:
A BROAD ENERGY AND ENVIRONMENT POLICY FIGHTING OBESITY
R6 R7
PLUS: Interviews with Henry Paulson, Robert Rubin and
Lawrence Summers on the economy, and James Comer, Joel Klein
and Louis Gerstner Jr. on education, R8 & R9
I L L U S T R A T I O N S B Y L L O Y D M I L L E R
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R2 Monday, November 24, 2008 THE WALL STREET JOURNAL.
UPFRONT
Editor’s Note
HERE’S ADVICE, and then there’s advice. This report falls into the lat-
What Are You
T ter category.
The Wall Street Journal last week convened its CEO Council, bring-
ing together some 100 top CEOs and influential policy makers to discuss
what the new administration’s priorities should be. The attendees were
some of the biggest names in corporate America. And, as you’ll see, some of
the most thoughtful.
Worried About?
By Melissa Korn War, peace and terrorism: 7% n GERALD FORD: 1974
Participants were divided into task forces in four areas: the U.S. economy, Poverty and homelessness/ Inflation and cost of living: 23%
When Americans are asked to- Social Security: 2% each Crime and violence: 14%
energy and the environment, the U.S. in the global economy, and health care.
day to name the country’s big- Dissatisfaction with
Each task force came up with what it thinks should be President Obama’s— gest problem, 77% of them say Although war had been at government: 12%
and Congress’s—top five priorities. Then the full council voted to identify it’s the economy. But how did the top of people’s minds when
people answer that same ques- President Truman took office in Amid economic distress, Wa-
the overall top five. tion in the past, as other new April 1945, after the death of tergate and divisive social con-
In these pages, you can find the CEOs’ arguments for why these actions presidents headed to the Oval Of- Franklin Roosevelt, this Octo- cerns, the “top problem” was sev-
should be on the president’s to-do list. You’ll also hear how senators who at- fice? Here’s a look back at the ber 1945 poll showed how eral. Inflation was in double dig-
concerns that faced presidents- quickly things had changed. its, and the Arab oil embargo
tended the conference reacted to the list. elect or new presidents, based Once peace was declared, the na- pushed oil prices up fourfold to
Clearly, the new administration is going to have no shortage of sugges- on Gallup polls and interviews tion turned inward, focusing on $10-$12 a barrel.
tions on what they should tackle. Still, I think it’s fair to say there’s advice. with historians. where returning GIs fit into the The country was looking for
work force. help everywhere. “They were
And then there’s advice. n HARRY TRUMAN: 1945 “There was a great deal of pub- weary of the ’60s, of Nixon’s lies
—Lawrence Rout
Unemployment and jobs: 77% lic concern about the end of the and Johnson’s lies and streets on
war, what the world was going to fire and napalm,” says Douglas
The Journal Report welcomes your comments—by mail, fax or electronic mail. Letters should be like when it was over, particu- Brinkley, a history professor at
Ms. Korn is a copy editor for larly whether the Depression Rice University. “There was a fa-
be addressed to Lawrence Rout, The Wall Street Journal, 4300 Rt. 1 North, South Brunswick, Dow Jones Newswires in Jersey was going to come back or not,” tigue of the era.”
N.J. 08852. The fax number is 609-520-7767, and the email address is reports@wsj.com. City, N.J. She can be reached at says Alonzo Hamby, an Ohio Uni-
melissa.korn@dowjones.com. versity history professor. n JIMMY CARTER: 1976
Significantly, by the time the Inflation and cost of living: 44%
election rolled around three Unemployment and jobs: 34%
years later, as relations with the Dissatisfaction with government:
Soviet Union deteriorated, 12%
things had reversed again: Inter-
national issues and foreign aid Americans were still smart-
were back on top, with 48% identi- ing from Watergate but were
fying those as the No. 1. problem. even more concerned about their
wallets. A long period of high in-
n DWIGHT EISENHOWER: 1952 flation and unemployment and
War, peace and terrorism: 55% scant productivity growth frus-
General economy: 20% trated people. Little wonder that
International issues and foreign President Carter’s message that
aid: 12% Gerald Ford had done nothing
right for the previous two years
The Korean War was front resonated with voters.
and center, having reached a
stalemate. Communism was a n RONALD REAGAN: 1980
concern at home, too. Inflation and cost of living: 53%
At the same time, a steel-mill Unemployment and jobs: 11%
strike in the summer of 1952 led International issues and foreign
to a short-term panic in the auto aid: 8%
and other manufacturing indus-
tries, resulting in far-ranging Money was at the top again,
price increases, production halts with inflation at a staggering
and massive layoffs. 13.3% in 1979. (It slowed to 12.5%
in 1980.)
n JOHN KENNEDY: 1960 The country was also weary
International issues and foreign from world events such as the So-
aid: 36% viet invasion of Afghanistan and
Unemployment and jobs: 26% the Iran hostage situation. After
War, peace and terrorism: 19% 444 days in captivity, the hos-
tages were freed on the day of
As the Cold War heated up, President Reagan’s inauguration.
“the public was asking not just ‘Are
we weak?’ but ‘Are we about to get n GEORGE H.W. BUSH: 1988
annihilated?’ ” says David Cole- Drugs: 27%
man of the University of Virginia’s General economy: 16%
Miller Center of Public Affairs. Poverty and homelessness: 10%
“This is a period of existential
threat.” He adds that foreign pol- The Soviet Union had lost
icy “just about anywhere was cast much of its strength and the econ-
in this mantle of the Cold War.” omy was relatively stable, leaving
Meanwhile, unemployment the public to worry about other
topped 8% in early 1961 as the problems. In particular, while
late Eisenhower-era recession marijuana and other drugs saw
deepened. During his cam- their highs fade by 1985, the more
paign, Sen. Kennedy often violent crack cocaine took hold in
promised to “get this country the later part of the decade.
moving again.”
n BILL CLINTON: 1992
n LYNDON JOHNSON: 1963 General economy: 35%
Racism: 52% Unemployment and jobs: 22%
International issues and foreign Health care: 18%
aid: 26%
Unemployment and jobs: 7% “One of the things that had al-
most always been a factor in elec-
President Johnson inherited tions since really before World
much of the social unrest that had War II was pretty much off the
begun to stir under John plate,” says Russell Riley of the
Kennedy. Martin Luther King Jr. Miller Center of Public Affairs.
and other civil rights leaders held With the end of the Cold War, “peo-
rallies and organized boycotts ple weren’t interested in foreign
throughout 1962 and 1963, and de- policy.” Instead the paramount
segregation efforts were met concerns were unemployment,
with violence. the potential impact of globaliza-
Then there was Vietnam: tion and large federal deficits.
Though U.S. combat troops
weren’t being deployed quite n GEORGE W. BUSH: 2000
yet, the number of American mili- Ethics, moral decline,
tary advisers was on the rise. lack of integrity: 13%
Education: 12%
n RICHARD NIXON: 1968 Crime and violence/Government,
Vietnam: 41% Congress and politicians: 9% each
Racism: 8%
Inflation and cost of living: 8% The country was peaceful
and, despite the bursting of the
Racial issues were overshad- dot-com bubble in March 2000,
owed by the war in Vietnam, still relatively prosperous.
where more than 500,000 U.S. But the public had been
troops were now deployed. Ini- bruised by the Monica Lewinsky
tial setbacks during the Tet Of- scandal and impeachment pro-
fensive in early 1968 led more of ceedings. And the election sea-
the country to put the war, and a son brought new ethical ques-
hope for its rapid conclusion, at tions about fund raising and
the top of their list of concerns. hanging chads. y
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THE WALL STREET JOURNAL. Monday, November 24, 2008 R5
Finance & the The Top Five Recommendations
1. FISCAL STIMULUS
Quickly implement fiscal stimulus to
should clearly communicate clear mes-
sage about the direction of policy, includ-
U.S. Economy
The president-elect confronts a recession that some forecasters predict
address short-term weakness and stabi-
lize employment without worsening long-
term budget deficit. Emphasize invest-
ment in infrastructure and other pro-
grams with long-term benefits, including
environmental. Avoid tax rebates and ex-
pedite more permanent tax cuts. Consider
ing a program for long-term fiscal respon-
sibility.
4. TAX POLICY
Change tax code to encourage employ-
ment, job creation, investment, and enhance
global competitiveness. Consider raising
using state and local government as a taxes on gasoline and broadening corporate
will be as bad as or worse than the deep one of the early 1980s. Unem- channel. tax base to lower rates.
ployment is rising, financial markets are fragile, the stock market is fall- 2. BUY ILLIQUID ASSETS 5. REGULATORY OVERHAUL
Use remaining money in Treasury’s Appoint blue-ribbon panel to spend a
ing, the Federal Reserve is nearly out of interest-rate ammunition, and Troubled Asset Relief Program (TARP) year considering changes to financial regu-
criticism of the Bush administration’s response to the credit crisis is inten- and possible additional funding to buy il- lation and supervision aimed at (a) improv-
liquid assets from financial institutions to ing safety, transparency and accountabil-
sifying. The chief executives gathered by The Wall Street Journal agreed provide a light at the end of the tunnel and ity, (b) avoiding overreaction to maintain
encourage renewed risk-taking and lend- U.S. competitiveness in global economy
that even before President-elect Obama takes office, he needs to shore up ing. and (c) reducing procyclicality of current
regulatory and accounting regime. Imple-
confidence and prepare a major dose of fiscal stimulus. 3. ECONOMIC VISION ment recommendations in first term of new
David Wessel, the Journal’s economics editor, moderated the task- President-elect Obama should an- administration while Treasury, Fed and
nounce economic team soon and convene other regulators focus on providing liquid-
force discussion on finance and the U.S. economy. Here are edited ex- conference with broad representation to ity, recapitalizing banking system, return-
recommend both immediate priorities and ing financial markets to normal function-
cerpts of the presentation of their priorities to the CEO Council. long-term policy direction. President ing and improving credit conditions.
DAVID WESSEL: Far and away the so, the idea of using some of the
most popular recommendation TARP [Troubled Asset Relief Pro-
to President-elect Obama was a gram] money focused on this.
fiscal-stimulus plan, and we’re The next point is the idea of
going to start with Roger Fergu- economic vision. President-
son discussing that. elect Obama
has been
ROGER FERGUSON: There are
quite clear
three or four points that I’d like
that we have
to focus on [about a stimulus].
one presi-
First, you can see we say “quickly
dent at a
implement.” There is some con-
time, and
cern that as soon as you start to
that he’s not
get into fiscal stimulus, which in-
the presi-
volves both the executive branch
dent. But
putting forth a proposal and the
that doesn’t
legislative branch deciding on it,
preclude
and then the implementation,
him from re-
that the risk is that things will go
ally getting Robert Steel
much too slowly.
to work.
The second point to make is
Let’s get the economic leaders
the need to stabilize employ-
working today, outlining the is-
ment. We
sues, talking about the chal-
recognize
lenges in a bipartisan way, and
that employ-
beginning to lay out the plans
ment cre-
that they’re going to hit the
ates a num-
ground running with on Jan. 20.
ber of addi-
tional bene- MR. WESSEL: A feature of that
fits. One is was that he convene a conference
that people with a broad set of people, biparti-
who are less san and business leaders, to help
worried recommend priorities, to help
about their build consensus. We also talked
jobs will about longer-term tax policy.
Roger Ferguson
have much
JEFFREY BEWKES: There was a lot
more confi-
of discussion about incentives for
dence in terms of consumption—
individuals versus incentives for
and two-thirds of the U.S. GDP is
corporations and business. We
driven by household consump-
recognize that over the next sev-
tion. Second, a number of other
eral years, we’re going to need to
pressures have hit households,
figure out, given the long-term fis-
including declining asset valua-
cal problems, how to create indi-
tions, and so focusing on stabiliz-
vidual tax designs that don’t yield
ing employment could have nu-
lower taxes, but probably will
merous benefits.
need to yield some higher taxes,
The third major topic was in terms of individual taxation.
wanting to do this without signif- But if you then move to the corpo-
icant damage to the budget defi- rate side, if we don’t figure out a
cit. We decided that the most we way to make corporate taxes
could hope for is to do so without more effective and competitive,
worsening long-term budget def- in terms of incentives and invest-
icits. Clearly, one can improve ment, we will have trouble com-
long-term budget deficits with peting with other countries.
the kind of stimulus that one is On the question of gas taxes,
likely to need here. we decided not to self-censor. We
Infrastructure, we thought, had a lot of discussion where we
was important for two reasons. knew or
One is it’s a great way to generate thought that
jobs, if done appropriately. Sec- neither
ond, we would hope for infrastruc- party would
ture to create a number of long- support such
term benefits: elements of produc- a thing. It’s
tivity, for example, investments been talked
in newer technologies—those about and
were all included in our concept not done for
of the right kind of infrastructure years. But
that we wanted, infrastructure we thought
that will help us become a much that maybe
more competitive economy. this is a time
We clearly focused on avoiding Jeffrey Bewkes when this
tax rebates, and a stronger look at could be
the more permanent tax cuts. This raised, and certainly, I think it was
builds off basic economic thinking generally agreed that gas or car-
that individuals and businesses bon taxes would be likely to be
are forward-looking. If they see a more direct and effective, unless
temporary tax cut, then the ten- compromised, than what may
dency is that it does not get spent, come out of a carbon caps-and-
and what we’re looking for is stim- trading scheme, just because even
ulus. And finally, we did recognize though you can design it, it’s hard
that state and local governments to pass it in recognizable form.
have potentially a very important
role to play as a channel for the fis- Regulatory Overhaul
cal stimulus. They are, in many
cases, the engines that drive at MR. WESSEL: Then, the final one
least the early decisions about in- Mr. Ferguson is going to present
frastructure investment, obvi- is regulatory overhaul.
ously working through private- MR. FERGUSON: I think we all rec-
sector business. ognize, both domestically and
probably also internationally,
Unlocking Illiquid Assets
that the regulatory structure and
ROBERT STEEL: The second point schemes that existed before this
is to buy illiquid assets. If these crisis have proved to be inade-
assets, which are really stuck in quate for dealing with the modern
the system, can begin to move, it world of finance. There have been
will affect both confidence and numerous efforts to modernize
capital. In particular, it frees up regulation and regulatory struc-
this capital that’s now being ture in the U.S. But still, one would
locked in, where people just Please turn to page R7
don’t feel like they can recognize
and then realize the losses. And
WSJ.com
FINANCE AND THE U.S. ONLINE TODAY: Go to
ECONOMY CO-CHAIRS: WSJ.com/Reports for the Journal’s
jeffrey l. bewkes President CEO Council blog, including:
and CEO, Time Warner Inc. n Videos: See excerpts from the four
lloyd c. blankfein Chairman task-force policy discussions; a Henry
and CEO, Goldman Sachs Paulson-Robert Rubin-Lawrence
Group Inc. Summers debate on the financial
roger w. ferguson jr. crisis; CEO interviews; and more.
President and CEO, n Podcasts: Hear the Journal’s
TIAA-CREF Jerry Seib and Erin White on
robert k. steel President and highlights and surprises of the
CEO, Wachovia Corp. meeting, and incoming White
SENATOR: House Chief of Staff Rahm
maria cantwell (D., Emanuel’s remarks to the gathering.
n News and analysis about the
Washington)
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