JOURNAL REPORT

© 2016 Dow Jones & Company. All Rights Reserved. THE JOURNAL. Tuesday, November 22, 2016 | R1

KELLYANNE

CONWAY RUDOLPH ‘Fairness is about equality GIULIANI of opportunity, not ‘We don’t want equality of outcomes.’ to become a country where we have political vindictiveness after an election.’

BUSINESS INTHEAGEOF

DANIEL TARULLO TRUMP ‘It’s probably more likely that At the annual gathering of the next response would be a ’s CEO Council, tightening.’ top executives got an early look at how their world may be about to change

ELIZABETH WARREN

PREET ‘The American people BHARARA do not want Wall Street to run their ‘The vast majority government.’ of insider-trading cases we brought have resulted in convictions.’

KEVIN TOM MICHAEL BRADY COTTON ROGERS ‘Wehaveto ‘We’re not ‘Cyber does fix and create there to put not recognize 21st-century our finger on these arbitrary health care.’ the scale for lines that we this or that have drawn.’ business or industry.’ THE WALL STREET JOURNAL INSIDE

Rudolph Giuliani talks about Daniel Tarullo offers his Susan Desmond-Hellmann Michael Rogers says a David Cote on people’s view Stephen Wolfram on ’s immediate view of the economy and and Thomas Frieden dis- public-private partnership is of business, R4 communicating with AIs, R6 agenda, R2 interest rates, R5 cuss the world’s biggest the key to combatting health threats, R8 cyberattacks, R9 Stephen Schwarzman on Guruduth Banavar on using Kellyanne Conway says the Kevin Brady spells out the the outlook for productivity artificial intelligence in issue at the core of the House GOP’s economic Gene Sperling is optimistic Preet Bharara on keeping and the economy, R4 decision making, R7 election was security, R4 priorities, R6 for the Democratic Party and executives honest, R9 the U.S. economy in the long John Graham on the right Andrew McAfee on who will discusses To m Co t t o n looks at the run, R8 PLUS time frame for evaluating succeed in the second the message the Democrats evolution of the Republican Daniel Kahneman on the CEOs, R5 machine age, R9 heard, R4 Party, R7 dangers of hindsight, R2 R2 | Tuesday, November 22, 2016 THE WALL STREET JOURNAL. JOURNAL REPORT | CEO COUNCIL What Is on Trump’s CEO COUNCIL MEMBERS (Chief executive officers John D. Johns, Protective Anthony Scaramucci, except as noted) Life Corp. Founder, Co-Managing Thomas P. Joyce Jr., Partner, Skybridge Nicholas K. Akins, Danaher Corp. Capital Immediate Agenda American Electric Power Rana Kapoor, Yes Bank Ltd. David T. Seaton, Mukesh Dhirubhai Ambani, Alex Karp, Palantir Fluor Corp. Chairman and Managing Technologies Jahja Setiaatmadja, Rudolph Giuliani says it’s borders, corporate Director, Reliance Michael J. Kasbar, World President Director, PT Industries Ltd. Fuel Services Corp. Bank Central Asia Tbk taxes, repatriation and trade Johan C. Aurik, Managing Declan Kelly, Gregg M. Sherrill, Tenneco Partner and Chairman, Holdings Keith Skeoch, Standard Life Global, A.T. Kearney Christopher J. Klein, Frederick W. Smith, FedEx ‘I think you’ll see Mitch Barns, Nielsen Fortune Brands Home & Gary B. Smith, Ciena Corp. George S. Barrett, Cardinal Security Inc. Sir Martin S. Sorrell, Group a conservative Health Inc. Sarah Krevans, Sutter Chief Executive, approach to John F. Barrett, Western & Health WPP PLC Southern Financial Group Mary A. Laschinger, Veritiv K.R. Sridhar, Bloom Energy antitrust law.’ Dominic Barton, Global Donald H. Layton, Freddie Paula Steiner, Health Care Managing Partner, Mac Service Corp. McKinsey & Co. Richard I. Lesser, Boston Todd A. Stevens, California Patrick Bass, thyssenkrupp Consulting Group Resources Corp. North America Inc. William Lewis, Jeff Storey, Level 3 Brendan Bechtel, Dow Jones & Co. Communications Inc. Bechtel Corp. Robert A. Livingston, Anthony R. Tersigni, Marc Benioff, Salesforce Dover Corp. Ascension JeffreyL.Bewkes,Time George Logothetis, Libra Robert Thomson, Warner Inc. Group News Corp Aneel Bhusri, Workday Inc. Peter S. Lowy, Co-CEO, Paul A. Tufano, Ståle Bjørnstad, Cxense Westfield Corp. AmeriHealth Caritas Jean-Laurent Bonnafé, BNP William Mansfield, MUFG Family of Companies Paribas SA Securities Americas Inc. Ronald N. Tutor, Tutor Benjamin A. Breier, Kindred Gracia C. Martore, TEGNA Perini Corp. Healthcare Inc. Michael J. Massey, N.V. Tyagarajan, Vincent Brun, President, PetSmart Inc. Genpact Ltd.

RALPH ALSWANG/DOW JONES Vacheron Constantin Timothy J. Mayopoulos, Bernard J. Tyson, Kaiser North America Permanente Rudolph Giuliani has had an MR. GIULIANI: Donald Trump. ney general. So I won’t have to Gregory W. Cappelli, Apollo John McAvoy, Consolidated Tien Tzuo, Zuora extensive career, but he is per- Donald Trump is an extraordi- decide. I don’t know who’s go- Education Group Inc. Edison Inc. Erez Vigodman, Teva haps best known for leading narily smart man. Exposing ing to be attorney general. Lloyd Carney, Brocade Terry D. McCallister, WGL Pharmaceutical to recovery af- him to different viewpoints is I think you’ll see a conser- Communications Systems Holdings Inc. and Industries Ltd. ter the terrorist attacks of the very best thing we can do. vative approach to antitrust Gregory C. Case, Aon PLC Washington Gas Timothy R. Wallace, Trinity Sept. 11, 2001. Now he’s a It’s exactly what Obama didn’t law. If it’s predatory pricing, Dominic Casserley, Daniel J. McCarthy, Frontier Industries Inc. prominent member of Presi- do, although he said he was where there are alternatives, President, Deputy CEO, Communications Corp. Mark Weinberger, EY dent-elect Donald Trump’s going to do it. you’ll probably see a challenge Willis Bill McDermott, SAP SE Dion J. Weisler, HP Inc. transition team and emerged to it. If it’s a situation in which Terrence W. Cavanaugh, Karl McDonnell, Strayer Harold L. Yoh III, Day & after the election as one of the MR. BAKER: Let me talk about there’s no alternative but a President, Erie Insurance Education Inc. Zimmermann top contenders for the post of Steve Bannon. There has been large conglomerate, I think Group Jim McGrann, VSP Global Yang Yuanqing, Lenovo secretary of state. a lot of concern about some of you’ll see the Justice Depart- Anil Chakravarthy, Thomas McInerney, The Wall Street Journal’s the things that he’s associated ment passing on that. Informatica Genworth Financial Inc. PARTICIPATING GUESTS Gerard Baker spoke with Mr. with. He has been accused of The last thing in the world William C. Cobb, Richard P. McKenney, Guruduth Banavar, Vice Giuliani about Mr. Trump’s po- racism. He has been accused of you’re going to see is an anti- H&R Block Inc. Unum Group President and Chief sitions and plans. What fol- anti-Semitism. business administration. Don- Andrew Collins, Sentient Jet Larry J. Merlo, CVS Health Science Officer, Cognitive lows are edited excerpts of the MR. GIULIANI: I haven’t seen ald Trump realizes that he got Steven H. Collis, Alex Molinaroli, Johnson Computing, International conversation. any of that in Steve. I’ve seen a elected, to a very large extent, AmerisourceBergen Corp. Controls Inc. Business Machines very smart, very bright man, on something he said in so Luis Manuel Conceicao do Steve Mollenkopf, Derek Belch, Founder and On the table very worldly man. I also think many speeches: “Jobs, jobs, Amaral, Eurocash SA Qualcomm Inc. CEO, STRIVR Labs Inc. MR. BAKER: Give us your sense something happens to you jobs.” So being pro-business is Roger W. Crandall, Deanna M. Mulligan, Preet Bharara, of what the immediate agenda when the election’s over. It’s being pro-jobs. Massachusetts Mutual Guardian Life Insurance U.S. Attorney, Southern is for the Trump presidency. not that you change your posi- That doesn’t mean there Life Insurance Co. Co. of America District of New York MR. GIULIANI: You’re going to tions. But you begin to realize, won’t be a necessary level of Bal Das, Chairman, BGD Oscar Munoz, United Kevin Brady, Chairman, see very much the policies he “I’ve got to bring in more peo- regulation. But one thing that Holdings LLC Airlines House Ways and Means talked about. ple. I’ve got to broaden my ho- President-elect Trump told me, Doug DeVos, President, Rupert Murdoch, Executive Committee; U.S. Repre- I analogize this election to rizons.” I don’t think that just he said, “One of the things I Amway Corp. Chairman, 21st Century sentative (R., Texas) when Andrew Jackson de- happens to the president. I learned over running for presi- Craig Donohue, Options Fox and News Corp Kellyanne Conway, Senior feated what was the almost think that happens to the chief dent, when I began, I thought Clearing Corp. Eileen K. Murray, Co-CEO, Adviser, Presidential emerging nobility of America. of staff, the policy adviser, the the biggest concern that busi- Michael J. Dowling, Bridgewater Associates Transition Team; Cam- The American people had had communications director, sec- nesses had was taxes. It’s true Northwell Health Pierre Nanterme, Accenture paign Manager, Donald J, enough of this elite, we needed retary of defense, attorney they are concerned about Francisco D’Souza, Christopher J. Nassetta, Trump for President somebody who represented us. general, secretary of state. taxes. But they tell me their Cognizant Technology Hilton David Cote, Chairman and That’s what happened here. When you’re out there just biggest concern is regulation. Solutions C.L. Max Nikias, President, CEO, Honeywell The people revolted against criticizing, it’s one thing. I’m going to cut those damn Colin Dyer, Member of the University of Southern Tom Cotton, U.S. Senator the elite that was trying to When you actually get on the regulations in half.” Board of Directors, Jones California (R., Ark.) force on them policies they inside, there’s a certain weight Lang LaSalle Indra K. Nooyi, PepsiCo Inc. Susan Desmond-Hellmann, didn’t agree with or didn’t ad- of responsibility for the Ameri- The Clinton question Richard Edelman, Edelman Gary A. Norcross, FIS CEO, Bill and Melinda dress what they were con- can people that is on your MR. BAKER: During the cam- Robert B. Engel, CoBank John H. Noseworthy, Gates Foundation cerned about. shoulders. Steve Bannon is the paign, President-elect Trump ACB Mayo Clinic Thomas Frieden, Director, Trump has to deliver on se- kind of guy who gets that. said that he would appoint a Jacques Esculier, WABCO James Park, Fitbit Centers for Disease Con- curing the borders. He has to special prosecutor to investi- Holdings Inc. Christina Paxson, President, trol and Prevention, U.S. lower taxes on everybody, so MR. BAKER: That change you gate and possibly prosecute John Ferriola, Nucor Corp. Brown University Department of Health everybody gets a little bit talk about, have you seen that Hillary Clinton. Is he going to? Andreas Fibig, International Paul Perreault, and Human Services more money in their pocket. in Donald Trump in the last MR. GIULIANI: That’s a decision Flavors & Fragrances Inc. CSL Behring Rudolph Giuliani, Vice And he has to lower the corpo- week? he should make when he ap- Daniel Florness, Fastenal Stefano Pessina, Walgreens Chairman, Presidential rate tax, which could be one of MR. GIULIANI: From the mo- points an attorney general. John D. Forsyth, Wellmark Boots Alliance Transition Team; former the biggest things he can do to ment he went to see Barack The attorney general should Eric Foss, Aramark Douglas L. Peterson, S&P Mayor of New York City ignite our economy. Obama, the way in which they sit down and study it and give Simon Freakley, Global John Graham, Professor of He has to work on repatria- dealt with each other, the way him a very reasoned balance of AlixPartners C. Michael Petters, Finance, Fuqua School of tion of money. You do that, in which he’s conducting him- two things. One is the idea Mark P. Frissora, Caesars Huntington Ingalls Business, Duke University and you’re going to see an self, his attempt to try, as best that we don’t want to become Entertainment Corp. Industries Inc. Oliver Hart, 2016 Nobel economy that’s growing at he can, to bring America to- a country where we have polit- Robert C. Garrett, Co-CEO, Nicholas T. Pinchuk, Prize in Economic numbers where we can sustain gether. All these protests, I ical vindictiveness after an Hackensack Meridian Snap-on Inc. Sciences Recipient; a lot of the other things that think they’re going to go away. election. Number two, we Health Anne R. Pramaggiore, Professor of Economics, we have to do. They’re just going to happen don’t want to be a country of Richard Gelfond, IMAX Commonwealth Edison On trade, part of it could be for a while, because some peo- unequal protection of the law. Eli Gelman, Amdocs Anthony Pratt, Executive Daniel Kahneman, 2002 the rhetoric of a campaign. ple are disappointed, and If the attorney general de- Pat Gelsinger, VMware Inc. Chairman, Visy Industries Nobel Prize in Economic Part of it can be the misinter- they’re angry. A little bit is So- cides that they’re not that far Seifi Ghasemi, Air Products J. Joel Quadracci, Quad/ Sciences Recipient; pretation of the media. You’re ros funded and driven. But I beyond the pale, maybe we & Chemicals Inc. Graphics Emeritus Professor, not talking about a man who’s think that’s going to go away. just put it behind us. If the at- Daniel S. Glaser, Marsh & Thomas J. Quinlan III, LSC Princeton University against free trade. You’re talk- And what we’re going to find torney general decides that McLennan Cos. Communications Inc. Andrew McAfee, ing about a man who’s against is a much more worldly and they have to be investigated, Alex Gorsky, Johnson & Solange Maria Pinto Co-Director, Initiative on unfair deals. expansive president than we then it shouldn’t be Donald Johnson Services Inc. Ribeiro, Neoenergia the Digital Economy, ever realized we were electing. Trump’s attorney general, it Robert Greifeld, Nasdaq Inc. Timothy M. Ring, C. R. Massachusetts Institute MR. BAKER: The two first ap- should be an independent C.P. Gurnani, Tech Bard Inc. of Technology pointments for the administra- Taking on business? counsel who investigates it. Mahindra Carlos Rodriguez, Adm. Michael S. Rogers, tion were Reince Priebus and MR. BAKER: Is this going to be James Hagedorn, Scotts Automatic Data Commander, U.S. Cyber Steve Bannon. Bannon is an an administration that is going MR. BAKER: President-elect Miracle-Gro Co. Processing Inc. Command; Director, aggressive populist flame- to take on big business issues? Trump said the Iran deal that Gregory J. Hayes, United Virginia Rometty, National Security Agency thrower. Reince Priebus is a Are big mergers going to be President Obama struck was a Technologies Corp. International Business Stephen A. Schwarzman, much more traditional conser- opposed by the Trump admin- disaster. What would you do To m H a ye s , President, Machines Chairman, CEO and vative Republican. Who’s going istration? about that? Tyson Foods Inc. Panu Henrik Routila, Co-Founder, Blackstone to win that fight? MR. GIULIANI: I won’t be attor- MR. GIULIANI: The president James B. Hebenstreit, Konecranes Group has a lot of options. Because Bartlett & Co. Mitchell E. Rudin, Mack- Gene Sperling, former President Obama didn’t do Lance Hockridge, Aurizon Cali Realty Corp. Director, National what he should’ve done under Holdings Ltd. Gisbert Rühl, Kloeckner & Economic Council CEO COUNCIL VIDEOS the Constitution. He should’ve David Holmberg, Highmark Co. SE Daniel K. Tarullo, Federal submitted that to the United Health Michael Sabia, Caisse de Reserve Board of To see CEO Council video excerpts of interviews States Senate. The next presi- Lisa Hook, Neustar Inc. dépôt et placement du Governors with Trump transition advisers Rudolph Giuliani and dent can disavow it as a mat- Mark S. Hoplamazian, Québec Elizabeth Warren, WSJ Kellyanne Conway, as well as Sen. Elizabeth ter of law. Either he should, or Hyatt Hotels Corp. Faiza Saeed, Deputy U.S. Senator (D., Mass.) .COM Warren, Rep. Kevin Brady, Fed governor Daniel he should use that power to Donald L. Jernigan, Presiding Partner, Stephen Wolfram, CEO, Tarullo and others, go to wsj.com/LeadershipReport. renegotiate it. Adventist Health System Cravath, Swaine & Moore Wolfram Research

VOICES FROM THE CONFERENCE

“What hindsight does is it blinds us to the un- CEO Council certainty with which we live. That is, we always Asia Meeting exaggerate how much certainty there is. Because May 16, 2017 after the fact, everything is explained. Everything Palace Hotel | Tokyo is obvious. And the presence of hindsight in a way

mitigates against the careful design of decision CEO COUNCIL MEMBERSHIP making under conditions of uncertainty.” IS BY INVITATION. Daniel Kahneman, Recipient of the 2002 Nobel FOR MORE INFORMATION VISIT Prize in Economic Sciences; Emeritus Professor, CEOCOUNCIL.WSJ.COM Princeton University PAUL MORSE/DOW JONES © 2016 Dow Jones & Co., Inc. All rights reserved. 3DJ4621 THE WALL STREET JOURNAL. Tuesday, November 22, 2016 | R3

Special Advertising Section Special Advertising Feature

Imagine a world in which we genuinely believe men and women are equal: as breadwinners and caregivers. Anne-Marie Slaughter President and CEO of New America

We cannot see America’s brightest future as inevitable. On the contrary,we must do our part to build the ‘more perfect union’ envisioned in our Constitution. Muhtar Kent Chairman and CEO of The Coca-Cola Company

Changemaking is the new literacy, so education needs to prepare students to be changemakers. Henry De Sio Global Chair for Framework Change at Ashoka

Jointheconversation

#America250

The Wall Street Journal news organization was not involved in the creation of this content. WSJ. Custom Studios is a unit of The Wall Street Journal advertising department. R4 | Tuesday, November 22, 2016 THE WALL STREET JOURNAL. JOURNAL REPORT | CEO COUNCIL The Message at the Core of the Election to heal those divisions? that’s the earliest and best and tional amendment. According to campaign manager Kellyanne MS. CONWAY: Really, many of brightest sign that you have them [the voters] were legiti- about President-elect Donald MR. SEIB: What would you say Conway, it was all about security mately fearful and legitimately Trump wanting to address the to the CEOs in this room as frustrated that they can’t pay entire country as one. they try to figure out what the the bills, that they just can’t Trump version of the Republi- get ahead. There’s nothing else Work with Republicans? can Party stands for on the is- ‘He’s been very they can do. They have a job. MR. SEIB: Does he work with sues that concern them? clear about his They live a good life. They pay Republicans in Congress? MS. CONWAY: He doesn’t say their taxes. They pay their MS. CONWAY: He’s been very all trade deals are bad. He’s 100-day plan.’ dues. They play by the rules. clear about his 100-day plan. made very clear he believes And yet, they always feel like Anybody can pull it up and Nafta was a bad deal for the they’re in the quicksand of ev- you can see what he’s talking American worker. He doesn’t eryday affordability. about. It’s very specific. say he won’t have trade deals. President-elect Trump said He’s already off to a very He just is pointing out that when he was elected, “I will be good start of working with some of them have not worked the president of all Americans, House Speaker Paul Ryan. I’ve for the people they were in- even those who did not sup- witnessed some of those calls. tended to benefit. In his 100- port me.” He’s expressed re- He had a great meeting here day plan, he wants China to be gret for any pain he’s caused, last week, as did Vice Presi- declared a currency manipula- particularly if it was done with dent-elect Mike Pence, with tor. Having said that, he spoke words. And he did not intend Speaker Ryan. And they go with the leader of China today. to do that. way back. It was fine. They’llhavetofindaway But in any event, he’s made MR. SEIB: Does President-elect to knit together what was al- very clear that Washington Trump feel a need to reach out ready being worked on and has wanted, for 30 years at to the country in a more for- could never really be signed least, somebody who owes mal way to try to bring people into law, because they had a nothing to anybody in Wash- together? Before the Inaugura- Democratic president in Presi- ington to come here and just

PAUL MORSE/DOW JONES (4) tion, the obvious point at dent Obama. clean out the rot from the in- which this traditionally oc- But the excuse of divided side out. Every successful presiden- and Ohio talking about opioid Constitution and our other curs? government is over. Americans tial campaign has an archi- use. That’s a kind of insecurity laws. But most people were MS. CONWAY: It has been dis- gave a Republican president a MR. SEIB: When you campaign tect. For Donald Trump, it was that was fairly new to our talking about fairness, which cussed. And I think you see Republican House and a Re- pledging to drain the swamp, campaign manager Kellyanne communities. is different. Fairness is about early signs of it. He and Mrs. publican Senate and majority and then you arrive at the Conway, now a special adviser People were also talking equality of opportunity, not Trump coming here to Wash- Republican governors, 69 of swamp, how can you work to the Trump transition team. about everyday affordability. equality of outcomes. And ington less than 36 hours after the 99 state legislative cham- with the swamp? Ms. Conway discussed the I’ve been a vocal and longtime when you listen to people being elected to meet with bers. If they [Democrats] lose MS. CONWAY: Youcan.A,he’s campaign and Mr. Trump’s critic of Republican politicians closely, what really under- President Obama and First one or two more, they’re not part of the swamp. But B, new challenges with Gerald who run around talking about girded their views toward edu- Lady Michelle Obama was so lower than the threshold that no one got rich off of his cam- Seib, Washington bureau chief job creation. About 7% of the cation reform, immigration incredibly important. I think you need to defeat a constitu- paign, trust me. of The Wall Street Journal. country are job creators or policy and tax reform, when Edited excerpts follow. fancy themselves as entrepre- they’re talking about letting neurs. There’s another 7% that Syrian refugees in by 550%, Election’s message are the job seekers, the unem- they’re really talking about MR. SEIB: What was the mes- ployed. what is fair. VOICES FROM THE CONFERENCE sage from voters on election But the vast majority of Donald Trump put issues on night? households are neither job the map that no one was giv- “The reason the country lives as well as it does MS. CONWAY: That there is creators nor job seekers. They ing voice to, like trade and il- and has the standard of living it does is because more of them than us. Every- are job holders. And Donald legal immigration. But he ar- of business. thing that Donald Trump said Trump gave voice to the job ticulated it through an “Now, I’m not a complete antiregulation guy. I about the populist uprising, holders, the people in this economic lens, so that we and people really just wanting country who say, “Gosh, when were no longer only asking, do think you need certain regulations to maintain fairness and an opportunity my grandfather had a job or what is fair to the illegal im- a certain common denominator. But at the end of and a voice, ended up being your grandfather had a job, it migrant? All of a sudden, we the day, we’re the reason the country is so innova- true. We can talk about it be- was enough to support the were asking, what’s fair to the tive and the standard of living is so good. Yet that ing an anti-elitist election. whole family. We have two, American worker? What’s fair That has some merit. But at three jobs in the household. to ask employers to do? message started getting lost long ago. And I its very core, people were talk- And we’re white knuckled at wouldn’t be surprised if you track it back to my ing about security. Security the end of each month.” Healing divisions generation in the ‘60s, if you really started to look from terrorism, national secu- People were also talking MR. SEIB: He tapped into an at when did people look at business differently.” rity, health-care security, eco- about fairness. I think Hillary anger in the country, and it nomic security. Donald Trump Clinton’s campaign was about produced a somewhat divisive David Cote, Chairman and CEO, Honeywell was going to states like Penn- equality. And we cherish campaign—an angry cam- PAUL MORSE/DOW JONES sylvania and New Hampshire equality. It’s enshrined in our paign. What can be done now

The Election’s Message ‘I just want to underline something that For the Democrats every one of you know. Elizabeth Warren says both parties have to Bigotry is bad understand that voters think the system is rigged for business.’

What happens to the Demo- is doing is putting together a what I think this election is cratic Party in the wake of transition team that is full of about. Donald Trump’s victory? lobbyists—the kind of people To get insights, The Wall that he ran against. [Vice Pres- MR. SEIB: So how do the two Street Journal’s Gerald Seib ident-elect Mike Pence has parties show that? What do spoke with Sen. Elizabeth War- since ordered the removal of Democrats do? What does the ren. Here are edited excerpts all lobbyists from the transi- Trump team do that it’s not of their discussion. tion team.] doing now in your opinion? The clearest point that SEN. WARREN: Well, it doesn’t Change in the air? comes out of this election is start by hiring a bunch of lob- MR. SEIB: A couple of days af- that the American people do byists to run the transition. It ter the election, you said, “If not want Wall Street to run doesn’t start by floating names we learn nothing else from the their government. They do not of people who’ve run giant past two years of electioneer- want corporate executives to hedge funds, or been part of ing, we should hear the mes- be the ones who are calling the that, to be able to run the who elected Donald Trump are Bigotry is bad for business. the election. Whether they sage loud and clear that the shots in Washington. Treasury. Or people who come thinking. Bigotry is not what your drove it effectively or whether American people want Wash- Look at the polling from from industry to be able to run employees expect. Bigotry is they drove it less effectively, it ington to change. It was clear this, that about three-quarters the regulatory agencies. MR. SEIB: Is there a place not what your customers ex- was driving the message that in the Democratic primaries. It of all Americans do believe The American people un- where populists in the Demo- pect. And if that’s the direction Washington needs to work for was clear in the Republican that the game is rigged. They derstand about the revolving cratic Party and a Trump ad- that this administration goes, the little guy. That Washington primaries. It was clear in the believeitisriggedinfavorof door. They’re really sick of it. ministration could come to- that creates a real problem for needs to work for the families campaign and it was clear on the people in this room and He did not win on Mitch gether? everybody. who’ve been left behind. That Election Day.” How do Demo- that it is rigged against them McConnell, Paul Ryan, busi- SEN. WARREN: This just keeps Washington doesn’t need to crats show that they heard and their families and their ness as usual, what can we do going back to, what is Donald The change in sides work for those at the top any- that message? children. And they want to see to help the giant corporations Trump going to do? He’s now MR. SEIB: But as you suggest, more. And this is so important SEN. WARREN: The interesting change. in America. given us the first tangible sign there are millions of people going forward because it raises question is going to be both They want to see that con- The K Street lobbyists are of his vision of how to run a who voted for Donald Trump this question about what does halves. How are the Democrats nection between Wall Street absolutely out there, salivat- Trump presidency. And a big not for those reasons. Most of the economic agenda look like. going to show it, and how is and giant corporations and our ing. They say, “This is our big part of that are lobbyists and those people used to be Demo- Donald Trump going to show government broken. They want chance. We’re going to get to Washington insiders. crats. How did your party lose Setting the agenda that he actually heard that that not to happen anymore. slash regulations. Look for a And let’s face it. There was them? Why were they Trump MR. SEIB: Well, let’s talk about message? That’s the message They want a government that tax cut for those at the top.” a lot during the election of the voters? that. What should the eco- he ran on. What Donald Trump runs for the people. That’s That is not what the people toxic stew of bigotry and at- SEN. WARREN: I think that nomic agenda look like, in your tacks on Americans all across Donald Trump made the prom- opinion? this country. Donald Trump ise to shake things up. He SEN. WARREN: I think there’s no started his campaign with an made the argument over and mandate out there for Mitch attack on Mexican-Americans over and over that the Demo- McConnell and for Paul Ryan. I VOICES FROM THE CONFERENCE and then he rode the escalator crats were too close to Wall think there is no mandate right down. He did attacks on Street and too close to big now to cut regulations and say, “You’ve had almost no productivity [growth] in women, on African-Americans, business. That was the core of “I know, let’s just turn a bunch the United States over the last X years. Part of on Muslims, on immigrants. He his economic argument, that of Wall Street banks loose and the reason, I think, is so much money has been did attacks on people with dis- too many insiders were calling see what they will do. Let’s not diverted into regulatory uses—without any result abilities. Everybody who didn’t the shots. That too many mul- remember what happened in look like the people who tinational corporations were 2008 and the run-up to 2008.” from it, from a productivity point of view. So I showed up at his rallies. running the trade deals. That I think the appetite for that think productivity’s going to go up. Overall eco- There were a lot of people too many people who’d already among the American people is nomic activity’s going to go up. And I think the who were attracted to that. made it big were using the zero. business community is going to look infinitely bet- But there were a lot of people tools of government to work Whether people were voting who were not and yet voted for themselves and not to for Hillary Clinton or whether ter at the end of a two- to four-year run than they for Donald Trump. They said, work for anyone else. they were voting for Donald have for quite a long time.” “We want somebody who’s go- I want to be clear. I think Trump, they weren’t voting for Chairman, CEO and ing to shake it up.” Hillary Clinton ran on very Mitch McConnell and Paul Stephen A. Schwarzman, Here I am with the business much the same argument, I Ryan’s deregulatory mix—let Co-Founder, Blackstone Group leaders of America, and I just just think Donald Trump made guys do whatever they want to want to underline something it aggressively. But the point do, let giant corporations do that every one of you know. is, you can’t miss this about whatever they want to do. THE WALL STREET JOURNAL. Tuesday, November 22, 2016 | R5 JOURNAL REPORT | CEO COUNCIL

‘We’re in a somewhat The Economic View different situation than I thought we were six or eight or Of a Fed Governor 10 or 12 months ago.’ Daniel Tarullo says the data suggests that it is time to talk about when to raise rates

Expectations that the Fed- upward trajectory. or 10 or 12 months ago. And so eral Reserve will raise interest Instead, growth has been now, I think the discussion of rates at its December policy modestly above trend for when is the appropriate time meeting have grown recently, some time. My perspective for to raise rates to prevent the fueled by the reaction in finan- a couple of years now had economy from overheating too cial markets to Donald been that there was more much is more on the table Trump’s victory in the U.S. room to run. There was more than it may have been before. presidential election. slack in the labor market. That said, there are some Neil King, global economics There was more utility in get- grounds for caution. We still editor at The Wall Street Jour- ting demand strengthened by have fewer tools to respond if

nal, sat down with Fed gover- having incomes up and more a recession were to come from RALPH ALSWANG/DOW JONES (2) nor Daniel Tarullo to discuss people having jobs. And we some external source than we the postelection landscape and weren’t really close to our in- do ability to control inflation. right now. back and say, “OK, what im- being, not just in December but what it might mean for the flation target and hadn’t been There is still some slack in the The unemployment rate has pact has that had?” through next year? economy and monetary policy. for some time. But over the labor market, although not as been around 5%, give or take, MR. TARULLO: Well, I can only Edited excerpts follow. last three or four months, I’ve much as before. We obviously for over a year now, during Impact, not expectation speak for myself here, and I seen changes in that pattern. don’t want to be pushing on which time we’ve been creat- MR. KING: The new administra- don’t want to comment on any Noticeable shift Core inflation is up some. the brakes harder than we ing at least twice—and in tion is talking about a sort of particular meeting. I think the MR. KING: What is just your After a long period of rela- need to in order to continue some months three or more Republican version of stimulus important issue is actually the basic sense of the strength of tively little wage growth, at the trend of moderate growth. times—as many jobs as are that would include tax cuts, one that your question identi- the U.S. economy? least one of the measures has needed to deal with new en- repatriation of corporate prof- fies, which is what is the pol- MR. TARULLO: We’ve had an shown some upward move- MR. KING: One of the Fed’s trants into the labor force its, some kind of burst in in- icy? And as I said, I think the unusual recovery from what ment. And we’ve seen the ac- mandates is maximum em- without pushing up inflation. frastructure spending and pos- policy now ought to be one in was obviously a very unusual tual labor-force participation ployment. The unemployment That suggested to me that sibly other spending, without a which we respond to the in- recession, one driven by a fi- rate approach, and by some rate is now at 4.9%. What there was a good bit of slack huge amount of concern, at coming data. nancial crisis, rather than by measures maybe even slightly would you consider to be max- in the labor market, something least in the short term, for the At this juncture, I think it’s the normal pattern of inflation exceed, the expected trend of imum employment? How low I think in retrospect has debt. How might that change probably more likely that the moving up and the Fed hitting labor-force participation. might that number go? proven to be true. the Fed’s outlook? next response would be a the brakes. And during that All of that has suggested to MR. TARULLO: Well, that’s actu- Suppose in 2015 or even MR. TARULLO: Fiscal policy is tightening rather than more period, we’ve never had what me that we’re in a somewhat ally the point. I don’t think we 2014 in anticipation of full em- one of the important back- accommodation. And then people call the Nike recovery, different situation than I know in real time what the ployment at around 5%, we ground considerations in given the trajectory that we’ve where there is a very steep thought we were six or eight natural employment rate is had taken several interest-rate thinking about the appropriate been on for some time now, I moves. I think almost surely, monetary policy to achieve the think at that juncture, we we would have given up some dual mandate of maximum watch carefully to see what of the benefits of that job cre- employment and price stabil- the impact of that presumed VOICES FROM THE CONFERENCE ation, which has benefited ity. So we obviously are sensi- rate increase would be. Re- those who didn’t profit as tive to the impact that fiscal member, monetary policy op- much from the early part of policy has. erates with a lag. “Superior performance by some CEOs early on the expansion. That includes But I want to emphasize, it had completely reverted to the mean within about lower-income workers, Afri- is to the impact. It isn’t to an MR. KING: There was a lot of 10 years. So whatever superior performance at can-Americans, Hispanics and expectation. Let’s give the new talk about Dodd-Frank during least on average was gone after 10 years. That others that traditionally have administration time to actu- the campaign. And there’s now higher unemployment rates. ally get its program and for some presumption that the Re- suggests 7 to 10 years might be a time frame that We would have lost some- Congress to decide what it’s publican majority will go after even initially successful CEOs maybe should be thing. going to do. And then the Fed it in some fashion. Do you evaluated carefully by the board.” So I think the real answer is will react appropriately to the have concerns about it being we don’t know. And that’s why impact of that in the economy. dismantled? John Graham, Professor of Finance, I’ve taken the position we MR. TARULLO: Just like with Fuqua School of Business, Duke University should proceed pragmatically, MR. KING: You voted for the fiscal policy, I don’t want to look at the data on inflation rate increase last December. speculate as to what may hap- and look and see what’s going The anticipation now is that pen. Obviously, if changes are on in labor markets. And then, there will be one next month. made, we will implement at an appropriate moment, To what extent can you outline faithfully whatever changes take the next step and then sit what you see rate policy as the Congress makes.

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years as well, then having the for them, to take it with them ulation right. But we need freedom to get the help you throughout their lifetime. And more customers around the ‘’s not the only get now at work is pretty we think that’s the most world. 800-pound gorilla in critical. streamlined, conservative ap- So you need to get trade proach. right, as well. It’s critically im- the budget, it’s the MR. GIGOT: You want to repeal portant that he give us a 8,000-pound gorilla.’ the ACA, I assume? MR. GIGOT: Is Medicaid going chance to make the case. REP. BRADY: Repeal the man- back to the states? So, strictly enforce these dates, the taxes, the directives. REP. BRADY: Yes. It has to, be- trade agreements that are crit- There are in the ACA federal cause the costs at the state ically important to turn one- agencies, bureaucrats and level are unsustainable. When way trade into the U.S. into commissions essentially in be- President Obama essentially two-way trade. I hope that my tween you and your doctor. said, “Look, the solution to advice would be not to with- That’s one of the drivers of your big problem is to make draw from the TPP, not to why this thing can’t simply be your problem bigger, do more withdraw from Nafta. Take the tweaked. You have to start Medicaid for more people at a opportunity to make those over in a big way. higher cost,” he exacerbated agreements better. But I also think it’s impor- theproblem.Wehavetofix I hope he takes the broader tant to retain some of the and create 21st-century health view, and on tariffs like that items that we think have care. that drive up costs, essentially strong public support. Letting Giving states the flexibility punish America for another kids stay on their health-care to design it for their state is country’s behaviors, I hope he plan till 26. Pre-existing ill- critical. takes a good, thoughtful ap- nesses, making sure there’s not proach to all that.

RALPH ALSWANG/DOW JONES (2) a lifetime cap because if you MR. GIGOT: Is Medicare reform happen to have a child or you on the table with the premium- MR. GIGOT: You mentioned TPP. got a very costly disease early support plan House Republi- But that seems to be dead. in life, you’ll bust through cans have passed before? Would you concede that? those early. REP. BRADY: Medicare’s not the REP. BRADY: No. I’d say it’s on The House GOP’s 800-pound gorilla in the bud- hold. For a critical reason. MR. GIGOT: Would your goal ul- get, it’s the 8,000-pound go- It’s not enough, as you timately be to create an indi- rilla. You won’t save it by just know, to simply buy American. vidual marketplace that allows cutting benefits. You’ve got to We have to sell American all a seamless movement from redesign it. throughout the world. That Economic Priorities employer-sponsored care and Asia-Pacific region will hold equalizes a tax treatment be- The trade issue half of all the middle-class cus- tween employers and individu- MR. GIGOT: The president-elect tomers on the planet by the Kevin Brady, chairman of the House Ways and als? has proposed putting tariffs on end of the decade. We want to REP. BRADY: Yes. It’s really im- goods from American compa- be in there. And if we with- Means, talks taxes, ACA, Medicare and trade portant to keep employer- nies if they move operations draw from that field, our econ- sponsored health care. But we overseas and then try to sell omy suffers. On the campaign trail, Don- separate corporate-tax reform We want the business rate need individuals to be able to those goods back into the So, I’m hopeful the new ald Trump made sweeping from individual-tax reform? to bring those earnings back to take it with them. United States. Do you support president gives us a chance to statements about his plans for REP. BRADY: I would advise America to be zero. We want Or for those who aren’t that kind of a policy? make the case to keep what’s American business. How do against doing that because we to level the playing field to working for the company that REP. BRADY: If the president good in trade and creates jobs, Republican lawmakers assess want to grow. We have two make sure made-in-America offers, you know, grade-A wants to grow the economy, and fix what’s perceived to be the situation? overall arching goals in tax re- products and new technologies health care, we’ve got to be and he sincerely does, you’ve bad. And there’s plenty of that The Wall Street Journal’s form. We want a tax code not can compete and win here and able to give people the free- got to get the tax code right, area for him to tackle with his Paul Gigot spoke with Texas designed merely to wring abroad. dom to pick a plan that’s right you’ve got to get balanced reg- skills. Republican Kevin Brady, chair- money from you, which is the man of the House Ways and one we have today. A tax code The ACA question Means Committee, who will actually built for growth, de- MR. GIGOT: Let’s move on to oversee issues such as trade signed to grow wages, jobs in health care, which is also your and taxes. Here are edited ex- the U.S. economy. And our portfolio. VOICES FROM THE CONFERENCE cerpts of the discussion. other goal is to leapfrog Amer- REP. BRADY: I think it’s impor- ica from dead last among our tant that every American has “There is a movie that just came out this last What’sontap global competitors back in the the freedom to buy the health weekend called ‘Arrival’ that I happened to work MR. GIGOT: Is it fair to say that lead, and keep us there going care they need, and to take it on as a science adviser. And it’s about communi- your top two priorities next forward. with them throughout their cating. I was realizing that the problem of commu- year are tax reform and re- lifetime without bringing in placing the Affordable Care MR. GIGOT: Donald Trump has new taxes. nicating with extraterrestrials is bizarrely similar to Act? proposed a corporate-tax rate We have to unlock the cur- the problem of communicating intentions to AIs. REP. BRADY: This new presi- of 15%. Your proposal is 20%. rent tax break you get at work “An AI is an example of an alien intelligence, so dent is making economic Can you get to 15%? to be able to carry that health- to speak, something different.” growth the pillar of his presi- REP. BRADY: I think we can find care plan with you from job to dency. And both of those play common ground on the rate. job, state to state. Stephen Wolfram, CEO, Wolfram Research key roles in it. The design of where we’re We would argue if the at today costs us jobs and health-care plan works right MR. GIGOT: Are you willing to growth. for you into your retirement

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‘Comprehensive From Pro-Business immigration reform is a Washington code word for mass ToPro-Markets immigration and amnesty.’ Tom Cotton says the GOP is not the party it was 10 years ago—thanks, in part, to Donald Trump

Many Republicans looked and the free-enterprise system. business and media and the askance at Donald Trump We celebrate businesses that academy, miss. Presidential when he emerged victorious succeed. But we recognize that candidates who succeed do from the GOP primaries. Some in a market-based system, take their parties in different openly opposed him even after we’re not there to put our fin- directions as well. he became their party’s presi- ger on the scale for this or that Out in places like Arkansas, dential nominee. Where does business or industry. Indiana and Wisconsin, Iowa, that leave the party now that We’ve gone back to a real Pennsylvania, there are a lot Mr. Trump is president-elect? focus, too, on the Constitution. of people who feel ill-served Sen. Tom Cotton (R., Ark.), I’m not talking primarily about by Washington, D.C. They feel discussed the state of the Re- individual liberties, I’m talking ill-served by some of the poli- publican Party with Kimberley about the structure of our cies that have either been im- PAUL MORSE/DOW JONES Strassel, editorial board mem- government, the need to rein plemented under the Obama ber of The Wall Street Journal. in executive agencies, and the administration, like Obama- that election were. Edited excerpts follow. need to restore structural bal- care, or some of the policies Work to Do ance between Washington and that you got a bipartisan—but Trade prospects How Americans surveyed just before the presidential election viewed Now and 2006 the state governments. in my opinion, wrong—con- MS. STRASSEL: How will Con- the Republican Party MS. STRASSEL: What are the sensus on, like immigration. gress work with Donald Trump big differences between to- MS. STRASSEL: Do you think Donald Trump was speak- on trade, given what he has Overall opinion of the Republican Party day’s Republican party and Donald Trump is changing the ing to their very practical con- said, pulling out of Nafta and Very Mostly Mostly Very Can't rate/ the one 10 years ago? In isola- party, or is he a response to cerns. He went into economi- abandoning, in general, what favorable favorable unfavorable unfavorable didn't answer tion from Donald Trump. changed voters out there? cally distressed areas and said, has long been an American SEN. COTTON: Our party, both SEN. COTTON: He’s both. Most “I’m going to bring jobs back pro-trade agenda? 10% 31% 33% 23% 5% the grass roots and in Congress successful presidential candi- to you,” and Hillary Clinton, SEN. COTTON: I’ll leave the de- now, is much more of a pro- dates are both. They some- she’d say, “I’m going to bring tails of trade policy to Donald market party, rather than a pro- times see things that are true, you more Obamacare and Trump. But sometimes the ex- How united the Republican Party is in its views on issues and vision business party. We’re focused that too many politicians, too mass immigration.” It’s not pressions in the media of his for the future on the operation of markets many elites in culture and surprising what the results of opposition to trade are over- Mostly Mostly Don’t know/ stated. To my knowledge, Don- united divided didn't answer ald Trump has never said that he’s opposed to trade. He 17% 80% 3% VOICES FROM THE CONFERENCE thinks a lot of our trade deals have been bad for the U.S. And Source: Pew Research Center survey of 2,583 adults in the U.S. (first question) and if you compare some of the 1,070 registered voters within that group (second question), “One of the examples that I really love about AI promises that were made, in conducted by telephone Oct. 20-25, 2016 THE WALL STREET JOURNAL. is going beyond question answering and saying, the last 15, 25 years about ‘Listen, if I have a position or an idea, can a Wat- these trade deals, he’s got a he has a golf course, celebrat- MS. STRASSEL: Where do Don- son-like system give me the pros and cons of the case to make there. ing the Brexit vote. And he said ald Trump and Republicans that day that we need to have a agree or disagree on immigra- idea?’ You know, ‘Do I have to go into this mar- MS. STRASSEL: In what way? free-trade deal with Great Brit- tion? What are the prospects ket? Do I have to make an acquisition? Do I have SEN. COTTON: If you listen to ain, which tells me he’s not op- for a comprehensive immigra- to worry about the economy when there is a cer- politicians who were selling posed to trade deals, he wants tion reform? tain set of parameters, maybe immigration, maybe those deals and you compare better trade deals. SEN. COTTON: Comprehensive the results, there’s simply a immigration reform is a Wash- tax laws, maybe whatever?’ mismatch between the rheto- MS. STRASSEL: Will U.S. trade ington code word for mass im- “If the machine could give you the pros and ric and the results. That’s one policy feature more country-by- migration and amnesty. So the cons that you, as the decision maker, can consider reason why so many people are country deals—and a distinc- prospects for that are very low. RALPH ALSWANG/DOW JONES and make the final decision much more informed, disappointed with politicians in tion between developed coun- Washington, because they con- tries and developing countries? MS. STRASSEL: What are the in a faster way, probably taking more sources of knowledge into account, I sistently do overpromise and SEN. COTTON: Yeah. Bilateral prospects for real reform to think that’s fundamentally better than what we have today.” underdeliver. The day after deals are easier to negotiate our immigration system? Chief Science Officer, Cognitive Computing, IBM British citizens voted to leave than multilateral ones. Donald SEN. COTTON: I hope that we’ll Guruduth Banavar, the European Union, Donald Trump, I think, will probably address this very early, and in Trump was in Scotland, where pursue some of them. a sweeping fashion.

. Exactly. .

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and prevent them where pos- set of policies to help coun- sible. And for each of those tries drive down smoking three aspects of global health rates. Preparing for an Outbreak security, institutions need to In New York City, we were be strengthened and tools able to help 400,000 people need [to be developed]. quit smoking in just a few Everyone should have heard years, saving over 100,000 about something called the lives and extending life expec- Joint External Evaluation. tancy by three years over just If you want to know if a a few years. country is ready to deal with DR. DESMOND-HELLMANN: It is an emergency from the health a profoundly positive inter- sector, currently there’s no vention. The other interven- way to really do that. So what tion we’ve invested in is nutri- we’ve done over the past few tion. Globally, we see both years is get a global consensus overnutrition and undernutri- on an accountable, indepen- tion and poor nutrition. Very dent, objective and transpar- simple things like exclusive ent public rating of all coun- breast-feeding for six months, tries that agree to do it. making sure pregnant women It holds the country ac- have access to good nutrition, countable. It also holds the understanding micronutrients world accountable. If a poor and what’s needed—these country isn’t ready, we’re all kinds of global health inter- at more risk. Let’s channel our ventions are incredibly cost- assistance to close those gaps, effective. That magic time of because a blind spot anywhere your first 1,000 days from con- is a vulnerability everywhere. ception isn’t just important for your stature, it’s important Biggest killer for your cognitive develop- MS. LANDRO: Dr. Frieden, you ment. These are the kinds of Susan Desmond-Hellman and Thomas Frieden did a public-health piece for things that emerging coun-

RALPH ALSWANG/DOW JONES (2) the New England Journal of tries—and businesses working Medicine recently in which you in those countries—are ex- were going to travel on busi- said tobacco was still the larg- tremely interested in. Because Thomas Frieden and Susan Desmond-Hellman ness who were concerned est cause of underlying disease that is your future workforce about their risk should they or in the world. and your future consumers. on being ready for a global health threat their partner become preg- DR. FRIEDEN: Tobacco use con- DR. FRIEDEN: And this is very nant. So understanding these tinues to kill millions of peo- relevant to health-care costs. Infectious-disease out- pathogen. And every day on terms of the danger to the new pathogens, understanding ple globally—in fact, more A nonsmoker costs drastically breaks not only have the po- average, we at CDC start a world? The idea that business what we need to do from a than infectious diseases com- less to care for than a smoker. tential to destabilize societies, new investigation that could will be disrupted, there will be governance standpoint, and bined. And it can be stopped. An ex-smoker costs at least they pose a threat to interna- detect a new pathogen. all sorts of social unrest? having tools, starting with di- If you look at countries and $1,000 less to care for each tional economies, as well. But frankly, pandemic influ- DR. DESMOND-HELLMANN: agnostics so we can spot new communities that have taken year than a smoker. In the U.S. What should public-health of- enza is what worries us most. What we learned from Ebola is pathogens, are a big focus. tobacco prevention seriously, today, there are 10 million ficials and businesses be doing Bill Gates has said there are that there are a couple things they’ve been able to drasti- fewer smokers than there to prepare? really only two things that that are underutilized and not MS. LANDRO: What are the cally reduce tobacco use. were in 2009. And if you think Physicians Thomas Frieden, could kill 10 million people ready. One is governance. Who components of a global-health Mike Bloomberg and his of the payoff, how much the head of the Centers for around the world. Nuclear war makes the call when things security agenda? foundation, along with the higher our health-care costs Disease Control and Preven- and a biological event, either happen? The second thing is DR. FRIEDEN: We have to find Gates Foundation, worked to would be if that weren’t the tion, and Susan Desmond-Hell- intentional or natural. It has having the right tools, which things better, stop them faster come up with a very concrete case, it’s quite substantial. mann, chief executive of the happened before—in 1918 and is why global health research- Bill and Melinda Gates Foun- 1919, 50 million to 100 million and-development is a big fo- dation, sat down with Wall people were killed. Even the cus of our foundation. Street Journal Assistant Man- 1957 influenza pandemic, And the last thing is, even aging Editor Laura Landro to which most people haven’t though the world is worried discuss this issue. Edited ex- heard of, cost 3% of the about something really super cerpts follow. world’s gross domestic prod- scary like in “Contagion,” we uct. Even SARS, a relatively all saw last summer how A Hillary Clinton Adviser ‘Contagion’ scenario small outbreak, cost about $30 something like Zika, which MS. LANDRO: I don’t know how billion. We don’t know when wasn’t thought to be a big many of you have seen the the next one will come, where threat, actually is a particular Looks Back—and Ahead movie “Contagion.” How close it will come from or what it threat for women who can get are we to a scenario like that? will be. But we’re certain there pregnant because it causes a Something that can’t be con- will be a next one. catastrophic birth defect. Gene Sperling is optimistic for the long run tained? From a business standpoint, DR. FRIEDEN: Every year on av- MS. LANDRO: How does the everyone in this room proba- erage we identify one new Gates Foundation see this in bly had young people who ‘My fixed star is having an economy that helps poor and working families live a life of dignity.’

For a look inside the Demo- communities spiral down. policies and message. cratic Party and its economic The Wall Street Journal would like to thank the 2016 sponsors for policies as it ponders what MR. BAKER: Isn’t that the MR. BAKER: Where does your their generous support of the CEO Council annual meeting. happens next, Gerard Baker, Trump message now? You may strand, what we used to think editor in chief of The Wall not agree with his solutions, but of as New Democrats, that Street Journal, interviewed this is what he spoke to, isn’t centrist strand of the Demo- Gene Sperling, economic policy it? What he heard out there in cratic Party, where does that adviser to Hillary Clinton’s the electorate? Why weren’t the go now? campaign, and a former direc- Democrats able to do that? MR. SPERLING: My fixed star is tor of the National Economic MR. SPERLING: Trump did do having an economy that helps Council. Edited excerpts follow. well, to a degree, in expressing poor and working families live that degree of, kind of, outrage. a life of dignity. That allows MR. BAKER: Elizabeth Warren Some of it—“I’m going to slap a people to rise. had a very tough, very popu- 45% tariff, I’m going to pull The reason I am against list Democratic message. Is out”—probably would have TPP [the Trans-Pacific Part- that where the Democratic hurt those very workers. nership trade deal] now, and Party is now headed? Now, maybe what you could why I’m so much more skepti- MR. SPERLING: She is very pas- say is, we were too serious. We cal on trade, is I just do not sionate. But I don’t know that had very aggressive trade believe that until we as a there was that significant of a plans. Plans to deny China mar- country look out for every- policy difference between her ket economy status, to start body, that we can do these and Hillary Clinton. taking cases ourselves, as op- policies where we say, “Hey, posed to industry doing it. She this is going to be slightly MR. BAKER: But Hillary was had a very tough trade posi- good for our efficiency, but seen as Wall Street’s friend. tion, and she truly believes it. random communities, random Nobody really thinks that Hil- As a senator, she felt that up- manufacturing workers are go- lary Clinton would govern like state New York got hurt badly ing to be devastated, and we Elizabeth Warren, do they? by unfair China trade practices. just aren’t going to do any- MR. SPERLING: She has had a It was hard to break thing about it.” bit of a populist streak. I through. But there is a differ- More robust dynamism in think, though, she is some- ence. And this is where Demo- the economy is going to come body who does focus very crats and progressives have an from having more people think much on what you can actually advantage in policy: We’re not there is a stronger compact get done, and that was attrac- just saying, “Oh, that’s a bad for them. And I don’t think tive to a lot of people. trade deal. We’re going to get that’s just about the sharing What you’re seeing in the a better trade deal.” We are economy. I think that’s a more world, whether it’s the Brexit, the ones who are thinking, deep issue in our economy. or here, is an increasing belief “What can we actually do to that the powers of globaliza- reinvest in communities to MR. BAKER: One of the things tion, automation, politics, fi- prevent communities from a that last Tuesday underlined is nance are having a greater im- downward spiral?” how disastrous the last eight pact hollowing out than Perhaps this was a moment years have been for the Demo- strengthening middle classes. where having a fuller strategy cratic Party. You’re in a worse FOR MORE INFORMATION VISIT CEOCOUNCIL.WSJ.COM And when that happens, people did not do as well as just ex- position now than you’ve been start to lose faith that that pressing the outrage. This is for a generation. growth is in everyone’s interest. one of the places where I MR. SPERLING: I imagine you could con- would tell Democrats and pro- coming into a terrible finan- vince some people that maybe gressives, improve the policies cial crisis was no doubt a trade flows have, in some and improve the message. I mixed blessing. It does help ways, had a positive impact on still believe that because we’re you get re-elected. But it GDP. But when they look at willing to try to use govern- makes it hard to completely whether it’s benefiting all of ment in a way that can still meet the expectations of peo- us, they say, “Oh, those are ne- empower people, help their ple when you’re overcoming ©2016 Dow Jones & Co., Inc. All rights reserved. 3DJ4562 gotiated by big companies and lives, in the long run we’re go- the worst recession and crisis elites,” and the fact is, certain ing to do better with those since the Great Depression. THE WALL STREET JOURNAL. Tuesday, November 22, 2016 | R9 JOURNAL REPORT | CEO COUNCIL

‘Probably 60% to 65% On the Front Lines of the total activity we see of concern is criminal. It’s not Of a Borderless War nation-states.’ Michael Rogers says to combat cyberattacks, the key is a public-private partnership

Cyberattacks represent an the government. nation-states doing this. But expanding and perilous front And we’re going, “Look, if you see criminal groups pene- line for companies and the you want us to provide value trating networks to steal in- government. What do we do and insight to you, then the formation that they think they about a borderless war that only way this is going to work can sell to someone. has impacted business across is if we get full access to your At the same time, you also the world and even a presiden- network and your data. It’s the have nation-states who you tial campaign? only way we can really gener- find are engaged in actions de-

The Wall Street Journal’s ate the level of insight that I signed to penetrate the net- PAUL MORSE/DOW JONES (2) Rebecca Blumenstein spoke think you expect from us. I re- works within the commercial with Adm. Michael S. Rogers, alize that that may make you sector. I think it is totally unrealis- head of the National Security uncomfortable. You’re opening You also find individuals tic to expect the private sector Agency Worries Agency and commander of the your structure. You’re opening and groups who are brought to withstand the onslaught of A survey of executives involved in cybersecurity at federal U.S. Cyber Command. Here are your networks. You’re opening together for specific purposes activity that is being directed government agencies found doubts about the agencies' preparedness. edited excerpts of the discus- your data. You have to be under a specific ideology or against them by nation-states sion. comfortable with that.” focus. They’ll harness that in- and other actors. Strongly agree Agree What are the top three They came back to us and terest to a specific outcome. Likewise, I don’t think it’s Disagree Strongly disagree factors that hinder your Cause for concern said, “We’re comfortable with “Hey, let’s do the following be- realistic to say, “Well, the gov- agency’s ability to advance MS. BLUMENSTEIN: How wor- that. What we ask you to do is cause we’re all united by the ernment’s going to do this.” My agency is fully aware of cybersecurity efforts? ried should CEOs be about the inform us of what you’re doing idea we don’t like this particu- The challenge with the gov- where our key assets are state of cybersecurity? while you’re doing it. And you lar policy.” We have seen ernment doing it is if you Lack of funding ADM. ROGERS: Do we have a stick to that.” Anonymous engage in activi- want me to defend something, 10% 65% 15% challenge here that requires ties against nation-states, I can’t do it from the outside. Absence of accountability attention? Yes. Is there a role MS. BLUMENSTEIN: But there companies, individuals. It’s like fighting with one hand for CEOs to play in this? Yes. were things that went wrong. I don’t want it to get to the tied behind your back. It’s not 48% 31% You don’t want your network- It took a long time for them to point where it takes some sig- realistic, and it doesn’t gener- Lack of understanding 44% security team deciding unilat- detect this, right? nificant calamity to drive us to ally lead to positive outcomes. 48% erally what’s important. You ADM. ROGERS: It doesn’t matter the conclusion that we’ve got as the leader need to set that if it’s a commercial network, if to do something different than Addressing WikiLeaks Lack of expertise tone. I do that in my own or- it’s a government network. what we’re doing now. The ul- MS. BLUMENSTEIN: I have to 44% ganization. Networks that I have been timate solution in my mind is ask about WikiLeaks. You told My agency struggles to Lack of time accountable for defending, we how do you bring this public- NPR in August, “These emails understand how cyber attackers 30% MS. BLUMENSTEIN: What can generally find there’s a signifi- private partnership? were clearly leaked for a rea- could potentially breach our go wrong? It was now two cant time lag for most organi- The agreement I always son, and they were leaked, I networks and access our data. Lack of training years ago when the Sony hack zations between discovery of reach with whoever we’re believe, to achieve an effect.” happened. What can we learn? activity and the actual time working with is: I will not use What can you tell us? 22% 10% ADM. ROGERS: I thought the the adversary initially pene- the data we gain for anything ADM. ROGERS: There’s an on- 13% Lack of interest positives were great collabora- trated the network. other than the exact purpose I going investigation. I’m just 22% tion between a private com- communicate to you. not getting into the specifics. pany—they knew they were Who’s attacking? Traditionally as a nation, I still think there shouldn’t be 31% Other dealing with something. They MS. BLUMENSTEIN: How con- we have very much differenti- any doubt in anybody’s mind. 46% 20% felt they needed to reach out cerned should we be about ated between what is the role This was not something done to the government. state actors? of the government, and what casually. This was not some- Lack of information They could have sat there ADM. ROGERS: Probably 60% to is the role of the private sec- thing done by chance. This 2% and said to themselves, “We 65% of the total activity we tor. was not a target that was se- really need to minimize this. see of concern is criminal. It’s Cyber does not recognize lected purely arbitrarily. This Source: (ISC)2 and KPMG survey, conducted online and in person in March 2016, of 54 cyber executives who identified themselves as U.S. federal senior managers or contractors Let’s not really confront this not nation-states. Criminal ac- these arbitrary lines that we was a conscious effort by a na- with cybersecurity responsibility in government. The online survey request was distributed publicly.” They were very up tivity includes theft of intel- have drawn. It doesn’t recog- tion-state to attempt to to personnel from defense, civilian and intelligence agencies and government contractors front when they approached lectual property. You also see nize geography. achieve a specific effect. and consultants. THE WALL STREET JOURNAL.

integrity, who are honest, who I don’t get paid to serve the want to do the right thing. president. I get paid to serve Keeping Corporate Executives Honest the public and what I think is MS. BLUMENSTEIN: Would you in the interest of justice, no Preet Bharara says there is a reason everyone talks about setting be interested in a position in matter who the president is. the Trump administration? Part of the election, on both the right tone at the top. It’s because it makes a difference. MR. BHARARA: I was going to sides, was about whether sys- put in for secretary of state. tems are rigged. And I can tell sponsibility is to make sure you, from cases we have that anybody you charge gets MS. BLUMENSTEIN: That might brought, there’s a lot that’s ‘Part of the job is not a fair trial. I have never spo- be taken. But seriously, your rigged on the Street and in justtoholdpeople ken anywhere outside of the interests, could they be politics. And the people in my four corners of the complaint aligned? office, in an apolitical way, accountable. It’s also or the indictment. MR. BHARARA: Idomyjob.I spend day after day after day to deter, to raise But when you have a spate love my job. It’s the best job I doing those kinds of cases. of problems, for example, if ever had. And it’s probably the I would like to think that public awareness.’ you have a gang problem in best job I will ever have. And I the level of aggressiveness in Newburgh, New York, which serve at the pleasure of the law enforcement will remain we have had, I talk about it. president. That’s true of Presi- the same, when you’re talking When you have a prescription- dent Obama. That will be true about things like keeping the pill problem that is killing of President Trump. And if markets fair and government more people than traffic acci- and when a president decides honest. I don’t foresee any de- dents and guns these days, that they want to replace me, parture from that, unless I’m and more people are ODing I’ll ride off into the sunset. missing something big. from prescription pills and dy- ing than from cocaine and, I think, heroin combined, then you talk about that problem. When you have assembly- It’sprivateairtravel,reimagined. men and senators in my home

RALPH ALSWANG/DOW JONES state of New York going to prison at an alarming rate, It’s a belief rooted in service, As U.S. Attorney for the CEOs? MS. BLUMENSTEIN: Every com- then you talk about the prob- peace and comfort. Southern District of New York, MR. BHARARA: Ihavecometo pany has rules, all sorts of lem. Because part of the job is a big part of Preet Bharara’s really love the sound of ner- best practices. What is a spe- not just to hold people ac- It’s knowing needs, job is keeping companies hon- vous laughter. cific role of a CEO? countable. It’s also to deter, to names, tastes. est—and he’s made a name for MR. BHARARA: It’s a cliché for raise public awareness. himself with very high-profile MS. BLUMENSTEIN: You talk a everyone in the room to talk I get invited to speak to It’s a calm breath. prosecutions. The Wall Street lot about the importance of about tone at the top. And groups like this but also to Awarmsmile. Journal’s Rebecca Blumenstein culture in companies. Why is it there’s a reason some things doctor and business students spoke with Mr. Bharara about so important? are clichés. They matter. because people have some in- the role of CEOs in setting cor- MR. BHARARA: In addition to You need to have a compli- terest in knowing how we An unexpected courtesy. porate ethics, his own style of being the chief federal law-en- ance department. But you also think about prosecution, what prosecution and his possible forcement officer in Manhat- need a charter for the place, we think the problems are, It’s your reason for flying. future under Donald Trump. tan, I’m sort of the CEO of my so that people understand not and how maybe the good peo- Becoming our reason for flying. Here are edited excerpts of the institution. I have to make de- just that you’re supposed to ple can help to solve those discussion. cisions, every day, about how follow these particular rules problems. I speak at every we allocate our resources, who because the CFPB or the FTC business school around. And Setting the tone we promote, what our priori- or whoever cares about them. I’ve been doing it for a num- It’s where. It’s why. MS. BLUMENSTEIN: Given that ties are. For my office to suc- When a new employee ber of years. It’s Sentient. part of your job involves pros- ceed and to do well, I have to comes in does someone say, I go to Harvard Business ecuting companies and occa- care about culture a lot. No “You should understand, apart School. Every February, for sionally CEOs, what are you CEO worth his or her salt from the regulations and the five or six years running, I doing talking to a room full of would think otherwise. compliance policy, we don’t speak to the first-year class. I lie. We don’t cheat. We don’t sit in on the day when they steal. If you do, you’re out.” talk about . Then we talk more broadly Prosecutorial reach about ethics and integrity and VOICES FROM THE CONFERENCE MS. BLUMENSTEIN: You faced how they should think about criticism for overreaching on conducting themselves to “I think the companies some insider-trading cases avoid problems. And I say, who are going to be suc- and also a sense of prosecut- “Look, I’m here. It’s not just a cessful, as we move deeper ing some of them in the media. scared-straight program for MR. BHARARA: The vast major- white-collar people,” although into this second machine ity of insider-trading cases we it’s a little bit that. “And I’m age, are the evidence- brought have resulted in con- not just directing my words to driven, outward-looking victions, and those convictions the ears of the two or three of platform builders with were upheld on appeal. you at Harvard Business geeky leadership.” There’s a small subset of cases School who, statistically we argued that the appeals speaking, are likely to commit DISCOVERAHIGHERLEVEL Andrew McAfee, court in New York got wrong. serious , al- OF PRIVATE AVIATION AT SENTIENT.COM Co-Director, Initiative on the Digital Economy, though I know who you are.” MS. BLUMENSTEIN: What about It’s more to direct my Massachusetts Institute of Technology 877.534.3003 trying cases in the press? words to the ears of the vast MR. BHARARA: One first re- majority of people who have R10 | Tuesday, November 22, 2016 THE WALL STREET JOURNAL.

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