JOURNAL REPORT

President Barack Obamaon the HealthCare.govrollout, the budget deficit,immigration reform andhow to change thecorporate-tax code, R4

Gov. Chris Christie onwhy both Republicans andDemocrats deserve a shareof the blame for the failureto get things done inWashington, R6

Rep. Paul Ryan on wherethe Republicans inCongress are willing tonegotiate in the currentround of budget talks—andwhere they aren’t, R6

Jacob Lew on how likely itis that meaningfuleconomic reform will takeplace in China—as well asthe prospects for change inthe U.S., R7

Penny Pritzker on thepriorities of the Obamaadministration, and howthey are aligned with theinterests of the businesscommunity, R8

Gen. Martin Dempsey onthe trouble spots in theMideast—and what setsmilitary leaders apart fromleaders in the corporateworld, R8

PLUS Flashbacks from Timothy Geithner, Rob Portman and José María Aznar at the 2012 CEO Council annual meeting

INSIDE

Meeting in the MuddleAt the annual meeting of The Wall Street Journal’s CEO Council,the disconnect between what’s going on in Washington and what

corporate leaders are asking for was as sharp as ever

IF YOU NEEDED EVIDENCE of the disconnect be-tween business and Washington, it was on displayat the annual Wall Street Journal CEO Council lastweek.In the business world, companies are growing

again. Earnings are up, so too employment.But what the chief executives want, before they

flip the switch on more business investment, is pol-icy clarity: What will health-care costs be 12 monthsfrom now, and tax rates, and borrowing costs? Willthe country change its immigration policy? How willenergy regulation affect supply? And will politi-cians tackle the long-term deficit problem?But what they heard in Washington was more

stalemate—on the budget, the debt ceiling, taxes

and health insurance, among other things. Demo-crats and Republicans at the conference once againdecried a “failure of leadership”—by the other guy.President Barack Obama, speaking to the group,

did make one overture. Breaking some news, he saidhe’s willing to address immigration reform piece-meal—an approach favored by many House Republi-cans—rather than as one sweeping plan, an ap-proach the president has favored. Business wantsreform that lets more skilled workers into the U.S.On other topics, like the Affordable Care Act,

there was little consensus. That worried one CEO infinance. “We’re just at the start of the problemswith the rollout,” he said. “They aren’t businesspeo-ple. They don’t understand the bad effects down theline of what they started.”Of course, there was plenty of upbeat news, too.

The CEOs were briefed on big new trade negotia-

tions with nations in Europe and Asia. And theyheard how innovation in online education is reach-ing thousands of new students.But the urgent need to find political compromise

seemed to hang over the two-day conference. TheCEOs even offered their own olive branch. Afterbreaking into task-force sessions to address key pol-icy matters, they issued five top recommendations,including this one:“Business and government should build better

bridges to each other—rather than viewing eachother as adversaries—to advocate for free enter-prise and shared prosperity.”

Mr. Bussey is an assistant managing editor andexecutive business editor of The Wall Street Journal.He can be reached at john.bussey@wsj.com or onTwitter @johncbussey.

RalphAlswang/Dow

Jones(6)

FollowThe ExpertsAn OnlineConversationDETAILS, R2

‘Nobody in this citytalks to each otheranymore.’Gov. Chris Christie

Michael Froman on theprospects for free-tradeagreements in Asia andEurope, and whatbusinesses might expectfrom those pacts, R9

Jim Yong Kim, GlennHubbard and StanleyFischer on the economicoutlook for emergingmarkets, Europe andelsewhere, R10

Lawrence Summers onhow Washington has tostop focusing only ondeficits, and start thinkingabout the power ofeconomic growth, R11

The CEOs list their toppriorities for action onsome of today’s mostpressing public policy andbusiness issues. No. 1:immigration reform, R2

CEO Task Forces offertheir top recommendationsfor action on health care,energy, cybersecurity, U.S.competitiveness and thefuture of capitalism, R4

PLUS: Amy Gutmann,William E. Kirwan andDaphne Koller on wherehigher education isheading, and the need forinnovation

‘The president’sbudget is somethinghe still sticks by.’Jacob Lew

‘People like the idea ofcorporate tax reformin theory.’President Barack Obama

‘The president’sagenda today is verymuch aligned with thebusinesscommunity’s.’Penny Pritzker

‘If this becomes aboutraising taxes, we’re notgoing to get anywhere.’Rep. Paul Ryan

‘Growth creates avirtuous circle, whichcreates more growth.’Lawrence Summers

BY JOHN BUSSEY

R2 | Monday, November 25, 2013 THEWALL STREET JOURNAL.

(Chief executives except asnoted)

Richard C. Adkerson,Freeport-McMoRan Copper& Gold Inc.

Hamid Akhavan,Unify Inc.Nicholas Akins, AmericanElectric Power

Joel T. Allison, Baylor HealthCare System

Mukesh Dhirubhai Ambani,Chairman and ManagingDirector, RelianceIndustries Ltd.

George S. Barrett, CardinalHealth Inc.

Dominic Barton, GlobalManaging Director,McKinsey & Co.

Jeffrey L. Bewkes, TimeWarner Inc.

John P. Bilbrey, Hershey Co.Leon David Black, ApolloGlobal Management LLC

Samir Y. Brikho, AMEC PLCGlenn A. Britt, Time WarnerCable Inc.

Lynn Britton, Mercy HealthKevin Burke, ConsolidatedEdison Inc.

Gregory W. Cappelli, ApolloGroup Inc.

Gregory C. Case, Aon PLCTerrence W. Cavanaugh, ErieInsurance Group

R. Marcelo Claure,Brightstar Corp.

Peter John Coleman,Woodside Petroleum Ltd.

Steven H. Collis,AmerisourceBergen Corp.

Michael D. Connelly, CatholicHealth Partners

Roger W. Crandall,Massachusetts Mutual LifeInsurance Co.

Fred Crawford, AlixPartnersKevin S. Crutchfield, AlphaNatural Resources Inc.

H. Lawrence Culp Jr.,Danaher Corp.

Richard J. Daly, BroadridgeFinancial Solutions Inc.

D. Scott Davis, United ParcelService of America Inc.

Doug DeVos, President andCo-CEO, Amway Corp.

Paul J. Diaz, KindredHealthcare Inc.

Francisco D’Souza, CognizantTechnology Solutions

Eric Elliott, PrimeTherapeutics LLC

Scott D. Farmer, Cintas Corp.Thomas F. Farrell II, DominionResources Inc.

G. Steven Farris,Apache Corp.

Lex Fenwick, Dow Jones & Co.Russ Fradin, SunGard DataSystems Inc.

Mark P. Frissora, Hertz GlobalHoldings Inc.

Jeffery R. Gardner,Windstream Corp.

Robert C. Garrett, HackensackUniversity Health Network

Richard Gelfond,IMAX Corp.

Seifi Ghasemi, RockwoodHoldings Inc.

Carlos Ghosn, Renault-NissanAlliance

Daniel S. Glaser, Marsh &McLennan Cos.

Greg J. Goff, Tesoro Corp.Robert Greifeld, NASDAQOMX Group Inc.

James Hagedorn, ScottsMiracle-Gro Co.

Patricia A. Hemingway Hall,Health Care Service Corp.

Paul Hermelin, Capgemini SALance Hockridge, AurizonHoldings Ltd.

Joseph L. Hooley, StateStreet Corp.

Thomas Horton, AmericanAirlines Inc.

Drew Houston,Dropbox

Robert J. Hugin,Celgene Corp.

John D. Johns,Protective Life Corp.

Brian P. Kelley,Green Mountain CoffeeRoasters Inc.

Declan Kelly, Teneo HoldingsChristopher J. Klein,Fortune Brands Home &Security Inc.

Klaus Kleinfeld, Alcoa Inc.Henry R. Kravis, Co-Chairmanand Co-CEO, KKR & Co.

T.K. Kurien, Wipro Ltd.Marc B. Lautenbach, PitneyBowes Inc.

Armand F. Lauzon Jr.,Sequa Corp.

René Lerer,Executive Chairman,Magellan Health Services

Richard I. Lesser, BostonConsulting Group

Michel M. Liès, Group CEO,Swiss Re AG

Gerardo I. Lopez, AMCEntertainment Inc.

Peter S. Lowy, Co-CEO,Westfield Group

Rob Lynch, VSP GlobalAjit Manocha,GlobalFoundries Inc.

Frank R. Martire,Fidelity NationalInformation Services Inc.

Timothy J. Mayopoulos,Fannie Mae

Liam E. McGee, HartfordFinancial Services Group

Larry J. Merlo,CVS Caremark Corp.

Stephen D. Milligan, WesternDigital Corp.

Wick Moorman, NorfolkSouthern Corp.

Denise Morrison, CampbellSoup Co.

Rupert Murdoch, ExecutiveChairman, News Corp

Pierre Nanterme,Accenture PLC

Shantanu Narayen, AdobeSystems Inc.

Indra K. Nooyi, PepsiCo Inc.John H. Noseworthy, M.D.,Mayo Clinic

Rodney O’Neal, DelphiAutomotive PLC

James F. O’Neil, QuantaServices Inc.

Dinesh C. Paliwal, HarmanInternational Industries

Neal Patterson, Cerner Corp.Joseph R. Perella, PerellaWeinberg Partners

Stefano Pessina,Executive Chairman,Alliance Boots GmbH

Douglas L. Peterson,McGraw Hill Financial

C. Michael Petters,Huntington IngallsIndustries Inc.

Nicholas T. Pinchuk,Snap-on Inc.

Eduard Potapov, Former CEO,Metalloinvest Management

Thomas J. Quinlan III,R.R. Donnelley & Sons Co.

Robert L. Reynolds,Putnam Investments

Carlos Rodriguez,AutomaticData Processing Inc.

James P. Rogers, EastmanChemical Co.

Kasper B. Rorsted, Henkel AGFrédéric Rose, Technicolor SADan Rosensweig, Chegg Inc.Gisbert Rühl, Klöckner & Co.Stephen H. Rusckowski,Quest Diagnostics Inc.

Ravi K. Saligram,Former CEO, OfficeMax Inc.

Robert Sanchez,Ryder System Inc.

Peter A. Sands, StandardChartered PLC

E. Scott Santi, Illinois ToolWorks Inc.

George Scanlon, FidelityNational Financial Inc.

Paolo Scaroni, EniMark Schneider,Fresenius Group

Mary Lee Schneider,Follett Corp.

Stephen A. Schwarzman,Blackstone

David T. Seaton,Fluor Corp.

Gregg M. Sherrill,Tenneco Inc.

Ralph W. Shrader, Booz AllenHamilton Inc.

Gary B. Smith,Ciena Corp.

Frederick W. Smith,FedEx Corp.

Sir Martin S. Sorrell,Group CEO, WPP Group

Edward W. Stack, Dick’sSporting Goods Inc.

John T. Standley,Rite Aid Corp.

Shivan S. Subramaniam,FM Global

Joseph R. Swedish,WellPoint Inc.

Anthony R. Tersigni,Ascension

Tidjane C. Thiam, Group CEO,Prudential PLC

Robert Thomson, News CorpAdewale Tinubu, Group CEO,Oando PLC

Fredric J. Tomczyk,TD Ameritrade Holding

N.V. Tyagarajan,Genpact Ltd.

Bernard J. Tyson, KaiserPermanente

Myron E. Ullman III,J.C. Penney Co.

Vincent R. Volpe Jr., Dresser-Rand Group Inc.

Timothy R. Wallace, TrinityIndustries Inc.

Mark R. Walter, GuggenheimCapital LLC

Gregory D. Wasson,Walgreen Co.

Mark Weinberger, Ernst &Young

Edward H. West, EducationManagement Corp.

William Winkenwerder Jr.,M.D., Highmark Inc.

Yang Yuanqing, Lenovo

PARTICIPATING GUESTSChris Christie, Governor ofNew Jersey

Gen. Martin E. Dempsey,Chairman, Joint Chiefs ofStaff

Stanley Fischer, FormerGovernor, Bank of Israel

Michael Froman, U.S. TradeRepresentative

Amy Gutmann, Ph.D.,President, University ofPennsylvania

Glenn Hubbard, Dean,Columbia Business School,Columbia University

Jim Yong Kim, M.D., Ph.D.,President, World BankGroup

William E. Kirwan, Ph.D.,Chancellor, UniversitySystem of Maryland

Daphne Koller, Co-Founderand Co-CEO, Coursera

Jacob J. Lew, Secretary of theTreasury

Barack Obama, President ofthe U.S.

Penny Pritzker, Secretary ofCommerce

Paul Ryan, U.S. Representa-tive (R., Wis.); Chairman,House Budget Committee

Lawrence H. Summers,Charles W. Eliot UniversityProfessor and PresidentEmeritus, Harvard Univer-sity; Former Secretary ofthe Treasury

CEO COUNCIL MEMBERS

JOURNAL REPORT | CEO COUNCIL

MORE THAN 100 CHIEF EXECUTIVES of large companies assembled at The Wall StreetJournal’s annual CEO Council conference to discuss some of today’s most pressing public

policy and business issues.The CEOs divided into five task forces and debated pri-

orities in the following areas: staying competitive, health-care innovation, the future of capitalism, cybersecurityand energy. Each task force presented its recommenda-tions, and the full conference then voted these as the topfive overall priorities:

1 IMMIGRATION REFORMThe U.S. needs immigra-

tion reform to retain tal-ented foreign workers whohave been educated in theU.S., attract talent to theU.S., and allow a freer flowof people into and out ofthe U.S. Immigration policyshould mirror labor needs.

2 EDUCATION REFORMThe U.S. needs to in-

vest in education to trainemployable workers, startingat the K-12 level, with a fo-cus on and respect for mul-tiple pathways. These in-clude vocational training,apprenticeships and com-munity college—not justfour-year university degrees.Businesses should activelyengage in the education

process, particularly at stateand local levels, throughyouth apprenticeships, tech-nical training, STEM andcontinuing education.

3 TAX REFORMThe U.S. tax code

needs an overhaul; the cur-rent system hurts U.S. com-petitiveness and encouragescompanies to move abroad.Close loopholes and simplifythe system.

4 BUSINESS-GOVERNMENT

COOPERATIONBusiness and governmentshould build better bridgesto each other—rather thanviewing each other as adver-saries—to advocate for freeenterprise and shared pros-

perity. Ensure that experi-enced businesspeople serveat top levels of government.

5 FOCUS ON HEALTH-CARE QUALITY

Government and industryshould seek better health-care outcomes, safety andservice and aim to reduceerror and harm. Thereshould be agreement on de-sired-outcome metrics forquality and evidence-basedpractices. Government andindustry should eliminatewaste—estimated at $765billion annually—includingunnecessary services andadministrative inefficiencies.And both should employ anational data network tocreate transparency for con-sumers and payers.

The Journal Report welcomesyour comments—by mail, fax oremail. Letters should be addressedto Lawrence Rout, The Wall StreetJournal, 4300 Route 1 North, SouthBrunswick, N.J. 08852. The faxnumber is 609-520-7256, and theemail address is reports@wsj.com.

For advertising informa-tion please contact SarahDale at 212-597-5729 orsarah.dale@wsj.com

THE JOURNAL REPORT

FULL PAPER: The entire Wall Street Journalissue that includes the CEO Council reportcan be obtained for $6.50 a copy. Order by:

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Follow The Experts >>

This Journal Report doesn’t stop here. As part of an expanded Web pres-ence for the Journal Reports, we’ve launched The Experts—an exclusive group ofindustry and thought leaders who engage in in-depth online discussions of top-ics raised in this and all Reports. See what they have to say about such topicsas threats to capitalism’s future, what businesses could do to improve the U.S.business climate, and how changing demographics will influence businesses in

the coming decade, at WSJ.com/LeadershipReport.The Experts also engage in video discussions. Next up:

“What Makes a Great CEO?” Join Stanford University profes-sor Robert Sutton, Suzanne Hopgood, corporate governanceand turnaround consultant, and Henry Mintzberg, the JohnCleghorn Professor of Management Studies at McGill Univer-sity, today at 8 p.m. Eastern time, or later at your conve-nience at WSJ.com/LeadershipReport.

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of the CEO Council annual meeting.

For more information please visitCEOCouncil.wsj.com.

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THEWALL STREET JOURNAL. Monday, November 25, 2013 | R3

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates.

Oracle CloudApplications

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More Enterprise SaaS ApplicationsThan Any Other Cloud Services Provider

R4 | Monday, November 25, 2013 THEWALL STREET JOURNAL.

Well into the second month ofthe ill-managed rollout ofHealthCare.gov, tough problemspersist for both the central web-site of the federal health-insur-ance marketplace and the manultimately responsible: PresidentBarack Obama.

Speaking before The WallStreet Journal CEO Council a fewblocks from the White House,Mr. Obama said the website willbe working by the end of thismonth “for the majority of peo-ple who are using it.” In an in-terview with Gerald Seib, theJournal’s Washington, D.C., bu-reau chief, the president alsodiscussed the state of the econ-omy, corporate tax reform andthe possibility of another govern-ment shutdown in the new year.Edited excerpts of their conver-sation follow.

Rollout FalloutMR. SEIB: You’ve indicated thatthe rollout has been difficult.What do you think you’velearned from this experience?PRESIDENT OBAMA: I think weprobably underestimated thecomplexities of building out awebsite that needed to work theway it should.

The way the federal govern-ment does procurement anddoes IT is just generally not veryefficient. In fact, there’s proba-bly no bigger gap between theprivate sector and the publicsector than IT.

So what we probably neededto do on the front end was toblow up how we procure for IT,especially on a system this com-plicated. We did not do that suc-cessfully. Now, we are getting itfixed. But it would have beenbetter to do it on the front end,rather than the back end.

MR. SEIB: Is it possible you’velost enough time and enough po-tential customers that you’re notgoing to reach the critical massof sign-ups that you need tomake the marketplace work?PRESIDENT OBAMA: It’s some-thing we have to pay attentionto. But keep in mind that thismodel of marketplaces wasbased on what was done in Mas-sachusetts. And the experienceof Massachusetts was that in thefirst month, 153 or 163 peoplesigned up out of an ultimate

36,000. It was less than 1%signed up in that first month,partly because buying insuranceis a complicated process for a lotof people.

There’s no doubt that we’velost some time. But the websiteis getting better each week. Bythe end of this month it will befunctioning for the majority ofpeople who are using it.

What’s also been expressed asa concern is the mix of peoplethat sign up.…We’ve got to moni-tor that carefully. We always an-ticipated, though, that youngerfolks would be the last folksin….It’s been a while since youand I were young, but as I recall,you don’t think you’re going toget sick at that time.

We’re going to have to, obvi-ously, remarket and rebrand, andthat will be challenging in thispolitical environment.

MR. SEIB: Larry Summers washere earlier talking about theeconomy and said one of theproblems is that the system can’tdo two things at once. It can’tcut deficits and spur growth. Hesaid now it needs to spurgrowth. Do you agree?PRESIDENT OBAMA: ActuallyLarry and I and most of my eco-nomic team, in fact, all my eco-

nomic team, have consistentlymaintained that there is a wayto reconcile the concerns aboutdebt and deficits with the con-cerns about growth.

When we talk about our defi-cit and debt problems, it is al-most entirely health-carecosts.…And if we’re able to bendthe cost curve, we help solve theproblem. Now one way to dothat is just to make health carecheaper overall.…That’s whatwe’ve been doing through someof the measures in the Afford-able Care Act.

There are some other provi-sions we could take that wouldmaintain our commitment to se-niors, Medicare, Social Security,the disabled and Medicaid, whilestill reducing very modestly thecost of those programs.

If we do those things, thatsolves our real fiscal problem,and we could take some of thatmoney, a very modest portion onthe front end, and invest in in-frastructure that puts peopleback to work, improve our re-search and development.

So the idea would be do somethings in the short term that fo-cus on growth; do some thingsin the long term that deal withthe long-term debt. That’s whatmy budget reflects. That’s what

a multiple series of negotiationswith John Boehner talked about,the so-called grand bargain. Wecouldn’t quite get there in theend, mainly because Republicanshad a great deal of difficultywith the idea of putting in morerevenue to balance out some ofthe changes…on entitlements.

Corporate TaxesMR. SEIB: Another way to makesome of that happen would be tofix the corporate tax code.PRESIDENT OBAMA: Both my ad-ministration and Republicanshave talked about corporate taxreform.…We put forward a veryspecific set of proposals thatwould lower the corporate taxrate, broaden the base, closesome loopholes. And in terms ofinternational companies andcompetitiveness, what we’vesaid is rather than a wholebunch of tangled laws that in-centivize folks to keep moneyoverseas, let’s have a modest butclear global minimum tax, getrid of some of the huge fluctua-tions that people experience.

People like the idea of corpo-rate tax reform in theory. Inpractice, if you want to make thecorporate tax reform deficit-neu-tral, then you actually have toclose some loopholes. And peo-

ple like the idea of a simpler taxsystem until it’s their particularloophole that’s about to getclosed. What we can’t afford todo is to keep all the loopholesthat are currently in place andlower the corporate tax rate. Wewould then blow another hole inthe deficit that would have to befilled. And what I’m not willingto do is to have higher rates onthe middle class in order to payfor that.

MR. SEIB: Some of the CEOs hereaddressed the question of howdo you stay competitive. Theirfirst priority was this: immigra-tion reform. The Senate haspassed a comprehensive bill theHouse won’t even agree to takeup. Can you make it happen?PRESIDENT OBAMA: We shouldwant to immediately say toyoung people who we’ve helpedto educate in this country, “Youwant to stay? We want youhere.”

And we do have to deal withabout 11 million folks who are inthis country, most of them justseeking opportunity. They didbreak the law by coming here oroverstaying their visa, andthey’ve got to earn their way outof the shadows, pay a fine, learnEnglish, get to the back of the

line, pay their back taxes—butgiving them a mechanismwhereby they can get right byour society. And that’s reflectedin the Senate bill.

Now I actually think thatthere are a number of House Re-publicans—including Paul Ryan,I think, if you ask him about it—who agree with that. They’resuspicious of comprehensivebills. But…if they want to chopthat thing up into five pieces, aslong as all five pieces get done, Idon’t care what it lookslike.…What we don’t want to dois simply carve out one piece ofit…but leave behind some of thetougher stuff that still needs toget done.

Another Shutdown?MR. SEIB: We’re heading towardshowdowns again: January bud-get, February debt ceiling. YourTreasury secretary said hethought maybe the systemcrossed the threshold in Octoberand realized it doesn’t want togo through that again. Are youconfident it won’t happen again?PRESIDENT OBAMA: The way oursystem is set up is like a loadedgun, and once people thought,“we can get leverage on policydisputes by threatening default,”that was an extraordinarily dan-gerous precedent. That’s a prin-ciple I had to adhere to, not justfor me but for the next presi-dent—that you’re not going tobe able to threaten the entireU.S. or world economy simplybecause you disagree with meabout a health-care bill.

I’d like to believe that the Re-publicans recognize that was nota good strategy. And we’re prob-ably better off with a system inwhich that threat is not there ona perpetual basis. I do not fore-see what we saw in October be-ing repeated in January.

If You Fix Health Care, You Fix the DeficitJOURNAL REPORT | CEO COUNCIL

RalphAlswang/Dow

Jones(2)

The Task Forces’PrioritiesCEO Council executives split up into five groups todebate priorities in the following areas. Here aretheir top recommendations.

THE FUTURE OF CAPITALISM

1 Business-GovernmentCooperation

Business and governmentshould build better bridgesrather than viewing each otheras adversaries, to advocate forfree enterprise and sharedprosperity. Ensure that experi-enced businesspeople serve attop levels of government.

2 Promote Education andTraining

Businesses should actively en-gage in the education process,particularly at the state andlocal levels, to encourage job-ready talent, including youthapprenticeships, technicaltraining, STEM and continuing

education.

3 Better ImmigrationPolicy

Encourage a freer flow of peo-ple into and out of the U.S.,particularly for educated andskilled workers. Immigrationpolicy should mirror laborneeds. Allow foreign studentsto stay in the U.S. economy.

4 Control GovernmentDebt

Government, with support ofbusiness, needs to addressthe unsustainable increase inspending on benefits and gov-ernment debt to minimizeshort-term disruptions and

ensure long-term stability.

CO-CHAIRSJoseph L. Hooley,Chairman, President andCEO, State Street Corp.Joseph R. Perella, FoundingPartner, Chairman and CEO,Perella Weinberg PartnersMyron E. Ullman III, CEO,J.C. Penney Co.

SUBJECT EXPERTJustin Wolfers, Ph.D.,Professor of Economicsand Public Policy,University of Michigan

THE U.S. ENERGY BONANZA

1 Develop InfrastructureFacilitate energy infrastruc-

ture development by placingtime limits on approvals. Re-move restrictions on oil andgas exports. Environmentalapprovals also need to be ex-pedited. Invest in upgradingaging infrastructure to accom-modate new resources.

2 Innovate EnergyTechnology

Invest in technology to im-prove efficiency and reducecarbon emissions, includingcarbon capture and storage.Encourage R&D investmentwithout government picking

winners and losers in the mar-ket.

3 Balanced Energy MixGovernment should en-

courage a balanced energyportfolio based on marketpricing that reflects the truevalue and cost of all resourcealternatives for customers.Maximize North American oiland gas production while us-ing less energy and developingalternatives.

4 Regulatory ConsistencyRegulatory consistency

driven by a long-term biparti-san energy policy. Avoid over-

regulation. Needs to be drivenby science and economics andminimize the politics.

CO-CHAIRSNicholas Akins, Presidentand CEO, American ElectricPowerKevin S. Crutchfield,Chairman and CEO, AlphaNatural Resources Inc.Wick Moorman, Chairmanand CEO, Norfolk Southern

SUBJECT EXPERTMichael A. Levi, David M.Rubenstein Senior Fellow forEnergy and the Environment,Council on Foreign Relations

STAYING COMPETITIVE

1 Immigration ReformThe U.S. needs immigra-

tion reform to retain talentedworkers educated in the U.S.and attract talent to the U.S.Immigration reform could pro-vide an instant jolt to the U.S.economy, which we need.

2 Education ReformThe U.S. needs to invest

in education to train employ-able workers, starting at theK-12 level, with a focus on andrespect for multiple path-ways—such as vocationaltraining, apprenticeships andcommunity college—not justfour-year university degrees.Business should get involvedat the state and local level

and seek ways to innovate ineducation.

3 Tax ReformOverhaul the U.S. tax

code, as the current systemhurts U.S. competitivenessand encourages companies tomove abroad. Close loopholesand simplify the system.

4 Alignment of InterestsIt shouldn’t be easier for

companies to do business inother countries. The U.S. gov-ernment needs to providebusiness with clarity and cer-tainty about policies and backits rhetoric on economicgrowth with action. Busi-nesses and government need

to work to better align them-selves to common purposes.Business and governmentcannot be antagonists; theyneed to be partners.

CO-CHAIRSKlaus Kleinfeld, Chairmanand CEO, Alcoa Inc.Shantanu Narayen,President and CEO,Adobe Systems Inc.Mary Lee Schneider,President and CEO,Follett Corp.

SUBJECT EXPERTHal Sirkin, Senior Partner,Boston Consulting Group

HOW BEST TO TACKLE CYBERSECURITY

1 Change Our CultureCompanies need to change

the mind-set of all their em-ployees through educationand training. There is an ur-gent need to raise the level ofunderstanding, starting withbasic security procedures suchas guarding against phishingattacks.

2 Corporate Action PlanCompanies should come

together within industrygroups to share informationand set new U.S. standardsfor cybersecurity. The processshould be fostered by the U.S.government, with governmentrepresentation, but not gov-ernment control. Model could

be rolled out in other coun-tries.

3 International Policy PlanCybersecurity must be re-

garded as an intergovernmen-tal policy issue, akin to tradeor commerce. There should bea new framework for estab-lishing global rules, eitherthrough a new intergovern-mental body or within an ex-isting framework, e.g. theWorld Trade Organization.

4 Make Collaboration SafeIn order to address cy-

bersecurity issues across in-dustries, companies need tobe able to collaborate withoutworrying about antitrust or

collusion issues. This requiresa clear regulatory framework.

CO-CHAIRSFrancisco D’Souza, CEO,Cognizant TechnologySolutionsFrank R. Martire, Chairmanand CEO, Fidelity National In-formation Services Inc.Stephen D. Milligan,President and CEO,Western Digital Corp.

SUBJECT EXPERTJames Mulvenon, Ph.D.,Vice President, IntelligenceDivision, Defense Group Inc.

HEALTH-CARE INNOVATION

1 Reform PaymentsModernize and reform

Medicare and fee-for-servicepayment systems to pay forhigh-value health care: betteroutcomes at affordable costs,rather than volume. Boost col-laboration between providersthrough regional health net-works, sharing of best prac-tices. Align incentives betweenproviders and payers. Addresspayment for appropriate alter-native services, such as tele-health and e-visits.

2 Focus on QualityFocus on quality of care:

better outcomes, safety andservice. Reduce error andharm. Agree on desired-out-come metrics for quality andevidence-based practices.Eliminate $765 billion inwaste, including unnecessary

services and administrative in-efficiencies, among others.Utilize national data networkto create transparency forconsumers and payers.

3 Team-Based CareCreate incentives for

team-based health care, tele-health and other innovationsto address preventive care,chronic-disease management,population health, serious ad-vanced illness and end-of-lifecare. Ensure that health pro-fessionals including nursesand physicians’ assistants canwork to their fullest capacityand level of certification. Ad-dress future workforce short-ages and misalignments.

4 Engage ConsumersEngage and educate con-

sumers on cost of their care.

Create incentives for the con-sumer to do preventive andmaintenance health care. Findways to encourage medicationand therapy adherence. Buildtrusted data sources and toolsso consumers can find infor-mation and understand theirchoices. Involve employers ineducating their employees.

CO-CHAIRSPatricia A. HemingwayHall, President and CEO,Health Care Service Corp.John H. Noseworthy,M.D., President and CEO,Mayo ClinicMark Schneider, Presidentand CEO, Fresenius Group

SUBJECT EXPERTHelen Darling, Presidentand CEO, National BusinessGroup on Health

‘What we probablyneeded to do...was toblow up how weprocure for IT,especially on a systemthis complicated.’President Barack Obama

President Obama talks about the disastrous rollout, solving fiscal woes and reforming corporate taxes

THEWALL STREET JOURNAL. Monday, November 25, 2013 | R5

R6 | Monday, November 25, 2013 THEWALL STREET JOURNAL.

It’s the biggest question inU.S. politics: Can Washington getits act together to solve the bud-get debate?

For insight, The Wall StreetJournal’s editorial-page editor,Paul Gigot, spoke with PaulRyan, the Wisconsin Republicanwho serves as chairman of theHouse Committee on the Budget.

Here are edited excerpts oftheir discussion.

Sealing the DealMR. GIGOT: The president ex-

pressed optimism about this bud-get round, in particular avoidinga repetition of the late unpleas-antness. Can you tell us rightnow that there will not be an-other shutdown or debt-limitbrinkmanship?MR. RYAN: I’m comfortable say-ing that. Whether we come to abudget agreement or just have acontinuing resolution that keepsgoing, either one of those sce-narios will prevail. Therefore, wewill not have a government shut-down. The debt limit is later on.

MR. GIGOT: You’re negotiatingwith the Senate Democrats. Oneof their positions is that all youneed to do to get a deal, or atleast to get them to move on en-titlements, is to eliminate sometax expenditures, tax subsidies,they call them. Why not put to-gether that kind of a deal?MR. RYAN: They’re not sayingthey’re willing to do entitlementreform of any significance what-soever. If this becomes aboutraising taxes, we’re not going toget anywhere. We’re very seriousabout tax reform. The Ways andMeans Committee is moving tax-reform legislation, and that’swhere taxes should be dealtwith. On the spending side, weare willing to trade spendingcuts that are across-the-boardand crude, the sequester, forsmarter cuts in the other part ofthe budget that is unreformed—the entitlement side. That’s whatwe’re discussing now.

MR. GIGOT: You’re willing to easethe sequester limits in the nearterm?MR. RYAN: If we can get some en-titlement reforms.

MR. GIGOT: Is there any progresson that front?MR. RYAN: We’ve made progress,but we do not have an agree-ment. We’re still going to try andwork out our differences.

The Immigration IssueMR. GIGOT: Where do you standon immigration reform? Is itsomething we can see gettingdone with maybe starting somevotes in the House this year?MR. RYAN: I’m for the House ver-sion of immigration reform.We’re denying our country intel-lectual capital, people who arebeing educated here to help uscreate jobs. If we do immigrationreform right, that is pro-growthpolicy. It’s got to be actual andverifiable on border and interiorenforcement before other thingscan be triggered. We want tomove from a chain-migrationsystem to economic-based immi-gration, so people come here fortalent and skills to create and filljobs. We want to make sure thatwe have a system that does notgrant amnesty or create a moralhazard and that helps respectthe rule of law while dealing in

an intelligent way with peoplewho are undocumented. That’sprobably seven or eight differentpieces of legislation. There’s notenough time to do it this year.

MR. GIGOT: There’s a lot of dis-cussion among Republicans thatthe next nominee for presidenthas to be a governor. Do youagree with that?MR. RYAN: No. There, next ques-tion.

MR. GIGOT: Why not?MR. RYAN: The résumé is not asimportant as the person, theirideas, their track record. I wouldlike to make sure we get a per-son who is going to be a stan-

dard-bearer that can go the dis-tance. I believe this country hasjust a handful of years before wego down the European path andbecome a social-welfare state.We’ve got to turn the growth en-gine back on. To fix what needsfixing is going to take somebodywho knows how to do it. Whoare they? What are their ideas?What are their gifts and abili-ties? That’s what matters to me.

MR. GIGOT: You did say that youwould look closely at making arun yourself. What’s your mentalchecklist?MR. RYAN: If I’m going to do a jobas chairman of the Budget Com-mittee, as a leader of my party, I

cannot let my mind be cloudedwith personal ambition. I’m go-ing to make those decisions later.I’ve got a job to do on behalf ofthe people who elected me, onbehalf of the responsibilities I’vebeen given. I’m going to focus onthat.

Where House Republicans StandPaul Ryan on why the current round of budget talks will not lead to another government shutdown

As Republicans scan theirranks for presidential contendersin 2016, many like the chances ofNew Jersey Gov. Chris Christie.The governor recently won a sec-ond term in a landslide electionin which he showed strong ap-peal among voters key to the Re-publican Party’s future, such aswomen and Latinos. He also isoften seen as someone unafraidof working with politicians fromboth sides of the aisle.

In an interview with GerardBaker, editor in chief of The WallStreet Journal, Mr. Christiespoke about his record as gover-nor and his views on nationalpolitical issues. Edited excerptsof their conversation follow.

Crossing BoundariesMR. BAKER: You won 50% of theLatino vote. You won over 20%of the black vote. You won 58%of women, running against awoman Democratic candidate,all in a state where PresidentObama won 58% of the votes ayear ago. How did you do it?GOV. CHRISTIE: The first thing is,you do your job. I often thinkthat folks make political leader-ship too complicated. Secondthing is, we made a concertedeffort from the time I got intooffice to say that we got onlyabout 30% of the Latino vote in2009, about 7% of the African-American vote in 2009. And my

view was, that was just nowherenear good enough. So we startedworking with those groups, giv-ing them a serious seat at thetable, knowing that they weren’talways going to agree with mypolicies but that they were goingto be listened to.

MR. BAKER: What was the mostimportant thing you’ve achievedso far?GOV. CHRISTIE: We’ve cut busi-ness taxes $2.3 billion, we’ve re-formed the pension and benefitsystem to save $120 billion over

the next 30 years, all in the faceof stiff public-sector union oppo-sition. But I think the most im-portant thing we did was changethe conversation. So many ofthese things were consideredgivens in New Jersey that couldnot be changed. And our posi-tion was, “I’m a Republican inNew Jersey. I’m playing withhouse money.”

Most importantly, we took theteachers union on. The teachersunion is the most powerfulunion in our state. They have200,000 members and get an-nual dues of $140 million. Theydo not pay anything on teachers’salary, pension or health care.It’s essentially a $140 millionslush fund to reward theirfriends and punish their ene-mies. So, we took them on fron-tally, early, and I think theynever expected any politician inNew Jersey to do that.

And the public reacted ex-traordinarily well. That was re-ally the moment that changedthe conversation and made a lotof the other things we did possi-ble, because we showed we werewilling to take on the biggestbully in the schoolyard.

MR. BAKER: That’s hard to do atthe national level, isn’t it, be-cause teachers are organized ona local basis and are paid by lo-cal authorities.GOV. CHRISTIE: Yeah, but you’retalking about setting a tone. And

the education system in ourcountry, while there are suc-cesses, is in the main failingmany, many millions of families.It is the defining issue of ourtime, what we’re going to dowith the education system.

Economic PerformanceMR. BAKER: Your opponents willsay, “Well, you may havechanged the conversation, butyou didn’t change the economicperformance very much.” Whyhasn’t New Jersey producedmore jobs in the last four years?GOV. CHRISTIE: Yeah, and I callthose critics to come to New

Jersey and attempt to turnaround the Queen Mary in theDelaware River.

When I took over as governor,we were rated the state with theleast business friendliness inAmerica. You’re not going toturn that around in four yearscompletely. But we have cutbusiness taxes $2.3 billion, cutregulations by one-third and cre-ated 143,000 new private-sectorjobs. It’s going to take us longerbecause we were in the deepestof deep holes.

MR. BAKER: What would youchange in Washington rightnow?GOV. CHRISTIE: Well, the people,predominantly. Both parties haveequal blame in what’s going onhere. Listen, I have a completelyDemocratic legislature in NewJersey. How do you do all thesethings that don’t appear to betraditional Democratic thingswith a Democratic legislature?It’s about human relationships.

Nobody in this city talks toeach other anymore. Or if theydo, they don’t speak to eachother civilly. They don’t developrelationships. They don’t de-velop any sense of trust betweeneach other.

MR. BAKER: Who’s to blame?GOV. CHRISTIE: First and fore-most, it’s the president. Becauseif you’re the executive, you’rethe person who is in charge ofmaking that happen.

When I’ve developed these re-lationships with Democratic leg-islators, it means you have tocompromise at times, you don’twalk away with everything youwant. But man, if I walk awaywith 70% of my agenda, NewJersey’s 70% better than itwould have been otherwise.

MR. BAKER: Do you think Obama-care can survive? Or does it haveto be just completely scrappedand start again?GOV. CHRISTIE: Obamacare iswrong. It’s a failure. It’s themost extraordinary overreach ofgovernment power in the historyof our country.

What do we need to replaceit? We need a robust debateamong both sides, unlike lasttime, where the presidentjammed this down everybody’sthroat and got not one Republi-can vote because he was unwill-ing to make any compromise, in-cluding tort reform.

A Pox on Both Your HousesGov. Chris Christie on why there’s plenty of blame to go around in Washington

JOURNAL REPORT | CEO COUNCIL

VOICES FROM THE CONFERENCE

‘We need to provide high-quality education at a lowercost. If at the end of theday, this means therearen’t as many universitiesor some people don’t havejobs, you know, this is nota welfare business. Wehave the interest of thenation at stake. And this iswhat we all have to keepfocused on—high qualityand containing costs.’

William E. Kirwan,Chancellor, UniversitySystem of Maryland

RalphAlswang/Dow

Jones(4)

Source: NBC News/Wall Street Journal telephone poll of 800 adultsconducted Oct. 25-28; margin of error:+/-3.46 percentage points

Consensus Is Still PopularMost Americans see at least some value in both major parties' positions.

uWhen it comes to your viewpoint of theDemocratic Party, which of these statements comesclosest to your point of view? (Asked only ofRepublicans and Independents)

uWhen it comes to your viewpoint of theRepublican Party, which of these statementscomes closest to your point of view? (Asked only ofDemocrats and Independents)

The Wall Street Journal

While I disagree with many of theDemocratic Party’s ideas and policies, it

has several good leaders and quite a few good policyareas with which I agree.

While I disagree with many of theDemocratic Party’s ideas and policies, it

has some people and a couple of policy areas withwhich I agree.

I disagree with almost everything theDemocratic Party stands for in their

ideas and policies and I do not like any of their leaders.

18%

45%

33%

While I disagree with many of theRepublican Party’s ideas and policies, it

has several good leaders and quite a few good policyareas with which I agree.

While I disagree with many of theRepublican Party’s ideas and policies, it

has some people and a couple of policy areas withwhich I agree.

I disagree with almost everything theRepublican Party stands for in their ideas

and policies and I do not like any of their leaders.

22%

49%

28%

Down This RoadThe Congressional Budget Office sees the federal debt as a percentageof gross domestic product declining slightly over the next few years,assuming current laws generally remain in place--but then rising to100% of GDP in 2038, even without accounting for the effects of thegrowing debt on the economy. Increasing interest costs and risingspending on Social Security and government health-care programs areprojected to fuel the climb in debt, the CBO says.

u Components of total spending, as a percentage of grossdomestic product

u Federal debt held by thepublic, as a percentage ofgross domestic product

u Total spending andrevenues, as a percentage ofgross domestic product

* Spending on Medicare (net of offsetting receipts), Medicaid, the Children's Health InsuranceProgram, and subsidies offered through new health-insurance exchanges

Note: Figures do not reflect the impact on the economy of the policies behind these projections.

Source: Congressional Budget Office The Wall Street Journal

Social Security

Federal Spending on Major Health Care Programs*

Other noninterest spendingNet interest

2003 ’08 ’13 ’18 ’23 ’28 ’33 ’38 2003 ’08 ’13 ’18 ’23 ’28 ’33 ’380102030405060708090100

0

5

10

15

20

25

30%Spending

Revenues

2003 2008 2013 2018 2023 2028 2033 20380

2

4

6

8

10

12%

‘I think the mostimportant thing we did[in New Jersey] waschange theconversation.’Gov. Chris Christie

‘This country has justa handful of yearsbefore we go down theEuropean path.’Paul Ryan

FLASHBACK: 2012

‘To restore fiscal sustainability, to be careful

of what you do to the long-term growth

prospects of the country and to make sure

we’re not adding to the burden on middle-

class Americans, you’re going to have to do

so with a mix of higher rates and deduc-

tions. I think that’s what the political con-

sensus ultimately will be.’

Timothy Geithner, former U.S. Treasury Secretary

THEWALL STREET JOURNAL. Monday, November 25, 2013 | R7

It’s been a busy few monthsfor Treasury Secretary JacobLew. First came the debt-ceilingshowdown with House Republi-cans and the subsequent federalgovernment shutdown, then atrip to China after leaders thereannounced possible further eco-nomic reforms. Now, back inWashington, another round ofdebt-ceiling deadlines and bud-get negotiations is looming.

In an interview with The WallStreet Journal’s editor-in-chief,Gerard Baker, Mr. Lew spokeabout some of the economicchallenges ahead. Edited ex-cerpts follow.

Signals From ChinaMR. BAKER: You met with Presi-dent Xi Jinping. How serious arethe reforms announced? Can yougive us a sense of whether thiswill represent radical change inChina’s economic structures?MR. LEW: I definitely had thesense they’re very serious abouteconomic reform. What I didn’tget a good sense of was the se-quence or pace of change. I sus-pect they’re looking at severalyears of change. I think theyknow they’ve got to get moremarket signals into their econ-

omy to get the growth rate theyneed. The global economy needsfor them to do that as well.

MR. BAKER: What will it meanfor global and U.S. business?MR. LEW: Take the Shanghaifree-trade zone. It is one of theinitiatives they announced justa few months ago, after our stra-tegic and economic dialogueshere in Washington. They havenot yet determined all the de-tails of what that is going to en-tail. If it opens up their finan-cial-services markets, that’s abig deal.

One of the things that they’retalking about is taking someprofits from state enterprisesand pumping it back in the econ-omy, through the governmentand dividends to shareholders.

We’re just going to have tocontinue to work with them. Onething that really impressed mewas how important the U.S. rela-tionship is to them.

MR. BAKER: China has said somecritical things about the U.S., inparticular over fiscal issues, inrecent months. Did you get muchpressure to do something aboutgetting our fiscal house in order?

MR. LEW: They understand wewent through a noisy politicalprocess but at the end we didwhat we had told them wewould do, which is make surethat we would stand by the fullfaith and credit of the UnitedStates. They did ask about howwe saw things unfolding.

MR. BAKER: They’re our principalcreditor after all, right?MR. LEW: It was not with a highdegree of anxiety or pressure. Itwas a very small part of the con-versation. And I was kind of re-assuring.

Budget ManeuveringMR. BAKER: Congress has morelooming deadlines in Januaryand February. Are you sayingwe’re not going to have anotherexperience like in October?MR. LEW: If you look at thethings Republican leaders havesaid since October, it’s clear thatthis was not a good experiencefor the country or for them po-litically. They should just extendthe debt limit way in advanceand not have any sense of crisis.

MR. BAKER: What is the rightway forward? Trading off the se-quester for entitlement reforms?MR. LEW: The president’s budgetlays out a very clear path withboth tax reform and entitlement

reform and replacing the seques-ter. It would give the economythe kind of certainty and tail-wind that it needs to grow.

To do the kinds of entitlementreforms in the president’s bud-get would require moving on taxreform and raising some addi-tional revenue. If that’s not apossibility for Republicans, thensomething large is not likely. Butthere’s other ways for these con-ferees to work things out. And Ireally would leave it to them.

MR. BAKER: Back in October, tosome extent, it looked like theadministration was sitting backand letting the Republicans digtheir own hole. Are you going tobe more proactively involved thistime? Is the president?MR. LEW: The budget conferenceis an intrinsically congressional

process. It’s one of the fewthings that doesn’t come to thepresident to be signed. TheHouse and the Senate agree on abudget resolution, and it setstheir internal governance of howthey’re going to handle appro-priations and budgetary matters.

The president’s budget issomething he still sticks by. Itrepresents what he offered tothe speaker at the end of lastyear. But we’ve got to see where

this conference goes.

MR. BAKER: We had our stron-gest employment growth in Octo-ber for quite a while despite thegovernment shutdown, which ledsome to suggest maybe weshould shut it down more often.MR. LEW: I hope nobody learnsthe wrong lessons from thenumbers. The economy wouldhave done even better if we hadnot had that debate.

The Odds of Change, Here and AbroadJOURNAL REPORT | CEO COUNCIL

VOICES FROM THE CONFERENCE

‘We’re moving into a world where knowledge, basecontent, is a commodity, which allows anyone whois smart and motivated and passionate to makesomething of themselves and open doors to oppor-tunity. But at the same time, the much deeper cog-nitive skills that are taught in the face-to-face inter-action—they’re still going to be a differentiator. Thebest place to acquire those is by coming and get-ting an education at the best universities.’

Daphne Koller, Co-Founder and Co-CEO, Coursera

RalphAlswang/Dow

Jones(2)

Work to DoAmong the challenges facing the U.S. economy: Household income and home prices remain well below their peaks of the past decade

uMedian household income,adjusted for inflation

u S&P/Case-Shiller U.S. National Home Price Index

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ’13

0

20

40

60

80

100

120

140

160

180

200

Source: Census Bureau Source: S&P Dow Jones Indices The Wall Street Journal

1Q2Q3Q4Q

1Q2Q3Q4Q

1Q2Q3Q4Q1Q2Q3Q4Q

1Q2Q3Q4Q

1Q2Q3Q4Q

1Q2Q3Q4Q1Q2Q3Q4Q

1Q2Q3Q4Q

1Q2Q3Q4Q1Q2Q

2003 ’04 ’06 ’08 ’10 ’120

10,000

20,000

30,000

40,000

50,000

$60,000

‘[China knows]they’ve got to get moremarket signals intotheir economy to getthe growth rate theyneed.’Jacob Lew

Treasury Secretary Jacob Lew on how likely economic reform is in China—and the U.S.

R8 | Monday, November 25, 2013 THEWALL STREET JOURNAL.

‘We need to make surethat when we invest intraining that it’stoward a job.’Penny Pritzker

Penny Pritzker was a billion-aire Chicago business executivebefore becoming Commerce sec-retary earlier this year. As thevoice for business in Washing-ton, Ms. Pritzker advocates forU.S. companies both here andabroad.

Matt Murray, deputy editor inchief of The Wall Street Journal,sat down with Ms. Pritzker todiscuss her agenda. Here are ed-ited excerpts:

Friend or Foe?MR. MURRAY: Let me start withthe elephant in the room, theperception that this administra-tion isn’t a friend of business.How do you see that dilemma?MS. PRITZKER: First of all, I don’tthink the president would haveasked me to take this job if hedidn’t want to have a relation-ship with the business commu-nity that was on good footing.And I wouldn’t have taken thejob if that wasn’t his attitude,which I know it is.

He’s asked me to be a bridgeto the business community inthis job, and I am your chiefcommercial advocate not only inthe U.S. but around the world.

The president’s agenda todayis very much aligned with thebusiness community’s, whetherit’s about investing in infrastruc-ture, immigration reform, corpo-rate tax reform, getting tradeagreements in Asia and Europe,

and investing in research anddevelopment. The question nowis how do we get things done?

MR. MURRAY: Well, how do we?Part of the frustration is the po-litical dysfunction. How can youhelp break the deadlock?MS. PRITZKER: It requires what Iknowhow to do frommybusinesscareer. Establish relationships,establish credibility, work hard,and make your arguments. Thenlook for common ground to tryand move the agenda forward.

MR. MURRAY: We’ve seen jobgrowth the last few years, yet itisn’t the amount we would like.What is underlying that and

what can you do to help?MS. PRITZKER: One big major fo-cus for me is trade and invest-ment. Trying to get the tradeagreements finished and throughCongress is a high priority.

Many of the companies in thiscountry are small and medium-size, and they have come to real-ize that 95% of customers areoutside the U.S. They want to beable to benefit from those mar-ketplaces. That is something weat the Commerce Departmentdo. We have people domesticallyand in foreign markets who notonly we help identify where yourproduct is competitive, but thenwe help you in market.

That results in job creation.

Of the 10 million jobs supportedby exporting, 1.3 million havebeen created since 2009.

Skills is another area nearand dear to my heart. I met withhundreds and hundreds of CEOsaround the country. And what Iheard from almost every CEO is,“I’m having an issue with work-force. How do I get enough peo-ple with the skills that I need?”

This needs to be a priority.

The Right TrackMR. MURRAY: What can you do tohelp on this front?MS. PRITZKER: The way I see myrole in this area—and it’s thefirst time the Commerce Depart-ment has made this a priority—is really to help the businesscommunity and business leaderslocally. The solutions are local,they don’t sit in Washington.

The business communityknows what kind of curriculathey want people to be fluent in.They know what kind of creden-tials they want. That’s the areawhere the private sector andbusiness leaders need to take aleading role in their regions.

We need to make sure thatwhen we invest in training thatit’s toward a job. And that’s ev-erything from high schools, vo-cational-ed schools, communitycolleges, universities.

MR. MURRAY: What do you thinksuccessful corporate tax reformshould look like?MS. PRITZKER: The president hasput forward a plan to reducecorporate taxes to 25% for man-ufacturers and 28% for othertypes of corporations. I thinkthat is the right track.

A Bridge to the Business CommunityCommerce Secretary Penny Pritzker on why the administration really is in tune with commercial interests

JOURNAL REPORT | CEO COUNCIL

U.S.

China

63%

30%

50%

36%

FavorableUnfavorable

Pakistan81%

11%

Japan5%

69%

ChinaU.S.

U.S.39%

44%

China46%

30%

Britain33%

53%

France34%

53%

Germany19%

59%

Japan67%

20%

U.S. China

U.S. 36%

11%

47%

Britain 55%

11%

26%

France 48% 22% 31%

Germany 50% 16% 29%

Russia 35% 15% 31%

Will eventually replace U.S.

Has already replaced U.S.

Will never replace U.S.

Japan

South Korea

Philippines

Indonesia

Malaysia

Very big or big problem

Small problem or nota problem

Don't know

Source: Pew Research Center poll of 37,653 respondents in 39 nations, conducted March 2 to May 1 by phone and in person under the direction of Princeton Survey Research Associates International The Wall Street Journal

The Measure of Two GiantsHow people in nations around the world view the U.S. and China

u Overall opinion of each country.Median of ratings in 38 nations

u Countries with the biggest gaps infavorable opinions of the U.S. and China

uWhat is the world's leading economic power? uWill China replace the U.S. as the world'sleading superpower?

u How big a problem are territorial disputesbetween China and your country?

41%

36%24%

0%

82%

18%

1%

90%9%

3%

77%20%

10%62%

28%

China 58%

8%

13%

Japan 15%

9%

72%

Source: Department of Commerce The Wall Street Journal

Selling AbroadU.S. merchandise exports over the past 10 years, overall and toselected major trading partners, in billions of dollars

uMerchandise exports to selected countries

uMerchandise exports overall

u Overall merchandise exports by category

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50

100

150

200

250

$300Canada Mexico EU China Japan

400

800

1200

$1,600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

100

200

300

400

500

600

Foods, feedsand beverages

Industrialsupplies

Automotive

Consumergoods

Other goods

Capital goods

RalphAlswang/Dow

Jones(3)

FLASHBACK 2012

‘Let’s make a commitment now:

We will have the current [tax]

code in place for six months. At

that time, we will have tax reform

and entitlement reform to deal

with these bigger issues that we

have to deal with.’

Sen. Rob Portman of Ohio

Leading a corporation is achallenge. But imagine steeringthe world’s largest military dur-ing a time of economic uncer-tainty and global unrest.

That’s the job of Gen. MartinE. Dempsey, chairman of theJoint Chiefs of Staff. The WallStreet Journal’s John Busseyspoke with Gen. Dempsey aboutwhat makes for good leadersand got his take on hot spotsaround the world.

What follows are edited ex-cerpts of their discussion.

The Military DifferenceMR. BUSSEY: Are the attributes ofa good leader roughly the samebetween the military, a CEO anda schoolteacher?GEN. DEMPSEY: We are a profes-sion, which is to say that wecommit ourselves to an uncom-mon life. And we accept by be-coming a member of the profes-sion we live to a certain ethos.

It’s not just about specialskills and attributes, it’s about aparticular ethos. In our case, it’sserving the people of the UnitedStates and ensuring the commondefense. It’s a profession that re-quires certain things of us, con-tinuing education, a renewal ofour commitment to that. We’rean up-or-out organization.

I don’t know how it works in-side of your businesses or youroccupations. The one thing I

would tell you, and it’s becomeapparent to me in my job, is thatyou’re not a profession just be-cause you say you are. You haveto earn it and re-earn it. And inparticular our relationship withthe American people. We have tocontinue to earn it.

MR. BUSSEY: There was a recentacademic study that says firmswhose CEOs have military expe-rience are less likely to be suedin class-action lawsuits and re-state financial statements,they’re less likely to backdate

options, they’re less likely to en-gage in earnings management,and they are less likely to usetax havensWhat is it about the militarybackground that caused thatsort of behavior in the CEOs?GEN. DEMPSEY: I don’t want toopine about what makes us dif-ferent or what makes you differ-ent. It’s more useful to us to seewhere we have common ground.I think where we should—and Isense where we do—have com-mon ground is in caring aboutthe future of our country.

MR. BUSSEY: The academics saidthat the study is a further vali-dation of “our use of military ex-perience as a proxy for the re-spect for rules, authority, andsocietal value.”GEN. DEMPSEY: I like to think wefollow the rules, but on occasionwe don’t. And when we don’t, wehold people accountable. Sec-ondly, I do think there’s some-thing extraordinary about beinggiven the responsibility for peo-ple’s lives. That should cause usall pause and put everything elsewe do in perspective.

Conflict ZonesMR. BUSSEY: There were miscal-culations in Iraq and Afghani-stan. Was that a failure of lead-ership?GEN. DEMPSEY: The book hasn’tyet been written.

At some level, we have to lookback and acknowledge what wedidn’t know and maybe shouldhave before we took the actionswe took.

On the other hand, once wewere engaged in it, the leader-ship was demonstrated at everylevel—and in particular at thelower levels, with those captainsand sergeants in villages andtowns and districts.

Even today in Afghanistan,where they’ve become so com-mitted, so captured by the expe-rience of trying to make thelives of Iraqi children and Af-ghan children better. Even ifthey do make the odd misstep,it’s hard to be critical, havingseen the effort they’ve made.

MR. BUSSEY: Walk us through thebig picture on the Mideast.GEN. DEMPSEY: Three things Iwould suggest to you. One is thechanged relationship betweenthe governed and the governing.I think books will be written forthe next several years about thisthing that we optimistically de-scribed as the Arab Spring sev-eral years ago.

It’s many things, but it’s cer-tainly the relieving of pressurethat was being brought to bearby dictators on societies thathad been suppressed for manydecades. You have a changed re-lationship between the governedand the governing among a pop-ulace that doesn’t know what todo with it, frankly. It will take adecade or more to finally settle.

Secondly, it’s being played outin an environment where there’san internal struggle within Islamfor control. It gets at the Sunni-Shiite schism. It’s a fault line,and right now the fault line runsfrom Beirut to Damascus toBaghdad. And players on bothsides are trying to influence theactions in their favor.

The third factor that createsis ungoverned space. Or if notungoverned, governed less thanwe would like it to be governed.And into that ungoverned spacemigrate extremists. It makes fora very volatile, complex, long-term challenge.

Leadership in a Dangerous World

’We accept bybecoming a member ofthe profession we liveto a certain ethos.’Gen. Martin E. Dempsey

Martin Dempsey, chairman of the Joint Chiefs of Staff, on the art of leading and the Mideast’s big picture

THEWALL STREET JOURNAL. Monday, November 25, 2013 | R9

JOURNAL REPORT | CEO COUNCIL

FLASHBACK 2012

‘It’s extremely important that the U.S. look to

Europe. Our feeling in Europe is that this ad-

ministration is looking only to the Pacific, to

Asia. This is a mistake. We have the opportu-

nity to create in the next months a very im-

portant free-trade area between Europe and

the U.S. That would send a message of sta-

bility to the rest of the world.’

José María Aznar, former prime minister of Spain

Michael Froman, who becameU.S. trade representative thisyear, has a big challenge: He isleading Washington’s push to ne-gotiate two massive free-tradedeals, one with Asia that aims tobring together 12 countries andnearly 40% of the global econ-omy, and one with Europe that'sbeing billed as a way to boosteconomic growth on both sidesof the Atlantic.

Rebecca Blumenstein, deputyeditor in chief of The Wall StreetJournal, sat down with Mr. Fro-man to find out where the talksstand and what U.S. business canexpect from the agreements.Here are edited excerpts:

Ambitious AgendaMS. BLUMENSTEIN: Is it fair tosay that, in a time of politicalparalysis, the administration istaking a particularly aggressivetone on trade?MR. FROMAN: We have whatmany people would view as themost ambitious trade agenda inhistory. The Trans-Pacific Part-nership and the Trans-AtlanticTrade and Investment Partner-ship—when we’re done withthese agreements, we’ll have freetrade with 65% to 70% of theglobal economy. The deals willposition the U.S. as a placewhere people want to produceproducts and send them aroundthe world.

MS. BLUMENSTEIN: The Asia pactknown as TPP is very compli-cated. You set a December dead-line. There's some concern thatthe administration is so intent on

reaching this deadline that itcould make some concessionsalong the way.MR. FROMAN: We’re workingaround the clock now to closeout issues, narrow differences,tee up the issues that require po-litical input to get resolved, butwe aren’t going to agree to a baddeal just to hit an artificial dead-line. The substance of the negoti-ations will ultimately dictate thetiming of the deal.

MS. BLUMENSTEIN: There’s agrowing sense that U.S. compa-nies, particularly auto makers,want rules against currency ma-nipulations inserted into this. Areyou in favor of that?MR. FROMAN: It is a serious issueand one that this administrationhas been very focused on fromthe start in our bilateral engage-ment with China from the presi-dent on down. Every level, we’veengaged with them on liberaliz-ing their currency and encourag-ing them toward a more market-oriented exchange rate. In termsof how it plays in the TPP re-mains to be seen.There are really two differentsets of issues that people are fo-cused on. One is the kind of cur-rency policies that China has tra-ditionally pursued.

The more recent concern isthe actions Japan has taken tostimulate its economy that havehad an effect on their currency.

That’s a bit more complicated,because many of the activitiesthat the Bank of Japan engagesin aren’t dissimilar from thatwhich the Federal Reserve is

thought to engage in. So we haveto be careful how we link cur-rency to trade rules, because wedon’t want to put ourselves in adefensive position as well.

MS. BLUMENSTEIN: What is yoursense of where business is on thetrade pacts? Often, you hear theyare against many of the provi-sions and deals.MR. FROMAN: I think businessgenerally is in favor of openingmarkets and creating more ex-port opportunities. It helps drivejob creation and investment herein the U.S. What tends to happenis that each business is waitinguntil they see what the final dealhas in their sector or area beforethey declare themselves on it.

MS. BLUMENSTEIN: What is reallythe wisdom and endgame ofkeeping China out of TPP talks?

MR. FROMAN: Our goal with TPPisn’t directed toward any coun-try. It’s directed at raising thestandards of the internationaltrading system. It’s intended tobe an open platform, and a num-ber of countries have said theywould like to join once we’redone with the agreement amongthe initial 12.

Magnet for InvestmentMS. BLUMENSTEIN: With Europe,the debate isn’t necessarily overtariffs as much as it is over regu-latory frameworks. Could we seea time in which a car made andinspected in Europe is acceptedhere in the U.S. without goingthrough our regulatory system?MR. FROMAN: The biggest oppor-tunity in this agreement, but alsothe hardest challenge, is gettingour hands around the regulatoryand standards piece.

We’re not talking about low-ering health, safety and environ-mental standards on either sideof the Atlantic. But both the U.S.and Europe have well-regulatedmarkets that come to slightlydifferent conclusions, and thatcreates unnecessary frictions fortrade. Our goal is to see what wecan do to eliminate the frictions.

On a Mission to Free TradeMichael Froman on the prospects for pacts with Asia and Europe

RalphAlswang/Dow

Jones(2)

Source: Commerce Department The Wall Street Journal

Trading PartnersU.S. trade in 2012 with the European Union, with which it is currentlynegotiating the Transatlantic Trade and Investment Partnership; withthe 11 other countries, as a group, with which it is negotiating theTrans-Pacific Partnership; and with its largest individual tradingpartners. The 11 other TPP countries are Australia, Brunei, Canada, Chile,Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

EU $265.67

TPP countries $689.06

Canada $292.54

Mexico $215.93

China $110.48

Japan $69.96

U.K. $54.85

Germany $48.80

Brazil $43.81

South Korea $42.28

Netherlands $40.63

Hong Kong $37.46

TPP countries $843.19 5.6

China $425.58 6.6

Canada $323.94 2.7

Mexico $277.57 5.6

Japan $146.39 13.5

Germany $108.71 10.2

South Korea $58.9 3.9

Saudi Arabia $55.67 17.3

U.K. $54.96 7.2

France $41.75 4.2

India $40.51 12.1

1.2

1.8

2.6

3.6

0.7

5.9

4.0

9.0

6.2

6.5

2.0

3.1

EU $381.65 3.5

u Merchandise imports to the U.S.Pct. Changefrom 2011

u Exports from the U.S.Pct. Changefrom 2011

‘We have what manywould view as the mostambitious trade agendain history.’Michael Froman

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R10 | Monday, November 25, 2013 * * * * THEWALL STREET JOURNAL.

It’s not an easy time to lookinto the economic crystal ball.Will emerging markets regaintheir strength? Will the U.S. andEurope find their way? Justwhat is America’s standing onthe world economic stage?

The Wall Street Journal’s Da-vid Wessel discussed these issueswith Jim Yong Kim, president ofthe World Bank, Glenn Hubbard,dean of Columbia BusinessSchool, and Stanley Fischer, for-mer governor of the Bank of Is-rael.

What follows are edited ex-cerpts of their discussion.

The Developing WorldMR. WESSEL: A couple of yearsago, one would have said thatthe developed world was falter-ing, and thank God for theemerging markets. They wereproviding the global demand. Wein countries like the U.S. and Eu-rope were going to be less andless relevant.

In the past six months, there’sbeen rethinking about that. Isthe golden age of emerging mar-kets behind us?MR. KIM: Over the past five or sixyears, even Africa had over 5%growth rates. While there’s beena slowdown, if you look at someof the biggest countries, it lookslike India’s going to have a good

third quarter. China came in atan annualized rate of 9.3% in thethird quarter.

There are all kinds of down-side risks, the biggest one beingwhat’s going to happen in thiscountry when February rollsaround. But we think that overthe next year, growth in theemerging markets is going to beover 5%. And we think that’s go-ing to continue.

You’re not going to see the10-plus-percent growth ratesthat you saw prior to 2008. Buta lot of the fundamentals ofthese countries are in much,much better shape than we evenknew.MR. FISCHER: The emerging mar-kets have done very well for adecade. But if you look at theBrics—Brazil, Russia, India,China, South Africa—the brick isChina. The others have not yetbuilt a framework that is goingto be very stable. The Chinesehave produced a plan that no-body understood at the begin-ning. And as time has gone by, itlooks better and better.

For the others, they have toimprove their policies. If youhave all the prerequisites inplace but you pursue policiesthat get worse and worse, youget into trouble.MR. HUBBARD: Certainly, the easy

credit has been largely responsi-ble for an emerging-marketboom, as has China’s own devel-opment.

Stan is absolutely right, poli-

cies are paramount. There’s somuch attention now being paidto tapering and Fed policy in theU.S. with spillover to the emerg-ing world. The Fed is not re-

sponsible for structural prob-lems in emerging economies. Ifyou take China, for example,some of the recent economic de-velopments have been good, butit is still a financial sector whosepolicies don’t work. Structuralreforms, likewise, are needed inIndia. Around the world, ratherthan looking at big monetary ormacro factors, these are individ-ual policy factors.

The Old PowerhousesMR. WESSEL: Let’s talk about acouple of developed countries.Start with Europe. Do they haveany reasonable chance of findingtheir way to a set of institutionalarrangements and policies thatallow them to grow at a ratethat raises living standards?MR. FISCHER: They have a rea-sonable possibility of doing that,but it’s going to take longer thanis politically convenient, andwe’ll see whether they can main-tain that balance. Just thinkabout this. Two years ago, ev-eryone was sure the Eurowouldn’t survive a year. Well,here it is and people aren’t even

talking about its disappearance.They have a habit of overcomingthese difficulties, despite every-thing. So I’m moderately opti-mistic it’ll happen.

MR. WESSEL: What about Japan?They’re kind of rolling the diceon policy.MR. HUBBARD: The change inmonetary policy has been verywelcome. Japan has had persis-tent deflation that can be ar-rested. The government, I’m alittle more skeptical. Certainlythe talk from the incoming ad-ministration was very promisingat the beginning and continuesto be, but the real issue insideJapan are structural reformsthat have bedeviled the Japaneseeconomy for decades. And I re-ally don’t see a whole lot ofprogress being made there.

MR. WESSEL: What do you hearfrom people around the worldabout the United States?MR. KIM: If you just look back atwhat happened in August of2011, the last time we had anear-miss, we followed the num-bers very carefully. Stock mar-kets in developing countriestook a 15% hit. Borrowing costswent up 75 basis points. What-ever happens here has a very di-rect impact on what happens inthe developing world.

I think there’s still tremen-dous admiration for the abilityof the United States to innovate.Every single country in theworld is thinking about whatthey need to do to build an inno-vative new generation.

My experience of running auniversity has come up with al-most every leader I talked to.They’re saying, “What do weneed to do to become more com-petitive? What do we need to dowith the primary, secondary andespecially at the tertiary level?”

The admiration for that partof the United States still remainsvery strong. There are a lot ofcountries—China’s one, Koreamaybe another—who’ve done sowell at process improvement.But the real, real innovation isstill a bit out of reach. Thosecountries want that, and theyknow that we have that here inthe United States.

Where Is the Global Economy Heading?Jim Yong Kim, Glenn Hubbard and Stanley Fischer on the outlook for emergingmarkets, Europe and the U.S.

JOURNAL REPORT | CEO COUNCIL

RalphAlswang/Dow

Jones(3)

Source: World Economic Forum The Wall Street JournalNote: 2013 figures are estimates; 2014 and 2015 figures are forecasts Source: World Bank

World

U.S.

Euro area

Japan

China

Russia

Brazil

India

South Africa

Developingcountries

High-incomecountries

On the Slow TrackGrowth rates for real GDP are expected to accelerate modestly world-wide in thenext couple of years.

People PowerThe World Economic Forum's Human Capital Index aimsto measure how well countries are developing productiveworkforces that can drive economic growth. The index isbased on indicators in areas including health, education,workforce skills and experience, and the legal and socialenvironments people work in. Here are the countries withthe 10 highest scores, and the ranking of other selectedcountries:

2.8

2012 2013 2014 2015

2.3 2.2 3.0 3.3

2.3

3.0

1.5

1.3

5.7

7.9

3.9

3.8

6.7

3.3

2.0

2.8

0.9

1.4

5.6

8.0

3.5

4.0

6.5

3.2

1.2

2.0

-0.6

1.4

5.1

7.7

2.3

2.9

5.7

2.5

1.3

2.2

-0.5

2.0

5.0

7.8

3.4

0.9

5.0

2.5

1.7

1.8

1.5

-0.5

6.0

9.3

4.3

2.7

6.2

3.1

2011

1 Switzerland

2 Finland

3 Singapore

4 Netherlands

5 Sweden

6 Germany

7 Norway

8 UnitedKingdom

9 Denmark

10 Canada

15 Japan

16 U.S.

43 China

51 Russia

57 Brazil

78 India

86 SouthAfrica

‘The Chinese haveproduced a plan thatnobody understood atthe beginning.’Stanley Fischer

‘The Fed is notresponsible forstructural problems inemerging economies.’Glenn Hubbard

‘There is tremendousadmiration for theability of the UnitedStates to innovate.’Jim Yong Kim

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THEWALL STREET JOURNAL. Monday, November 25, 2013 | R11

JOURNAL REPORT | CEO COUNCIL

When it comes to fixing theeconomy, are we attacking thewrong problem? Lawrence H.Summers thinks so.

The Wall Street Journal’s Da-vid Wessel spoke with the formerTreasury secretary and Harvardpresident about why growth ismore important than deficits,how to close the gap betweenrich and poor, and other mat-ters. Here are edited excerpts oftheir discussion.

The Wrong ApproachMR. WESSEL: I have been inWashington for 30 years. Formuch of that time, we have beenobsessed with reducing the defi-cit. That has been particularlytrue in the past few years. Youthink that’s a dumb idea. Why?MR. SUMMERS: We’ve had 10 bi-partisan budget processes.We’ve had zero bipartisangrowth processes. We’ve hadbudget summits up the yin-yang.We’ve had no growth summits.We have gotten the idea that ad-dressing the deficit is the defin-ing challenge facing the country.

There are three relevant reali-ties. First, on the current fore-cast, the debt-to-GDP ratio willimprove over the next decade.The debt forecasts look justabout right on line with the waythey looked in terms of declineafter the 1993 budget deal. For10 years, this problem is in hand.

Second, basing policy onthese forecasts longer than thatis kind of a crazy thing to do. Wedo not know what the long-rundeficit is going to be.

The third thing is that if you

take the longest-run deficit andtake the official forecasts, if weincrease the growth rate by two-tenths of 1%, you solve the entireidentified fiscal-gap problem.

If we get the growth rate up,the debt problem will stay incontrol. If we continue to be acountry that doesn’t increase thefraction of adults that are work-ing, that doesn’t catch up withits GDP potential, that grows at2% or less, we can have all theentitlement summits in theworld, and we’re gradually goingto accumulate debt and have aserious debt problem.

We should be focusing ongrowth. Growth creates a virtu-ous circle, which creates moregrowth.

In a growing economy, em-ployers work harder to train thenext generation of workers. In agrowing economy, there aremore ladders for kids to get on,which puts them in a better po-sition to lead 10 years down theroad.

MR. WESSEL: The gap betweenwinners and losers in our societyis wide by historical measuresand has been widening. Shouldwe worry about that? And if so,what should we do about it?MR. SUMMERS: We surely shouldbe worrying about it. For 240years since George Washington,it’s always been true that we be-came a country with more equalopportunity every generation.That is no longer true in theUnited States.

The gap in life prospects be-tween the children of the rich

and the children of the poor haswidened over the last 40 years.The gap in the college-atten-dance rates between the childrenof the rich and the children ofthe poor has widened over thelast 40 years.

We need to find ways to en-sure that the educational oppor-tunities open to every kid arelike the educational opportuni-ties open to the kids of the peo-ple in this room. And we are notclose to that as a country.

We need to make sure thatwhere there are slots to begiven—whether it’s the govern-ment giving rights to spectrumor mining rights or whatever itis—that those processes areopen and inclusive and open toeveryone and are not processesthat reward the fortunate.

There are a substantial set ofloopholes, special-interest privi-leges and the like that distortthe allocation of resources. Theymake the economy function lesswell and act to reify and to rein-force inequality.

Serious tax reform that wentafter those inequities could bothmake a fairer economy and makean economy that was more effi-cient.

The Troubled RolloutMR. WESSEL: HealthCare.gov is adisaster. How much damage hasthat done to the trust that Amer-icans have in the ability of thegovernment to do anything?MR. SUMMERS: Many of youknow from your own experiencesthat the general rule on large ITprojects is take what they say,double it, and then move to thenext higher unit of time.

That’s true when it’s done inthe private sector, and there’s noorganized constituency for fail-ure. When it was done in thepublic sector, there was a mas-sive organized constituency forfailure that organized as best it

could to bring about failure bystarving funds and by objectingto the procedures and so forth.

So it was an extraordinarilydifficult task whose difficultywas massively underestimated. Idon’t think there’s any legiti-mate excuse for how badly itwas underestimated.

The great danger at a mo-ment like this, like the dangerfor a football team that’s downby two touchdowns early in thefourth quarter, is that they willabandon their playbook andstart throwing Hail Marys in ev-ery direction. Usually, that’s agood way to end up down bythree touchdowns.

The great danger at a mo-ment like this is that you’llpromise days when you’ll haveresults. You’ll try to jury-rigsomething rather than recogniz-ing that given the depth of thehole you’re in, it’s going to bevery difficult.

As difficult as it was to dothis right in the first place, it isgoing to be more difficult to fix.But I think it is hugely importantthat it be fixed.

At the same time, we need acompact in this country, wherewe debate things, and then whenwe come to a conclusion, for awhile everybody tries to makethem work.

Deficits, Deficits. What About Growth?

RalphAlswang/Dow

Jones

Sources: Commerce Department (GDP),Labor Department (unemployment andinflation)

The Wall Street Journal

The State of theEconomyReal gross domestic productgrowth, unemployment andinflation over the past 10 years

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

0

2

4

6

8

10%

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

–4

–2

0

2

4

6%

–4

–2

0

2

4

6%

u Annual average unemploy-ment rate

u Annual real GDP growth

u Annual average inflation rate

‘If we get the growthrate up, the debtproblem will stayin control.’Lawrence Summers

Lawrence Summers on howWashington is focusing on the wrong issue

VOICES FROM THECONFERENCE

‘We need to direct ourfinancial aid to need-based financial aid.There are too manypublic colleges and uni-versities that are pro-viding financial aid tothose who can affordit, rather than to thosewho can’t afford it.Secondly, [we need]loan-forgiveness pro-grams that are basedon income. We reallywant students to beable to afford highereducation.’Amy Gutmann, President,University of Pennsylvania

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