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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   R3




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      R4    Monday, November 24, 2008                                                                                                                                  THE WALL STREET JOURNAL.




                                                                                                                                                                         THE PARTICIPANTS
                                                                                                                                                                    These business leaders attended the


             THE CEOS’ TOP PRIORITIES                                                                                                                               meeting of theCEO Council(chief exec-
                                                                                                                                                                    utives except as noted)
                                                                                                                                                                    Fernando Aguirre, Chiquita
                                                                                                                                                                    Brands International Inc.
                                                                                                                                                                    José Maria Alapont, Federal-
                                                                                                                                                                    Mogul Corp.
                                                                                                                                                                    Brad Anderson, Best Buy Co.




                                                                                                               3
             Last week, The Wall Street Journal assembled nearly 100 CEOs                                              ECONOMIC VISION                              Jeffrey L. Bewkes, Time Warner
           of large companies for a day and a half to discuss the policy choices                                            President-elect Obama should            Inc.
           facing the incoming Obama administration, and the effects those                                               announce his economic team                 Lloyd C. Blankfein, Goldman
                                                                                                                                                                    Sachs Group Inc.
           choices may have on business and the economy.                                                                 soon and convene a conference              Angela F. Braly, WellPoint Inc.
               The CEOs divided into four task forces and debated priorities in                                with broad representation to recommend               Kevin Burke, Consolidated
                                                                                                               both immediate priorities and long-term              Edison Inc.
           the areas of health care, energy and the environment, finance and the                                                                                    Stephanie A. Burns, Dow Corning
                                                                                                               policy direction. He should communicate a
                                              U.S. economy, and international eco-                             clear message about the direction of pol-
                                                                                                                                                                    Corp.
                                              nomic affairs. Using an electronic rank-                                                                              Charles Butt, H-E-B
                                                                                                               icy, including a program for long-term fis-          Morris Chang, Chairman, Taiwan
                                              ing system devised by the Journal,                               cal responsibility.                                  Semiconductor Manufacturing Co.
                                              they chose five top priorities in each                                                                                Jeff Clarke, Travelport
                                              subject area.                                                                                                         Marcelo Claure, Brightstar Corp.
                                                                                                                                                                    Bill Cobb, J.M. Smith Corp.




                                                                                                               4
                                                  Each task force then reported its                                     COMPREHENSIVE                               Howard S. Cohen, Chairman,
                                              priorities back to the full council. Four                                 ENERGY AND                                  BlueLinx Holdings Inc.
                                              senior members of the U.S. Senate                                         ENVIRONMENT POLICY                          Denis A. Cortese, Mayo Clinic
                                                                                                                                                                    David Crane, NRG Energy Inc.
                                              joined in the subsequent discussions.                                         Put national legislation in             Michael T. Dan, Brink’s Co.
           At the end of the conference, the chief executives revised and then                                 place that starts us on the road to decar-           Scott Davis, United Parcel
           ranked all the priorities from the four task forces, in order of their rel-                         bonize our economy and to create the                 Service Inc.
                                                                                                               most energy-efficient economy in the                 Paul Diaz, Kindred Healthcare Inc.
           ative urgency and importance.                                                                                                                            Craig S. Donohue, CME Group Inc.
                                                                                                               world. Level with the American people
               The CEOs who attended the session were from a diverse range of in-                              that ensuring an adequate and diverse en-            Brian Duperreault, Marsh &
                                                                                                                                                                    McLennan Cos.
           dustries; as a group, they employ more than six million people and rep-                             ergy supply in a low-carbon world will not           Lynn Laverty Elsenhans, Sunoco
           resent roughly $2 trillion in annual sales. That should give their views                            be cheap or easy. But make the case that             Inc.
           on these issues some added weight in the months ahead.                                              the transition must be transparent and               Thomas F. Farrell II, Dominion
                                                                                                                                                                    Resources Inc.
                                                                                                               fair to all Americans, and that linking the
               Here’s a look at their top five priorities.                                                     economy, the environment and energy pol-
                                                                                                                                                                    J. Brian Ferguson, Eastman
                                                                                                                                                                    Chemical Co.
                                                                                                               icy bolsters security for all three.                 Roger W. Ferguson Jr.,




           1                                                     2
                  FISCAL STIMULUS                                           EDUCATED                                                                                TIAA-CREF
                       Quickly craft fiscal stimulus for                    WORK FORCE                                                                              Christopher T. Fey, U.S.
                                                                                                                                                                    Preventive Medicine
                    the U.S., in cooperation with parallel



                                                                                                               5
                                                                             President-elect Obama should               TAX POLICY                                  Paul D. Finkelstein, Regis Corp.
                    efforts by G20 countries, particu-                     ask businesses to lead in the ac-                                                        Jay S. Fishman, Travelers Cos.
           larly cash-rich economies with capacity to                                                                       Change the tax code to encour-
                                                                 tions necessary to build a competitive                                                             Douglas L. Foshee, El Paso Corp.
           increase domestic demand. For the U.S., a                                                                     age employment, job creation
                                                                 work force for the immediate and long                                                              Russell P. Fradin, Hewitt
           stimulus package should exceed $300 bil-                                                                      and investment and enhance glo-            Associates
                                                                 term. Emphasis should be placed on im-        bal competitiveness in the short term. Con-          Carlos Ghosn, Nissan Motor Co.,
           lion. It also should emphasize investment
                                                                 proved K-12 education and intellectual-cap-   sider raising taxes on gasoline and broad-           Renault SA
           in infrastructure, including environmental,                                                                                                              Larry A. Goldstone, Thornburg
           education and low-carbon energy, but                  ital creation. Enact national education       ening the corporate tax base to lower                Mortgage Inc.
           should not worsen the long-term budget                standards and assessments, devote funds       rates.                                               William D. Green, Accenture Ltd.
           deficit. Avoid tax rebates and rely on more           to teacher excellence and improve teacher                                                          Evan G. Greenberg, ACE Ltd.
           permanent tax cuts, and use state and lo-             education.                                                                                         James W. Griffith, Timken Co.
           cal government as a channel.                                                                                                                             James Hagedorn, Scotts
                                                                                                                                                                    Miracle-Gro Co.
                                                                                                                                                                    John H. Hammergren, McKesson
                                                                                                                                                                    Corp.
                                                                                                                                                                    Ed Harbach, BearingPoint Inc.
                                                                                                                                                                    Lewis Hay III, FPL Group Inc.
                                                                                                                                                                    Paul Hermelin, Cap Gemini SA
                                                                                                                                                                    Les Hinton, Dow Jones & Co.
                                                                                                                                                                    Michael J. Jackson, AutoNation
                                                                                                                                                                    Inc.
                                                                                                                                                                    William D. Johnson, Progress
                                                                                                                                                                    Energy Inc.
                                                                                                                                                                    Richard C. Kelly, Xcel Energy Inc.
                                                                                                                                                                    Jeffrey B. Kindler, Pfizer Inc.
                                                                                                                                                                    Klaus Kleinfeld, Alcoa Inc.
                                                                                                                                                                    Robert W. Lane, Deere & Co.
                                                                                                                                                                    Steven F. Leer, Arch Coal Inc.




                                     7
                                                                                                                                                                    Stephen P. MacMillan, Stryker
                                                                                                                                                                    Corp.




                              THANK YOU
                                                                                                                                                                    Murray D. Martin, Pitney Bowes
                                                                                                                                                                    Inc.
                                                                                                                                                                    Scott A. McGregor, Broadcom
                                                                                                                                                                    Corp.
                                                                                                                                                                    Michael G. Morris, American
                                                                                                                                                                    Electric Power Co.
                                                                                                                                                                    Rupert Murdoch, News Corp.
                                                                                                                                                                    Susan R. Nowakowski,
                                                                                                                                                                    AMN Healthcare Services Inc.
                                                                                                                                                                    Steve Odland, Office Depot Inc.
                                                                                                                                                                    Rodney O’Neal, Delphi Corp.
                                                                                                                                                                    Paul S. Otellini, Intel Corp.
                                                                                                                                                                    James W. Owens, Caterpillar Inc.
                                                                                                                                                                    W. Douglas Parker, US Airways
                                                                                                                                                                    Group Inc.
                                                                                                                                                                    Antonio M. Perez, Eastman
                                                                                                                                                                    Kodak Co.
                                                                                                                                                                    Nicholas T. Pinchuk, Snap-On Inc.
                                                                                                                                                                    Thomas J. Quinlan, R.R. Donnel-
                                                The Wall Street Journal would like to thank                                                                         ley & Sons Inc.
                                                                                                                                                                    S. Ramadorai, Tata Consultancy
                                                                                                                                                                    Services
                                                                                                                                                                    David M. Ratcliffe, Southern Co.
                                                           the 2008 CEO Council sponsors                                                                            Stuart H. Reese, Massachusetts
                                                                                                                                                                    Mutual Life Insurance Co.
                                                for their generous support of the program.                                                                          James E. Rogers, Duke Energy
                                                                                                                                                                    Corp.
                                                                                                                                                                    Eric Schmidt, Google Inc.
                                                                                                                                                                    Stephen A. Schwarzman,
                                                                                                                                                                    Blackstone Group LP
                                                                                                                                                                    Gregg M. Sherrill, Tenneco Inc.
                                                                                                                                                                    Ralph W. Shrader, Booz Allen
                                                                                                                                                                    Hamilton Inc.
                                                                                                                                                                    Henrik C. Slipsager, ABM
                                                                                                                                                                    Industries Inc.
                                                                                                                                                                    Frederick W. Smith, FedEx Corp.
                                                                                                                                                                    Sir Martin Sorrell, WPP
                                                                                                                                                                    Group PLC
                                                                        PROUDLY SUPPORTED BY:                                                                       Robert K. Steel, Wachovia Corp.
                                                                                                                                                                    Douglas M. Steenland, former
                                                                                                                                                                    CEO, Northwest Airlines Corp.
                                                                                                                                                                    Shivan Subramaniam, FM Global
                                                                                                                                                                    Fredric J. Tomczyk, TD
                                                                                                                                                                    Ameritrade Holding Corp.
                                                                                                                                                                    James Turley, Ernst & Young
                                                                                                                                                                    Myron E. Ullman, J.C. Penney Co.
                                                                                                                                                                    Daniel C. Ustian, Navistar
                                                                                                                                                                    International Corp.
                                                                                      PARTNER                                                                       Joe Uva, Univision
                                                                                                                                                                    Communications Inc
                                                                                                                                                                    Daniel L. Vasella, Novartis AG
                                                                                                                                                                    David M. Walker, Peter G.
                                                                                                                                                                    Peterson Foundation
                                                                                                                                                                    Timothy R. Wallace, Trinity
                                                                                                                                                                    Industries Inc.
                                                                                                                                                                    William C. Weldon, Johnson &
                                For more information about The Wall Street Journal CEO Council, please visit CEOCouncil.wsj.com.                                    Johnson
                                                                                                                                                                    Thomas J. Wilson, Allstate Corp.
                                                                                                                                                                    Yang Yuanqing, Chairman,
                                                                                                                                                                    Lenovo Group Ltd.
                        ©2008 Dow Jones & Company, Inc. All Rights Reserved #4AO712                                                                                 William D. Zollars, YRC
                                                                                                                                                                    Worldwide Inc.




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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)
                                                conference from Journal reporters.




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  • 1. P2JW329024-0-R00100-1--------XA 11/24/2008 AZ,EE,MW,SC,SW,WE C M Y K Composite P2JW329024-0-R00100-1--------XA 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 Composite CYAN MAGENTA YELLOW BLACK P2JW329024-0-R00100-1--------XA 6065780
  • 2. P2JW329025-0-R00200-1--------XA 11/24/2008 AZ,EE,MW,SC,SW,WE BLACK P2JW329025-0-R00200-1--------XA 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 THE NEXT JOURNAL REPORT REPRINTS AVAILABLE FULL PAPER: The entire Wall Street Journal INVESTING issue that includes the Shaping the New Agenda Journal Report is now available and IN FUNDS can be obtained for $5 per copy. Please place your order by any of the following methods: By phone: 1-800-JOURNAL § See which funds are By fax: 1-413-598-2259 the leaders and lag- By mail*: Shaping the New Agenda Dow Jones & Co. gards in 16 categories Attn: Back Copy Department 84 Second Ave. § Try our “Investing IQ” Chicopee, Mass. 01020-4615 test JOURNAL REPORT ONLY: Bulk orders of this Journal Report section only may take up to § Size up your funds six weeks for delivery and can be obtained for $5 for one copy, $2 for each additional with our handy yard- copy up to 50, and 25 cents for each copy sticks thereafter. Please place your order by any of the following methods: § Pick up pointers for By phone: 1-800-JOURNAL balancing your portfolio By fax: 1-413-598-2259 By mail*: Dow Jones LP Fulfillment Services COMING NEXT MONDAY Attn: Mailing Operations Dept. 102 First Ave. Chicopee, Mass. 01020-4621 INDIVIDUAL ARTICLES: Reprints of individual articles are available in minimum orders of 500 or 1,000 copies, depending on the for- mat. To order article reprints or for more information: For advertising Online: www.djreprints.com information please contact By phone: 1-800-843-0008 Holly Oliveri at By email: customreprints@dowjones.com 312-750-4110 or *For all mail orders, do not send cash. Checks or money orders are to be made pay- holly.oliveri@dowjones.com able to Dow Jones & Co. BLACK P2JW329025-0-R00200-1--------XA 6065781
  • 3. P2JW329026-0-R00300-1--------XA 11/24/2008 AZ,EE,MW,SC,SW,WE C M Y K Composite P2JW329026-0-R00300-1--------XA THE WALL STREET JOURNAL. Monday, November 24, 2008 R3 Composite CYAN MAGENTA YELLOW BLACK P2JW329026-0-R00300-1--------XA 6065782
  • 4. P2JW329027-0-R00400-1--------XA 11/24/2008 AZ,EE,MW,SC,SW,WE C M Y K Composite P2JW329027-0-R00400-1--------XA R4 Monday, November 24, 2008 THE WALL STREET JOURNAL. THE PARTICIPANTS These business leaders attended the THE CEOS’ TOP PRIORITIES meeting of theCEO Council(chief exec- utives except as noted) Fernando Aguirre, Chiquita Brands International Inc. José Maria Alapont, Federal- Mogul Corp. Brad Anderson, Best Buy Co. 3 Last week, The Wall Street Journal assembled nearly 100 CEOs ECONOMIC VISION Jeffrey L. Bewkes, Time Warner of large companies for a day and a half to discuss the policy choices President-elect Obama should Inc. facing the incoming Obama administration, and the effects those announce his economic team Lloyd C. Blankfein, Goldman Sachs Group Inc. choices may have on business and the economy. soon and convene a conference Angela F. Braly, WellPoint Inc. The CEOs divided into four task forces and debated priorities in with broad representation to recommend Kevin Burke, Consolidated both immediate priorities and long-term Edison Inc. the areas of health care, energy and the environment, finance and the Stephanie A. Burns, Dow Corning policy direction. He should communicate a U.S. economy, and international eco- clear message about the direction of pol- Corp. nomic affairs. Using an electronic rank- Charles Butt, H-E-B icy, including a program for long-term fis- Morris Chang, Chairman, Taiwan ing system devised by the Journal, cal responsibility. Semiconductor Manufacturing Co. they chose five top priorities in each Jeff Clarke, Travelport subject area. Marcelo Claure, Brightstar Corp. Bill Cobb, J.M. Smith Corp. 4 Each task force then reported its COMPREHENSIVE Howard S. Cohen, Chairman, priorities back to the full council. Four ENERGY AND BlueLinx Holdings Inc. senior members of the U.S. Senate ENVIRONMENT POLICY Denis A. Cortese, Mayo Clinic David Crane, NRG Energy Inc. joined in the subsequent discussions. Put national legislation in Michael T. Dan, Brink’s Co. At the end of the conference, the chief executives revised and then place that starts us on the road to decar- Scott Davis, United Parcel ranked all the priorities from the four task forces, in order of their rel- bonize our economy and to create the Service Inc. most energy-efficient economy in the Paul Diaz, Kindred Healthcare Inc. ative urgency and importance. Craig S. Donohue, CME Group Inc. world. Level with the American people The CEOs who attended the session were from a diverse range of in- that ensuring an adequate and diverse en- Brian Duperreault, Marsh & McLennan Cos. dustries; as a group, they employ more than six million people and rep- ergy supply in a low-carbon world will not Lynn Laverty Elsenhans, Sunoco resent roughly $2 trillion in annual sales. That should give their views be cheap or easy. But make the case that Inc. on these issues some added weight in the months ahead. the transition must be transparent and Thomas F. Farrell II, Dominion Resources Inc. fair to all Americans, and that linking the Here’s a look at their top five priorities. economy, the environment and energy pol- J. Brian Ferguson, Eastman Chemical Co. icy bolsters security for all three. Roger W. Ferguson Jr., 1 2 FISCAL STIMULUS EDUCATED TIAA-CREF Quickly craft fiscal stimulus for WORK FORCE Christopher T. Fey, U.S. Preventive Medicine the U.S., in cooperation with parallel 5 President-elect Obama should TAX POLICY Paul D. Finkelstein, Regis Corp. efforts by G20 countries, particu- ask businesses to lead in the ac- Jay S. Fishman, Travelers Cos. larly cash-rich economies with capacity to Change the tax code to encour- tions necessary to build a competitive Douglas L. Foshee, El Paso Corp. increase domestic demand. For the U.S., a age employment, job creation work force for the immediate and long Russell P. Fradin, Hewitt stimulus package should exceed $300 bil- and investment and enhance glo- Associates term. Emphasis should be placed on im- bal competitiveness in the short term. Con- Carlos Ghosn, Nissan Motor Co., lion. It also should emphasize investment proved K-12 education and intellectual-cap- sider raising taxes on gasoline and broad- Renault SA in infrastructure, including environmental, Larry A. Goldstone, Thornburg education and low-carbon energy, but ital creation. Enact national education ening the corporate tax base to lower Mortgage Inc. should not worsen the long-term budget standards and assessments, devote funds rates. William D. Green, Accenture Ltd. deficit. Avoid tax rebates and rely on more to teacher excellence and improve teacher Evan G. Greenberg, ACE Ltd. permanent tax cuts, and use state and lo- education. James W. Griffith, Timken Co. cal government as a channel. James Hagedorn, Scotts Miracle-Gro Co. John H. Hammergren, McKesson Corp. Ed Harbach, BearingPoint Inc. Lewis Hay III, FPL Group Inc. Paul Hermelin, Cap Gemini SA Les Hinton, Dow Jones & Co. Michael J. Jackson, AutoNation Inc. William D. Johnson, Progress Energy Inc. Richard C. Kelly, Xcel Energy Inc. Jeffrey B. Kindler, Pfizer Inc. Klaus Kleinfeld, Alcoa Inc. Robert W. Lane, Deere & Co. Steven F. Leer, Arch Coal Inc. 7 Stephen P. MacMillan, Stryker Corp. THANK YOU Murray D. Martin, Pitney Bowes Inc. Scott A. McGregor, Broadcom Corp. Michael G. Morris, American Electric Power Co. Rupert Murdoch, News Corp. Susan R. Nowakowski, AMN Healthcare Services Inc. Steve Odland, Office Depot Inc. Rodney O’Neal, Delphi Corp. Paul S. Otellini, Intel Corp. James W. Owens, Caterpillar Inc. W. Douglas Parker, US Airways Group Inc. Antonio M. Perez, Eastman Kodak Co. Nicholas T. Pinchuk, Snap-On Inc. Thomas J. Quinlan, R.R. Donnel- The Wall Street Journal would like to thank ley & Sons Inc. S. Ramadorai, Tata Consultancy Services David M. Ratcliffe, Southern Co. the 2008 CEO Council sponsors Stuart H. Reese, Massachusetts Mutual Life Insurance Co. for their generous support of the program. James E. Rogers, Duke Energy Corp. Eric Schmidt, Google Inc. Stephen A. Schwarzman, Blackstone Group LP Gregg M. Sherrill, Tenneco Inc. Ralph W. Shrader, Booz Allen Hamilton Inc. Henrik C. Slipsager, ABM Industries Inc. Frederick W. Smith, FedEx Corp. Sir Martin Sorrell, WPP Group PLC PROUDLY SUPPORTED BY: Robert K. Steel, Wachovia Corp. Douglas M. Steenland, former CEO, Northwest Airlines Corp. Shivan Subramaniam, FM Global Fredric J. Tomczyk, TD Ameritrade Holding Corp. James Turley, Ernst & Young Myron E. Ullman, J.C. Penney Co. Daniel C. Ustian, Navistar International Corp. PARTNER Joe Uva, Univision Communications Inc Daniel L. Vasella, Novartis AG David M. Walker, Peter G. Peterson Foundation Timothy R. Wallace, Trinity Industries Inc. William C. Weldon, Johnson & For more information about The Wall Street Journal CEO Council, please visit CEOCouncil.wsj.com. Johnson Thomas J. Wilson, Allstate Corp. Yang Yuanqing, Chairman, Lenovo Group Ltd. ©2008 Dow Jones & Company, Inc. All Rights Reserved #4AO712 William D. Zollars, YRC Worldwide Inc. Composite CYAN MAGENTA YELLOW BLACK P2JW329027-0-R00400-1--------XA 6065783
  • 5. P2JW329028-0-R00500-1--------XA 11/24/2008 AZ,EE,MW,SC,SW,WE C M Y K Composite P2JW329028-0-R00500-1--------XA 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) conference from Journal reporters. Composite CYAN MAGENTA YELLOW BLACK P2JW329028-0-R00500-1--------XA 6065784