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1、Resolute Annual Report 2024Financial HighlightsAs of or for the year ended December 31,(in millions,except per share,ratio data and employees)2024 2023 2022Selected income statement dataTotal net revenue$177,556(d)$158,104$128,695Total noninterest expense 91,797(d)87,172 76,140Pre-provision profit(a

2、)85,759 70,932 52,555Provision for credit losses 10,678 9,320 6,389 Net income$58,471$49,552$37,676 Per common share data Net income per share:Basic$19.79$16.25$12.10 Diluted 19.75 16.23 12.09Book value per share 116.07 104.45 90.29Tangible book value per share(TBVPS)(a)97.30 86.08 73.12Cash dividen

3、ds declared per share 4.80 4.10 4.00Selected ratiosReturn on common equity 18%17%14%Return on tangible common equity(ROTCE)(a)22 21 18Liquidity coverage ratio(average)(b)113 113 112Common equity Tier 1 capital ratio(c)15.7 15.0 13.2Tier 1 capital ratio(c)16.8 16.6 14.9Total capital ratio(c)18.5 18.5

4、 16.8Selected balance sheet data(period-end)Loans$1,347,988$1,323,706$1,135,647Total assets 4,002,814 3,875,393 3,665,743Deposits 2,406,032 2,400,688 2,340,179Common stockholders equity 324,708 300,474 264,928Total stockholders equity 344,758 327,878 292,332Market data Closing share price$239.71$170

5、.10$134.10Market capitalization 670,618 489,320 393,484Common shares at period-end 2,797.6 2,876.6 2,934.2Employees 317,233 309,926 293,723(a)Pre-provision profit,TBVPS and ROTCE are each non-GAAP financial measures.Refer to Explanation and Reconciliation of the Firms Use of Non-GAAP Financial Measu

6、res on pages 6769 for a discussion on these measures.(b)Refer to Liquidity Risk Management on pages 108-115 for additional information on this measure.(c)Refer to Capital Risk Management on pages 97-107 for additional information on these measures.(d)Total net revenue included a$7.9 billion net gain

7、 related to Visa shares,and total noninterest expense included a$1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation,both recorded in the second quarter of 2024.Refer to Executive Overview on pages 54-58 and Notes 2 and 6 for additional information on the exchange offer for Visa

8、 Class B-1 common stock.JPMorganChase(NYSE:JPM)is a leading financial services firm with assets of$4.0 trillion and operations worldwide.The firm is a leader in investment banking,financial services for consumers and small businesses,commercial banking,financial transaction processing and asset mana

9、gement.Under the J.P.Morgan and Chase brands,the firm serves millions of customers,predominantly in the U.S.,and many of the worlds most prominent corporate,institutional and government clients globally.Information about J.P.Morgans capabilities can be found at and about Chases capabilities at .Info

10、rmation about JPMorganChase is available at .2024Year of FirstsCOMMERCIAL&INVESTMENT BANKGenerated$25 billion of net income on revenue of$70 billion#1#1 IN DEPOSITS AND FOR SMALL BUSINESSESNamed#1 in retail deposit market share and#1 primary bank for U.S.small businessesMIDDLE MARKET SYNDICATED LEND

11、ERRanked#1 overall Middle Market Syndicated Lender in the U.S.#1 IN ARTIFICIAL INTELLIGENCERanked#1 for overall artificial intelligence capabilities on the Evident AI Index for the third year in a row#1 IN CUSTOMER SATISFACTIONRanked#1 among self-directed investors in the J.D.Power 2024 U.S.Wealth M

12、anagement Digital Experience Study#1 MOST ADMIRED COMPANIESRanked in the top 10 on Fortune magazines Most Admired Companies list for the eighth year in a rowTOP 10TOP COMPANIESRanked#1 on LinkedIns 2024 Top Companies list,which ranks the 50 best large U.S.companies for career growth#1PRIVATE BANK AN

13、D ASSET MANAGERNamed Best Private Bank in the World by Global Finance magazine and#1 asset manager by active flows#11Dear Fellow Shareholders,Jamie Dimon,Chairman and Chief Executive OfficerAcross the globe,2024 was yet another year of significant challenges,from the terrible ongoing war and violenc

14、e in Ukraine and conflicts in the Middle East to ongoing terrorist activity and growing geopolitical tensions,importantly with China.Our hearts go out to those whose lives are profoundly affected by these events.JPMorganChase,a company that historically has worked across borders and boundaries,will

15、do its part to ensure that the global economy is safe and secure,but it is not immune to the effects of these events.Two things are absolutely foundational to the long-term success of JPMorganChase:one is whether we run a great company and two,which is maybe more important,is whether the long-term h

16、ealth of America,domestically,and the future of the free and democratic world are strong.In the first two sections of this letter,I deal with these critical issues.And in the third and fourth sections,I talk about specific issues unique to JPMorganChase and how we are addressing them,including const

17、antly fighting complacency,arrogance and bureaucracy.2 2INTRODUCTION1 Represents managed revenue.2 Adjusted ROTCE of 20%excludes$5.4 billion from net income in 2024 as a result of the net gain related to Visa shares and the donation of Visa shares to pre-fund contributions to the Firms Foundation.Th

18、is is a non-GAAP financial measure.Despite the unsettling landscape,the U.S.economy,at least until recently,continued to be resilient,with consumers still spending(though with some recent weakening)and businesses still healthy.It is important to note that the economy has been fueled by large amounts

19、 of government deficit spending and past stimulus.There also remains a growing need for increased expenditure on infrastructure,the restructuring of global supply chains and the military,which may lead to stickier inflation and ultimately higher rates than markets currently expect.The recent tariffs

20、 will likely increase inflation and are causing many to consider a greater probability of a recession.And even with the recent decline in market values,prices remain relatively high.These significant and somewhat unprecedented forces cause us to remain very cautious.There is much more detail on all

21、of this in section three.2024 was another strong year for JPMorganChase,with our firm generating record revenue for the seventh consecutive year,as well as setting numerous records in each of our lines of business.We earned revenue in 2024 of$180.6 billion1 and net income of$58.5 billion,with return

22、 on tangible common equity(ROTCE)of 20%2,reflecting strong underlying performance across our businesses.We also increased our quarterly common dividend of$1.05 per share to$1.15 per share in the first quarter of 2024 and again to$1.25 per share in the third quarter of 2024 while continuing to reinfo

23、rce our fortress balance sheet.We grew market share in several of our businesses and contin-ued to make significant investments in products,people and technology while exercising strict risk disciplines.Throughout the year,we demonstrated the power of our investment philosophy and guiding principles

24、,as well as the value of being there for clients as we always are in both good times and bad times.The result was continued broad healthy growth across the firm.The charts on pages 612 show our performance results and illustrate how we have grown our franchises,how we compare with our competitors an

25、d how we look at our fortress balance sheet.Please peruse them and the CEO and COO letters in this Annual Report,all of which provide specific details about our businesses and our plans for the future.In 2024,we continued to play a forceful and essential role in advancing economic growth.In total,we

26、 extended credit and raised capital totaling$2.8 trillion for our consumer and institutional clients around the world.3 3 INTRODUCTIONOn a daily basis,we move over$10 trillion in 120+currencies and more than 160 countries,as well as safeguard over$35 trillion in assets.After we purchased and effecti

27、vely fully integrated First Republic Bank,that bank failure disappeared as a negative issue for the U.S.economy.In addition to bringing much-needed stability to the U.S.banking system,we were able to give a new,secure home to approximately half a million First Republic customers.While we have modifi

28、ed our approach to certain corporate responsibilities to conform to new guidance,we remain committed to reaching out to all communities in an effort to create a stronger,more inclusive economy from supporting work skills training programs around the world and financing affordable housing and small b

29、usinesses to making investments in our people and in cities like Detroit that show how business and government leaders can work together to solve problems.Almost all of these efforts are commercial in nature;i.e.,“profit seeking”and are no different from what businesses,large and small,are trying to

30、 do in towns across America.We have achieved our decades-long consistency by adhering to our key principles and strategies(see sidebar on Steadfast Principles on page 5),which allow us to drive good organic growth and promote proper management of our capital(including dividends and stock buybacks).I

31、 remain proud of our companys resiliency and of what our hundreds of thousands of employees around the world have achieved,collectively and individually.Throughout these recent challenging years,we have never stopped doing all the things we should be doing to serve our clients and our communities.As

32、 you know,we are champions of bankings essential role in a community its potential for bringing people together,for enabling companies and individuals to attain their goals,and for being a source of strength in difficult times.I often remind our employees that the work we do matters and has impact.U

33、nited by our principles and purpose,we help people and institutions finance and achieve their aspirations,lifting up individuals,homeowners,small businesses,larger corporations,schools,hospitals,cities and countries in all regions of the world.What we have accomplished in the 20+years since the JPMo

34、rganChase and Bank One merger is evidence of the importance of our values.4 4INTRODUCTIONSteadfast Principles Worth Repeating Looking back on the past two+decades starting from my time as Chairman and CEO of Bank One in 2000 there is one common theme:our unwavering dedication to help clients,communi

35、ties and countries throughout the world.Clearly our financial disci-pline,constant investment in innova-tion and ongoing development of our people have enabled us to achieve this consistency and commitment.In addi-tion,across the firm,we uphold certain steadfast tenets that are worth repeating.First

36、,our work has very real human impact.While JPMorganChase stock is owned by large institutions,pension plans,mutual funds and directly by single investors,the ultimate beneficia-ries,in almost all cases,are individuals in our communities.More than 100 million people in the United States own stocks;ma

37、ny,in one way or another,own JPMorganChase stock.Frequently,these shareholders are veterans,teach-ers,police officers,firefighters,health-care workers,retirees,or those saving for a home,education or retirement.Often,our employees also bank these shareholders,as well as their families and their comp

38、anies.Your management team goes to work every day recogniz-ing the enormous responsibility that we have to all of our shareholders.Second,shareholder value can be built only if you maintain a healthy and vibrant company,which means doing a good job of taking care of your custom-ers,employees and com

39、munities.Conversely,how can you have a healthy company if you neglect any of these stakeholders?As we have learned over the past few years,there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still strengthening shareholder value.Third,while

40、 we dont run the company worrying about the stock price in the short run,in the long run we consider our stock price a measure of our prog-ress over time.This progress is a func-tion of continual investments in our people,systems and products,in good and bad times,to build our capabilities.These imp

41、ortant investments will also drive our companys future prospects and position it to grow and prosper for decades.Measured by stock perfor-mance,our progress is exceptional.For example,whether looking back 10 years or even further to 2004,when the JPMorganChase/Bank One merger took place,we have outp

42、erformed the Standard&Poors 500 Index and the Standard&Poors Financials Index.Fourth,we are united behind basic prin-ciples and strategies(you can see the principles for How We Do Business on our website and our Purpose statement in my letter from 2022)that have helped build this company and made it

43、 thrive.These allow us to maintain a fortress balance sheet,constantly invest and nurture talent,fully satisfy regulators,continually improve risk,governance and controls,and serve customers and clients while lifting up communities worldwide.This philosophy is embed-ded in our company culture and in

44、flu-ences nearly every role in the firm.Fifth,we strive to build enduring busi-nesses,which rely on and benefit from one another,but we are not a conglom-erate.This structure helps generate our superior returns.Nonetheless,despite our best efforts,the walls that protect this company are not particul

45、arly high and we face extraordinary competi-tion.I have written about this reality extensively in the past and cover it again in this letter.We recognize our strengths and vulnerabilities,and we play our hand as best we can.Sixth,we must be a source of strength,particularly in tough times,for our cl

46、ients and the countries in which we operate.We must take seriously our role as one of the guardians of the worlds financial systems.Seventh,we operate with a very import-ant silent partner the U.S.government noting,as my friend Warren Buffett points out,that his companys success is predicated upon t

47、he extraordinary conditions our country creates.He is right to say to his shareholders that when they see the American flag,they all should say thank you.We should,too.JPMorganChase is a healthy and thriving company,and we always want to give back and pay our fair share.We do pay our fair share and

48、we want it to be spent well and have the greatest impact.To give you an idea of where our taxes and fees go:In the last 10 years,we paid more than$52 billion in federal,state and local taxes in the United States and over$26 billion in taxes out-side of the United States.Additionally,we paid the Fede

49、ral Deposit Insurance Corporation over$11 billion so that it has the resources to cover failures in the American banking sector.Our partner the federal government also imposes significant regulations upon us,and it is imperative that we meet all legal and regulatory requirements imposed on our compa

50、ny.Eighth and finally,we know the founda-tion of our success rests with our people.They are the front line,both individually and as teams,serving our customers and communities,building the technology,making the strategic decisions,managing the risks,deter-mining our investments and driving innovatio

51、n.However you view the world its complexity,risks and opportunities a companys prosperity requires a great team of people with guts,brains,integrity,enormous capabilities and high standards of professional excel-lence to ensure its ongoing success.56?Net income?Diluted earnings per share(EPS)?Return

52、 on tangible common equity(ROTCE)20242023202220212020201920182017201620152014201320122011201020092008200720062005$8.5$15.4$17.4$19.0$21.3$17.9$21.7$24.4$14.4$24.7$24.4$26.9$38.4$36.4$37.7$49.6$53.0$48.3$58.5$32.5?15%24%22%6%10%15%15%15%11%13%13%12%17%19%14%23%18%21%22%13%?$4.00$4.33$1.35$2.26$3.96$4

53、.48$5.19$4.34$5.29$6.00$6.31$10.72$15.36$12.09$16.23$19.75?$8.88?$9.00$6.19$2.35$5.6$11.7$29.1$39.11 Adjusted net income excludes$2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act(TCJA).This a non-GAAP financial measure.2 Effective January 1,2020,the Firm

54、adopted the Financial Instruments Credit Losses accounting guidance.Firmwide results excluding the net impact of reserve release/(build)of$(9.3)billion and$9.2 billion for the years ending December 31,2020 and 2021,respectively,are non-GAAP financial measures.3 Adjusted net income excludes$5.4 billi

55、on from net income in 2024 as a result of the net gain related to Visa shares and the donation of Visa shares to pre-fund contributions to the Firms Foundation.This a non-GAAP financial measure.GAAP=Generally accepted accounting principlesNet income excluding TCJA1Net income excluding reserve releas

56、e/build2ROTCE excluding TCJA1 was 13.6%for 2017ROTCE excluding reserve release/build2 was 19.3%for 2020 and 18.5%for 2021ROTCE excluding Visa gain(net of contribution)3 was 19.9%for 2024Earnings,Diluted Earnings per Share and Return on Tangible Common Equity20052024($in billions,except per share and

57、 ratio data)Net income excluding Visa gain(net of contribution)37Tangible Book Value and Average Stock Price per Share20052024High:$254.31 Low:$164.30?Tangible book value?Average stock price 20242023202220212020201920182017201620152014201320122011201020092008200720062005$60.98$66.11$71.53$73.12$86.0

58、8$97.30$56.33$16.45$18.88$21.96$22.52$27.09$30.12$33.62$38.68$40.72$44.60$48.13$51.44$53.56$36.07$43.93$47.75$39.83$35.49$40.36$39.36$39.22$51.88$58.17$63.83$65.62$113.80$106.52$155.61$128.13$144.05$205.20$110.72$92.01 CAGR=Compound annual growth rate10%CAGRsince 2005Stock total return analysisBank

59、OneS&P 500 IndexS&P Financials IndexPerformance since becoming CEO of Bank One(3/27/200012/31/2024)Compounded annual gain13.2%7.6%5.8%Overall gain2,065.0%512.2%304.3%JPMorganChase S&P 500 IndexS&P Financials IndexPerformance since the JPMorganChase and Bank One merger(7/1/200412/31/2024)Compounded a

60、nnual gain12.3%10.5%5.9%Overall gain978.1%668.5%222.1%Performance for the period ended December 31,2024 Compounded annual gain One year44.3%25.0%30.6%Five years14.7%14.5%11.7%Ten years17.6%13.1%11.4%This chart shows actual returns of the stock,with dividends reinvested,for heritage shareholders of J

61、PMorganChase and Bank One vs.the Standard&Poors 500 Index(S&P 500 Index)and the Standard&Poors Financials Index(S&P Financials Index).8 2005 2014 2023 2024Consumer&CommunityBankingAverage deposits($B)1Deposits market share2#of top 50 markets where we are#1(top 3)Business Banking primary market share

62、3Client investment assets($B)1Total payments volume($T)4%of digital non-card payments5 Credit card sales($B)Debit card sales($B)Debit and credit card sales volume($B)Credit card sales market share6Credit card loans($B,EOP)Credit card loans market share7Active mobile customers(M)#of branches#of advis

63、ors1$187 4.5%6(12)4.0%NA NA 20%$225 NA NA 15%$142 19%NA 2,641 NM$487 7.9%7(22)7.2%$213$1.6 49%$466$241$707 21%$131 17%19.1 5,602 3,090$1,127 11.4%12(25)9.5%$951$5.9 79%$1,164$515$1,679 23%$211 17%53.8 4,897 5,456$1,064 11.3%14(25)9.7%$1,088$6.4 81%$1,259$546$1,805 23%$233 17%57.8 4,966 5,755 Serve 8

64、4M U.S.consumers and 7M small businesses 71M active digital customers8,including 58M active mobile customers9 Primary bank relationships for 80%of consumer checking accounts#1 retail deposit share#1 deposit market share position in 4 out of 5 largest banking markets in the country(NY,LA,CHI and SF)w

65、hile maintaining branch presence in all 48 contiguous U.S.states#1 primary bank for U.S.small businesses Ranked#1 in J.D.Power 2024 U.S.Wealth Management Digital Experience Satisfaction among full-service and self-directed investors10#1 U.S.credit card issuer based on sales and outstandings11#1 owne

66、d mortgage servicer12 Ranked#3 in the J.D.Power 2024 U.S.Mortgage Servicer Satisfaction Study13#3 bank auto lender for loan and lease financing14 Ranked#1 in J.D.Power 2024 Digital Experience for Customer Satisfaction among Non-Captive Automotive Finance Lenders15Commercial&InvestmentBankTotal Marke

67、ts revenue16 Market share16 FICC16 Market share16 Equities16 Market share16Global investment banking fees17 Market share17Assets under custody($T)Average client deposits($B)18 Average CB client deposits($B)19Payments revenue($B)20Payments revenue rank(share)21Firmwide average daily security purchase

68、s and sales($T)#of top 75 MSAs with dedicated teams22Average Banking&Payments loans($B)23 Average CB Loans($B)24 Average GCB&GIB Loans($B)23Multifamily lending25#of Global Banking Bankers26#of CB Bankers#of GCB Bankers#of GIB Bankers 2006#8 6.3%#7 7.0%#8 5.0%#2 8.7%$10.7$220.8$66.1$4.9 NA NA 35$117.

69、0$38.1$75.3#29 NA NA NA NA#1 8.7%#1 9.0%#3 8.0%#1 8.2%$20.5$621.4$124.6$7.9 NA NA 55$219.0$112.5$105.0#1 NA NA NA NA#1 11.2%#1 10.8%#2 12.2%#1 8.6%$32.4$912.9$174.1$18.3#1(9.3%)$3.0 72$340.8$209.2$131.2#1 9,272 3,469 1,408 3,574#1 11.4%#1 10.9%#2 12.4%#1 9.3%$35.3$961.6$179.5$18.4#1(9.5%)$3.4 74$348

70、.8$220.3$128.1#1 9,726 3,700 1,453 3,858 90%of Fortune 500 companies do business with us On-ground presence in 177 locations in the U.S.,60+countries internationally and serving clients in 100+markets#1 in global investment banking fees for the 16th consecutive year and ranked#1 across M&A,ECM and D

71、CM for the first time in a calendar year17 Consistently ranked#1 in Markets revenue since 201116 J.P.Morgan Research ranked as the#1 Global Research Firm,#1 Global Equity Research Team and#1 Global Fixed Income Research Team27#1 in USD payments volume with 28.7%USD SWIFT market share28#1 in U.S.Merc

72、hant volume processing29#3 Custodian globally by revenue30 Banking and Payments services to 32K+Middle Market clients and 38K+real estate owners and investors$2.6B revenue from Middle Market expansion,as well as nearly 2,700 new relationships in Middle Market Banking#1 overall Middle Market Bookrunn

73、er in the U.S.with 20 specialized industry coverage teams31 Over 8K incremental affordable housing units financed in 2024 within Global Banking32Asset&Wealth ManagementJPMAM LT funds AUM performed above peer median(10-year)33Client assets($T)34Traditional assets($T)34,35Alternatives assets($B)34,36A

74、verage deposits($B)34Average loans($B)34#of Global Private Bank client advisors34 NA$1.1$1.0$74$42$27 1,484 82%$2.3$1.9$221$146$95 2,392 83%$5.0$4.4$421$216$220 3,515 85%$5.9$5.2$504$235$228 3,775 181 funds with a 4/5 star rating37 Business with 57%of the worlds largest pension funds,sovereign wealt

75、h funds and central banks#2 in 5-year cumulative net client asset flows38#1 in active flows39 Positive client asset flows in 2024 across all regions,channels and asset classes#1 in active ETF flows and#2 in active ETF AUM39#1 in Institutional Money Market Funds AUM40#1 Private Bank in the World41AUM

76、=Assets under management ETF=Exchange-traded funds LT=Long-Term USD=U.S.dollarCB=Commercial Banking FICC=Fixed income,currencies and commodities M&A=Mergers and acquisitions M=Millions DCM=Debt capital markets GCB=Global Commercial Banking MSA=Metropolitan statistical area B=Billions ECM=Equity capi

77、tal markets GIB=Global Investment Banking NA=Not available T=TrillionsEOP=End of period JPMAM=J.P.Morgan Asset Management NM=Not meaningful K=ThousandsFor footnoted information,refer to pages 58-59 in this Annual Report.Client Franchises Built Over the Long TermDRAFT 3/7/25,TYPESET:3/17/25 REV.4/6/2

78、5_r1 v.25_JD_client franchises_139New and Renewed Credit and Capital for Our Clients20052024($in billions)1 In alignment with the business segment reorganization effective in the second quarter of 2024,Corporate Client Banking activity was moved from Small Business,Middle Market and Commercial clien

79、ts to Corporate clients starting in 2024.2 Government,government-related and nonprofits available starting in 2019;included in Corporate clients and Small Business,Middle Market and Commercial clients for prior years.?Corporate clients?Small Business,Middle Market and Commercial clients1?Consumers?G

80、overnment,government-related and nonprofits2 20242023202220212020201920182017201620152014201320122011201020092008200720062005$1,090$165$310$1,120$135$245$1,160$165$250$1,390$220$250$1,260$1,520$280$310$275$275$1,690$400$265$1,620$430$260$1,790$480$225$1,350$440$225$335$290$215$250$615$1,290$465$245$

81、260$640$1,930$1,330$205$240$590$270$250$510$1,230$1,770$330$1,440$370$235$1,620$325$195$1,500$1,575$1,860$1,815$2,105$2,355$2,310$2,495$2,350$3,190$2,410$2,265$2,800$2,260$2,045$2,140$1,565$1,900 estimated101 Represents assets under management,as well as custody,brokerage,administration and deposit

82、accounts.2 Represents activities associated with the safekeeping and servicing of assets.Assets Entrusted to Us by Our Clients20052024Deposits and client assets1($in billions)Assets under custody2($in trillions)?Client assets?Wholesale deposits?Consumer deposits20242023202220212020201920182017201620

83、152014201320122011201020092008200720062005$1,883$730$398$2,061$755$439$2,329$824$464$2,376$861$503$2,353$2,427$722$757$558$618$3,255$3,617$3,740$3,633$3,802$3,781$4,240$1,186$1,209$959$1,132$5,926$6,580$6,383$1,349$1,057$8,789$5,292$1,306$1,095$7,693$4,488$1,314$1,148$6,950$3,258$844$718$4,820$2,740

84、$792$679$4,211$2,783$784$660$4,227$3,011$1,881$558$372$2,811$1,743$573$365$2,681$1,415$648$361$2,424$1,513$520$221$2,254$1,296$425$214$1,935$1,107$364$191$1,66220242023202220212020201920182017201620152014201320122011201020092008200720062005$16.9$18.8$20.5$13.2$10.7$13.9$15.9$14.9$16.1$20.5$19.9$20.5

85、$23.5$23.2$26.8$33.2$32.4$35.3$31.0$28.611JPMorganChase Exhibits Strength in Both Efficiency and Returns When Compared with Large Peers1 and Best-in-Class Peers1Year ended December 31,2024EfficiencyReturnsOverhead ratio2 ROTCEJPMorganChaseEfficiencyReturns JPM overhead ratioBest-in-class peer overhe

86、ad ratio4JPMROTCEBest-in-class peer ROTCE5,7Best-in-class GSIB peer ROTCE6,7Consumer&Community Banking 53%51%COF-DC&CB 32%25%BAC-CB 25%BAC-CBCommercial&Investment Bank 50%56%BAC-GB&GM 18%15%GS-GBM 15%GS-GBMAsset&Wealth Management 67%62%NTRS-WM&ALLIANZ-AM 34%41%MS-WM&IM 41%MS-WM&IMGSIB=Global systemi

87、cally important bank ROTCE=Return on tangible common equityFor footnoted information,refer to page 59 in this Annual Report.*FOOTNOTES MOVED TO BACK PAGE25_JD_best-in-class_peers_0925_JD_best-in-class_peers_09.epsDRAFT 2/28/25 TYPESET:3/14/25 REV.4/6/25_r1 v.25_JD_best-in-class_peers_0971%66%65%65%6

88、3%51%MSCBACWFCGSJPM7%13%13%14%19%22%20%CBACWFCGSMSJPMAdjusted ROTCE excluding Visa gain (net of contribution)325_JD_daily payment_v.0425_JD_daily payment_02.epsDRAFT 3/4/25:TYPESET 3/14/25 REV.4/2/25 v.25_JD_daily payment_v.04Daily Average Cash Management Volume1 and Value1(#in millions,$in trillion

89、s)Daily Average Merchant Transactions and Settlement Value(#in millions,$in billions)1 Based on regulatory reporting guidelines prescribed by the Federal Reserve for U.S.Title 1 planning purposes;includes internal settlements,global payments to and through third-party processors and banks,and other

90、internal transfers.20242023202220212020201920182017201655.062.372.182.490.1102.4113.4124.8133.5$2.9$3.3$3.7$4.1$4.4$5.2$5.9$6.6$7.120242023202220212020201920182017201632.734.637.439.345.749.252.656.659.7$6.1$6.7$7.0$7.3$8.6$9.7$9.8$9.7$10.21225_JD_fortress balance_08Our Fortress Balance Sheet2005202

91、4Average loans/Liquid assets(%)2024202320222021202020192018201720162015201420132012201120102009200820072006200590%132%136%192%152%159%350%311%387%80%106%110%118%129%115%86%93%70%63%77%$804$547$510$366$450$371$137$146$106$921$745$786$768$755$860$1,652$1,447$1,428$1,437$1,43020242023202220212020201920

92、182017201620152014201320122011201020092008200720062005$124$136$149$80$56$49$63$95$111$161$170$180$185$183$187$203$230$260$191$20410.1%11.0%10.7%7.3%7.0%7.0%7.0%8.8%9.8%10.2%11.6%12.2%12.1%12.0%12.4%15.0%15.7%13.1%13.1%13.2%?Tangible common equity(average)?CET1(%)2?Liquid assets?Average loans/Liquid

93、assets(%)2024202320222021202020192018201720162015201420132012201120102009200820072006200590%132%136%192%152%159%350%311%387%80%106%110%118%129%115%86%93%70%63%77%$804$547$510$366$450$371$137$146$106$921$745$786$768$755$860$1,652$1,447$1,428$1,437$1,4309%CAGRsince 2005Tangible common equity(average)1

94、($in billions)Liquid assets4($in billions)2005 2006 2007 2008 200920102011201220132014201520162017201820192020202120222023 2024Net income applicable to common stockholders($B)$8$14$15$5$9$16$18$20$17$20$22$23$23$31$35$27$47$36$48$57Capital returned to common stockholders($B)3$6$5$9$(12)$(6)$1$11$4$9

95、$10$11$14$22$28$34$16$29$13$20$31ROTCE(%)15%24%22%6%10%15%15%15%11%13%13%13%12%17%19%14%23%18%21%22%DRAFT 2/28/25 TYPESET:3/16/25 REV.4/5/25_r1 v.25_JD_fortress balance_08*FOOTNOTES MOVED TO BACK PAGELiquid assets from December 31,20052012 defined as cash,cash due from banks and investment securitie

96、s CAGR=Compound annual growth rateCET1=Common equity Tier 1ROTCE=Return on tangible common equityFor footnoted information,refer to page 59 in this Annual Report.13Within this letter,I discuss the following:Introduction Steadfast principles worth repeatingI.America and the World Are at a Critical Cr

97、ossroads:Comprehensive Action and Leadership Are Imperative Now Only America has the economic,military and,yes,moral power.Celebrate Americas values and virtues,with humility,in order to restore civic pride,citizenship and purpose.Acknowledge and fix our problems at home by regaining common sense an

98、d being resolute.Recognize that the best strategy for Americas success is to implement effective domestic policies that drive robust economic growth for the benefit of all citizens.Initiate comprehensive economic foreign policy to win the new global“economic”war.America will be first but not if it i

99、s alone.Affirm that our national security and the worlds best military,at whatever cost,are paramount and necessary for peace.II.A Compendium of Critical Domestic Policies to Drive Growth,Opportunity and Well-Being We need consistent and responsible tax and fiscal policies.Our education system is in

100、 deep need of reform to create skills,jobs and opportunity.We must remedy the healthcare system,both to reduce costs and improve outcomes.We can improve effective regulations while reducing crippling rules,demoralization,and arbitrary and expensive litigation.We could do a better job supporting smal

101、l businesses.We should have permanent plans to consistently drive the building of great infrastructure.We can make it easier to build a more affordable housing supply.We can strengthen our financial system and markets.Local democracy works:Let it shine and learn from it.Page 2Page 5 Page 15 Page 16

102、Page 17 Page 20 Page 21 Page 26 Page 28Page 29 Page 31 Page 33 Page 33Page 34 Page 35Page 35Page 35Page 39Page 40Page 40Page 40Page 41 Page 41Page 42 Page 44Page 46Page 48Page 48Page 49 Page 51Page 52Page 52Page 53Page 54Page 55Page 55Page 56Page 5714III.Specific Issues Facing Our Company We take a

103、long view in dealing with our excess capital.We bring an investor/owner mindset to drive organic growth.Our largest risk is geopolitical risk.Were not in Kansas anymore:economy,inflation,interest rates,asset prices,trade wars,oh my!Consumer payments have become a new battleground.We devote significa

104、nt resources to strategic intelligence to inform change and share our knowledge.Powering economic growth in TexasIV.Management Learnings Why complacency,arrogance,bureaucracy and BS kill companies.You have to get the numbers right.You need a full and constant assessment.You better have great control

105、s.You must kill bureaucracy all the time and relentlessly.Mistakes I made.What the heck is culture?Leading the team.Why its hard to achieve good growth and innovate.Management tricks and tools.In ClosingI.America and the World Are at a Critical Crossroads:Comprehensive Action and Leadership Are Impe

106、rative NowOnly America Has the Economic,Military and,Yes,Moral PowerI am writing about this topic,both as a patriot who cares about Americas and the free worlds future and as the CEO of our company,because it may be the most critical factor affecting the future of JPMorganChase itself.The success of

107、 JPMorganChase has always been predicated on the success of the United States of America and the health of the world,particularly the strength of free and democratic countries.Whether you call them adversaries or major competitors,they have made their goal clear.We must act now.The brutal invasion o

108、f Ukraine and the inde-scribable terrorist acts on Israel should have dis-pelled any illusion that the world is a safe place.We do not need another Pearl Harbor or 9/11 to shatter any false sense of security based on the hopeful notion that dictators,terrorists and oppressive nations wont use their

109、economic and military powers to advance their aims particularly against what they perceive as weak,incompetent and disorganized Western democ-racies.Global peace and world order are vital American interests.We also need to answer the question:What kind of world do we want to live in?And do we believ

110、e that we can,or should,try to make the world a better place?Practically,what is the other choice?Our international adversaries and major com-petitors have made it clear that their goal is to dismantle American hegemony,which means dismantling the rules-based system led by America in concert with ou

111、r allies(essentially the Bretton Woods system and the North Atlantic Treaty Organization,as well as the International Monetary Fund and the United Nations).Since the end of World War II,this system has brought forth the longest period of peace and prosperity among the great powers.Today,it is clear

112、this system needs serious reform and strengthen-ing,not total destruction.Yet,if given the oppor-tunity,that is exactly what our adversaries want to happen:Tear asunder the extensive military and economic alliances that America and its allies have forged.In the multipolar world that follows,it will

113、be every nation for itself giving our adversaries the opportunity to set the rules and use military and economic coercion to get what they want.That is what is at stake here.We need to bring the whole of government and the private sector together to build the world we want while dealing with the col

114、d realities of the world we have.We face the most perilous and complicated geo-political and economic environment since World War II.Todays world is more complex and more interconnected than ever before.Comprehen-sive strategies,diligently deployed,are required to address challenges on many fronts:t

115、he war in Ukraine;terrorism in the Middle East and the real possibility that Iran may develop a nuclear weapon;Europes potential fragmentation;and ongoing trade disputes and the rise of China.If Iran acquires a nuclear weapon,many other nations around the world will seek to acquire nuclear weapons,p

116、resenting us with a cata-strophic situation.A global nuclear arms race is the worst outcome that could happen to our world and this may be the greatest threat to mankinds survival.Lastly,it is extremely important to recognize that security and economics are interconnected “economic”warfare has cause

117、d military warfare in the past.Not only is Americas global leadership role being challenged outside our borders by other nations but also inside our borders by our polarized electorate.1515AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWThe ac

118、tions taken in the next decade may prove,depending on how our country and our allies per-form,the most consequential of our lives and may very well determine the fate of the free and demo-cratic world over the next century.America has always had an amazing ability to confront enor-mous challenges an

119、d we did so by facing them head-on with superb leadership from Abraham Lincoln to FDR to Dwight Eisenhower.We should remember that America,“conceived in liberty and dedicated to the proposition that all men are created equal,”still remains a shining beacon of hope to citizens around the world.Here a

120、re five things our nation needs to do well in order to secure the future we should want for our country and our companies.I fear that if we fail at one of them,we may fail overall:1.Celebrate Americas values and virtues,with humility,in order to restore civic pride,citizenship and purpose.2.Acknowle

121、dge and fix our problems at home by regaining common sense and being resolute.3.Recognize that the best strategy for Americas success is to implement effective domestic policies that drive robust economic growth for the benefit of all citizens.4.Initiate comprehensive economic foreign policy to win

122、the new global“economic”war.America will be first but not if it is alone.5.Affirm that our national security and the worlds best military,at whatever cost,are paramount and necessary for peace.These are my prescriptions,and I understand that some people may disagree with them and,on some issues,I ma

123、y ultimately be wrong.What I am not wrong about,however,is the urgent need to face these issues head-on we should not assume that America will overcome them.We have always been a resilient nation and have overcome significant adversity in the past because we faced our challenges and dealt with them

124、properly.Problems dont age well.And the consequences of not dealing with this properly range from bad to catastrophic.CELEBRATE AMERICAS VALUES AND VIRTUES,WITH HUMILITY,IN ORDER TO RESTORE CIVIC PRIDE,CITIZENSHIP AND PURPOSE.To be able to attack our problems at home and abroad,we must be strong.And

125、 our core strength is based upon our commitment to our values,as well as our ability to work hard and think intelligently about our problems.If the soul of America is not strong,then the rest will be weak.While we should acknowledge Americas flaws,they should not be used to pull apart our country.Ou

126、r values transcend any political stance libertarian,conservative,progressive,Democrat or Republican.We need to believe in ourselves and get back to work(in the office!),not tear each other down.Americas strength is not a divine right it is earned by citizens committed to a common purpose.Many of the

127、 blind ideologies being bandied about run counter to our fundamental principles.Our principles of freedom of speech,religion and enterprise allow individuals to pursue life as they lawfully see fit.Ideologues often adhere to rigid beliefs and seek to impose those beliefs on others;in extreme forms o

128、f fanaticism,there is no room for individual differences.I applaud many traditional Democratic values,such as a commitment to try to lift up all of our citizens and to provide more justice and equal opportunity.I also deeply respect many tradi-tional Republican values,such as a dedication to provide

129、 a strong national defense,to promote free enterprise and encourage a pro-business environment,and to emphasize the importance of the Constitution.And we should all support other core values,such as family,country,self-reliance,respect for workers and common sense.These values are not mutually exclu

130、sive and should be embraced and upheld by both parties.We,the people,need to be able to embody all these values.Even with all of our current problems,billions of people,if they could,would leave their country and move to ours.Similarly,if most people could only invest in one country,they would choos

131、e the United States.Our exceptionalism is based 1616AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWon our freedoms,our liberties,our opportunities and our rule of law,all under the protection of the Constitution(and the military)of the United

132、 States of America.You need only to witness the deep appreciation of new citizens,who often made enormous sacrifices to be here,to feel what it must be like when they take the Oath of Allegiance to the United States of America it would bring you to tears.It is incumbent on us to educate ourselves,ou

133、r fellow citizens and future generations about American values and our ongoing pursuit of a more perfect democracy.This education should start in grammar school our civic roles and responsibilities need to be taught.Our common values are transcendent.ACKNOWLEDGE AND FIX OUR PROBLEMS AT HOME BY REGAI

134、NING COMMON SENSE AND BEING RESOLUTE.Facts are often used by people to justify what they already think,and then populists on both sides distort the facts and use them to jazz up citi-zens around their grievances.But,as former U.K.Prime Minister Tony Blair asserts,we need to sep-arate the populists f

135、rom the grievances because many of these grievances are partially rooted in truth and must be addressed.The following are issues that I believe are causing legitimate frustra-tion and anger in the country today.This list is not complete,but lets acknowledge some of these profound challenges.In this

136、section and the next,I discuss some possible solutions:Lack of control of our borders.Uncontrolled immigration is highly disturbing to affected populations around the world and reduces the ability to manage legal and needed immigra-tion.In the United States,the number of immi-grants has increased by

137、 approximately 50%over the last 20 years.Once we gain control of our borders,I believe most Americans would support increasing merit-based immigration,including allowing anyone who earns a degree here to stay,ensuring there are proper visas for seasonal workers,enabling children born in this country

138、 to remain and providing a rigor-ous path to citizenship for law-abiding,undoc-umented immigrants.Healthy and proper immigration would bring great talent to our country and has been shown to actually help grow the economy.Too many left behind.Our fellow citizens at the lowest income tier have,in fac

139、t,been left behind,a trend were seeing globally.From 1979 to 2019,wage growth of the top 10%income tier was nearly 10 times that of the bottom 10%which,basically,did not increase at all.Our very low-income citizens experience higher school dropout rates,greater joblessness,increased drug use and cri

140、me in their neighborhoods,and signifi-cantly worse health outcomes.They often reside in rural areas and in inner cities.So while enormous wealth has been created in the country,the promise of equal opportunity seems unfulfilled for too many for too long.Education,some of the best and some of the wor

141、st.We have many of the best universities(including research universities)in the world.However,over the last 20 years,the cost of college has more than doubled for both public and private colleges,while household median incomes have gone up only 18%.Many inner-city schools graduate under 50%of their

142、stu-dents.And in both high schools and colleges,we dont teach enough skills that lead to well-paying jobs.Again,this affects the bot-tom income tier far more.Equal opportunity is clearly not fairly shared.Ineffective and incompetent government.Most people do not believe that the govern-ment,regardle

143、ss of party control,is doing a good job.For some,its the constant bureau-cracy,lack of permitting and failing schools;for others,its the constant anti-business sentiment.We struggle to build pipelines,upgrade our electrical grid,develop high-speed rails and accomplish other necessary goals.Our gover

144、nment seems unable to reform and reorganize itself,which is a prob-lem.This is amplified by the fact that many of our career politicians have little real-world experience,and it shows.We have failed at basic common sense.And lets stipulate here that this is not about blaming individual workers.We al

145、l know that many government employees are hard-working,ethical and caring citizens doing very important jobs that support and protect their fellow Americans.1717AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOW Profligate fiscal management.Most

146、 people do not believe that giving the government more money leads to better outcomes.In fact,most people perceive government actions,such as special tax breaks,as patronage for favored interest groups.Many people think the tax system itself is littered with unfair loopholes.Government has been fisc

147、ally irre-sponsible and profligate and even with all the money spent,grievances increased.Our government estimates that it makes over$200 billion in“improper”payments per year.Somehow,we have huge deficits and bad outcomes.A leviathan both too weak and too strong.Our state is paradoxically both too

148、weak ineffective at accomplishing essential tasks and overly strong overreaching in ways that undermine fundamental democratic princi-ples like individual freedom and autonomy.Over the last few decades,many have felt violated by the governments increasing inter-ventions.This heavy-handedness often p

149、rescribes not only how we should act but also how we should think and feel.Culture wars and virtue signaling.In the past,the elite often insulted traditional values of family,God and individual success,lecturing about their superior values from their com-fortable perches and imposing all of this on

150、people who believed differently.We have implemented many climate policies that do not effectively address climate change and raise the cost of living.We have stopped teaching some important parts of American history.Instead of acknowledging Americas significant virtues,we denigrate them and tear the

151、m down.We engage too frequently in class warfare and excessively in identity poli-tics;i.e.,using race,sex or creed inappropri-ately.And state laws were passed that actually increase crime instead of preventing it.Many of these policies hurt the very people they were meant to protect most.Many citie

152、s that paid a high price for their misguided policies are now returning to obvious policy goals safe streets,better schools,more housing.Unfortunately,more and more people are being disrespectful,condescending and unwilling to listen to one another.While adjustments are needed,it is quite predict-ab

153、le that the pendulum will swing too far in the other direction.When all is said and done,lets hope we can all treat each other with a little more respect.An imperfect healthcare system.While in some ways our healthcare is the best in the world,it is also expensive,essentially costing almost twice as

154、 much as the average health-care in OECD(Organisation for Economic Co-operation and Development)countries.Our healthcare system is also lacking in preventive care,transparency and proper incentives,and leaves too many uninsured.Crippling litigation,bureaucracy and regula-tion.An effective legal envi

155、ronment,upheld by a dependable judiciary,is essential for eco-nomic health,protecting rights,ensuring jus-tice,resolving disputes,maintaining checks and balances,and supporting innovation.However,the current environment is demoral-izing and slowing growth.While we all want justice through the legal

156、system,our litigation system is expensive(far more than most other countries),capricious,arbitrary and slow.All of this leads to extreme risk aversion mostly on the part of government but often on the part of business as well.It is concerning that some politicians have grown increasingly beholden to

157、 the interests of tort lawyers,posing real risk to balanced policymaking.In some ways,this could be Americas Achilles heel.Red tape 2.0.Red tape has always meant excessive paperwork,bureaucracy and regulations.But its been taken to a whole new level by people who really like it and want even more of

158、 it.They have doubled down on regula-tions and bureaucracy,which also dramati-cally increased red tape.In so doing,they made sure that new rules were written by academics with no pragmatic experience,guaranteeing that they would be excessive,confusing,contradictory and infused with ideology.So we ne

159、ed to give credit where credit is due.Therefore,I have renamed it“BLUE”tape.Even when“blue”tape has been shown to slow down economic growth and make it hard for businesses and individuals to thrive,those who created it excuse the out-come and refuse to change(see Europe).1818AMERICA AND THE WORLD AR

160、E AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOW Damaging trade practices,particularly with China.While trade has greatly benefited the world and many if not most American citizens,the damage that was done to some,while acknowledged,was never rectified.Those who suff

161、ered felt the sting both in lost jobs and lower wages.We also allowed too much unfair trade.Finally,and most import-ant,we failed to protect our national security,becoming too reliant on potential adversaries for critical products that the military needs(more on this later).Selfishness on the part o

162、f our citizens and elected officials.Whether it is unions fighting new technologies or businesses getting tax breaks,the focus on“what am I going to get”needs to stop.There are 13,000 groups lobby-ing in Washington,D.C.,defending their“spe-cial interest.”Rarely do they fight for what is good for Ame

163、rica.When Americas future hangs in the balance or when special interest groups wield undue influence,it is time to pri-oritize principle over profit and put country before company or union.Many in our country do this our uniformed officers in the military are an ideal example as they put their lives

164、 on the line out of a deep belief in our values and our country.America is still the exceptional nation,but its problems demand that we adjust our strategies.America has carried the burden of keeping the world safe and has made extraordinary efforts,including through trade,to improve the lives of th

165、e citizens of other nations.It is time to rebal-ance and rebuild but not retreat from the post-world order.A U.S.retreat from international leadership will leave a vacuum that may be filled by China or other actors that seek to promote an alternate set of international rules and norms.Both parties c

166、ontributed to our failures(and the media amplifies it).Many of the grievances Ive noted existed and grew under both parties leadership.These grievances are frequently amplified by media,both traditional and new,that often adheres to only one partys views,which leaves audiences blind to all of the is

167、sues and consequences of flawed policies.For example,when conducting interviews,reporters many times reveal their biases whether through subtle support or open skepticism.Interview subjects may be discred-ited because of who they are,not because of the content of their argument.Much of this is makin

168、g us meaner to each other a little more kindness and understanding would go a long way.I am a firm believer that we should constantly talk with each other,air our views,hold each other accountable and try to respect all sides of an argument.Social media has made this worse,in fact,delib-erately wors

169、e by using algorithms to manipulate as opposed to educate.Networks and platforms could meaningfully improve the quality of dis-course on the town square both by offering a menu of algorithms,as opposed to ones that are addictive,and by requiring all users to authenti-cate their identities,whether th

170、ey choose to speak anonymously or not.In banking,we have“know your customer”requirements social media should have them as well.Verifying iden-tities would go a long way toward eliminating foreign influence and bots,and would make individuals,not the platform,subject to the law.We also exist in a nat

171、ion awash with inaccurate and unfair labeling and scapegoating;i.e.,Wall Street versus Main Street.Who exactly is Wall Street in this comparison with Main Street?Large business and small business are symbiotic.Shouldnt we respect jobs and workers and the companies that create those jobs?And some giv

172、e voice to the view that public sector jobs are more virtuous than private sector jobs.Less than 25 million people work in the public sector and we should hold them in high regard teachers,police,firefighters,military,sanitation workers and others.All jobs have dignity and purpose,and add to the gen

173、eral well-being of the country.It is good to remember that the 135 million people who work in the private sector generate the income that funds the public sector.All of these are among the reasons why I believe the body politic may be tired and ready to see bold disruption.While we need to take prop

174、er actions,we also need reform and reconstruction.In addition,our adversaries mistake our appar-ent disarray as a sign that we are lazy,weak and decadent.Anyone who knows America its work ethic,innovation and morality of most citizens knows this is not true.1919AMERICA AND THE WORLD ARE AT A CRITICA

175、L CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWRECOGNIZE THAT THE BEST STRATEGY FOR AMERICAS SUCCESS IS TO IMPLEMENT EFFECTIVE DOMESTIC POLICIES THAT DRIVE ROBUST ECONOMIC GROWTH FOR THE BENEFIT OF ALL CITIZENS.We need to address the underlying issues caus-ing the grievances that

176、 are tearing us apart and holding the nation back.By enacting meaningful policy reforms to resolve these issues,I believe our gross domestic product(GDP)would grow by over 3%a year benefiting all Americans and especially those in our lower-income communi-ties.From 2000 to 2024,GDP grew by just over

177、2%a year.Had it grown by 3%,which should be easily achievable with the right policy decisions,our GDP per person would be approximately$16,000 higher this year.In this section and in the following,I describe many of the policies that we need to fix and,in some cases,how to do it.Some of the fixes ar

178、e easy,while others are more challenging.They run the gamut from improving the supply side,such as education,infrastructure,permitting,production capability and technology,to addressing the demand side,including fiscal and tax policy.All of these are domestic policies,which we can fix on our own.Lat

179、er in this section,I talk about foreign economic policies,including trade,foreign investment and the U.S.dollar as the worlds reserve currency,all of which are essential to our country and the world.Policy needs to be detailed,comprehensive and coordinated to be successful how you describe it politi

180、cally is a separate matter.As someone once said,“If you are going to do what you already did,you are going to get what you already got.”We have the best economy in the world,but we must confront our extensive flaws and fault lines.We need to build our own capabilities and stop the constant under-and

181、 over-reaction.Our policies must foster healthy,sustainable growth,and its essential that we unite the entire nation government and busi-ness alike to achieve it.Around the world,we observe both effective and counterproductive policies.For example,well-intentioned labor laws can backfire,as seen in

182、parts of Europe where rigid labor regulations have contributed to persistently high unemployment.Similarly,certain safety net programs may inadvertently discourage paid work.On the other hand,stream-lined permitting policies show how smart gover-nance can accelerate development and get projects buil

183、t in short order and safely.Nations that implement sound policies are capable of achieving remarkable outcomes;consider Ireland,Singapore,South Korea and Sweden.Even Greece,which used to be Europes perennial basket case,has managed to turn itself around,driven by an exceptional political leader.Good

184、 political leaders get both the politics and the policies,in detail,right.They are constantly educating the public instead of just responding to it.Our country needs leaders who can guide their parties away from catering to the extremes and who can collaborate effectively with our allies to craft in

185、tegrated policies that address both economic and security challenges in the short and long term.Most important,on the home front,we need lawmakers on both sides of the aisle to commit to the serious work of governing setting aside partisan divides to develop policies that foster economic growth and

186、expand opportunities for all Americans to succeed.Running for any executive office(mayor,governor or president)and running the government are completely different things.Some quickly figure that out,and some dont.While a good politician must communicate policies in a clear,compelling way that resona

187、tes with the American public,the policies them-selves must be well designed to be truly effec-tive.And this is more important today than ever before because the future,for both foreign policy and economic policy,is fraught with extreme risk.We need to promote,not denigrate,businesses,large and small

188、.On economic policy,the Republicans are right to champion business and free enterprise,limit excessive government intervention,establish an international tax system that has made America competitive for the first time in over 15 years,and cut back on needless,mind-numbing,job-killing regulations.And

189、 all of this could be done while still maintaining the proper regula-tion necessary to prevent market abuses and safeguard the economic environment.Recent Democratic policies,driven by often-misguided narratives and an often-2020AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION

190、 AND LEADERSHIP ARE IMPERATIVE NOWdismissive tone,have left much of the business community frustrated and disillusioned.Many government agencies and regulators frequently criticize business by relying on oversimplified and dishonest concepts like“price gouging”to justify their stance.They tend to ta

191、ke the iso-lated missteps of a few companies and use them to paint the broader business community as unethical.This fuels rhetoric that undermines free enterprise and leads to regulatory over-reach that frequently exceeds the intent of the law.Few in the previous administration actually understood b

192、usiness or had any experience run-ning a business and it showed.Other import-ant policies(for example,infrastructure,the CHIPS and Science Act,the Inflation Reduction Act),while well-intentioned,were laden with vir-tue-signaling and uninformed rules,which limit their effectiveness.And instead of fix

193、ing endless regulations,like permitting,government effec-tively made them worse.It would be wiser to properly educate the public about the role of business,large and small.The private sector is the engine for investing our countrys capital into high-returning areas it is our most effective tool for

194、promoting innovation,sustainable growth,productivity and jobs.There are more than 30 million businesses in America,but within the private sector,it is large compa-nies that are responsible for 85%of the research and development(R&D)and nearly half of all nonresidential capital investment.Big compa-n

195、ies generally have excellent healthcare,well-ness,retirement and training programs.Every time a new plant is built somewhere,it cre-ates four or five times more jobs in that area,usually in small businesses.Small business and large business are truly symbiotic.INITIATE COMPREHENSIVE ECONOMIC FOREIGN

196、 POLICY TO WIN THE NEW GLOBAL“ECONOMIC”WAR.AMERICA WILL BE FIRST BUT NOT IF IT IS ALONE.Americas extraordinary standing in world affairs is predicated on our economic,military and moral strengths.Our exceptional relation-ships with our allies largely exist both because of the security they receive f

197、rom Americas mili-tary umbrella and our strong economic ties.But we are in a new world defined by shifting power dynamics,rapid technological disruption and rising geopolitical tensions,including Chinas growing assertiveness.This economic competi-tion and conflict will likely go on far longer than t

198、he wars on the battlefield.The autocratic nations of the world,and some of the nonaligned nations,would like to see a fragmentation of Americas economic alliances and a weakening of our global economic posi-tion,including our status as the worlds most powerful economy,a leader in innovation and hold

199、er of the worlds reserve currency.This competition has many players,using many tac-tics,over many years.But our long-term strate-gic goals should be crystal clear:to maintain the cohesion and strength of the Western world,including their economies.If the Western worlds military and economic alliance

200、s were to frag-ment,America itself would inevitably weaken over time.Economic fragmentation from our allies may be disastrous in the long run.Keeping our alliances together,both militarily and economically,is essential.The opposite is precisely what our adversaries want.Europe has some serious issue

201、s to fix.Since 2008,the euro-zones GDP per person has gone from over 75%of U.S.GDP per person to approximately 50%.While Europe has received some tough mes-sages from U.S.leaders recently,what European leaders should do is seize the moment.Euro-pean nations know what they need to do:signifi-cantly r

202、eform their economies so they can grow;e.g.,finish the economic union to make com-merce across their countries easier and more efficient,and initiate labor reform and tax reform to incent more business growth and more labor participation(see the Draghi report).They also recognize that they need to m

203、aterially increase their military spend and capabilities.This is going to be hard,but our countrys goal should be to help make European nations stronger and keep them close.If Europes economic weakness leads to frag-mentation,the landscape will look a lot like the world before World War II.Each nati

204、on will need to seek out its own relationships to secure its future,and that may very well mean closer rela-tionships with Russia and Iran for energy and China for trade and economics.Such moves would ultimately make these countries far more reliant on China and Russia over time effectively 2121AMER

205、ICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWmaking them vassal states.Economics is the longtime glue,and America First is fine,as long as it doesnt end up being America alone.We do not need to fear China we just need to get our act together.Co

206、mprehensive economic policy is critical to compete with China.There is no more conse-quential relationship for the world,and this rela-tionship will affect the whole Indo-Pacific region,especially our allies:Australia,Japan,the Philip-pines,South Korea and others.Over the last 20 years,China has bee

207、n executing a more comprehensive economic strategy than we have.The countrys leaders have success-fully grown their nation and,depending on how you measure it,have made China the largest or second-largest economy in the world.That said,many people question Chinas current economic focus it continues

208、to be beset by many eco-nomic and domestic issues,particularly capital misallocation,which have resulted in large real estate problems,a weakened financial system,policies that inhibit entrepreneurs in their own country and an urgent need to accommodate a rapidly aging population.China has its own n

209、ational security concerns,as it is located in a very politically complex part of the world.Many of Chinas actions have caused its neighbors(e.g.,Japan,Korea,the Philippines,among others)to start to re-arm and draw closer to the United States.It also surprises many Americans to hear that while our co

210、untry is 100%energy sufficient,China needs to import 10 million barrels of oil a day.It is clear that Chi-nas new leadership has set a different course,with a much more intense focus on national security,military capability and internal devel-opment.That is its right,and we simply need to adjust to

211、it.America still has an enormously strong hand plenty of food,water and energy;peaceful neighbors;and what remains the most prosper-ous and dynamic economy the world has ever seen,with a per person GDP of over$86,000 a year(this compares with Chinas GDP per per-son of$13,000 in 2024).Most important,

212、our nation is blessed with the benefit of true free-dom and liberty.Starting well over a decade ago,both business and government should have focused on certain problems with China:unfair trade across multi-ple dimensions and our reliance on China for critical national security-related components.Whi

213、le we may always have a complex relation-ship with China(made all the more complicated and serious by its actions in supporting Russia in the ongoing war with Ukraine),the countrys vast size and importance to so many other nations(China is the largest trading partner to almost every other nation)req

214、uire us to stay engaged thoughtfully and without fear.At the same time,we need to build and execute our own long-term,comprehensive economic secu-rity strategy to keep our position safe and secure.For example,we need to remain com-petitive with China in the artificial intelligence(AI)race by bolster

215、ing our technological advancements and reducing our reliance on Tai-wan for semiconductor chips.Most of the actions we can take to protect our country are unilateral and do not need Chinas agreement.Overall,I believe that respectful,strong and con-sistent engagement would be best for both the United

216、 States and China,as well as the rest of the world.Whether you view China as a competitor or a potential adversary,we should work with our allies to firmly negotiate an ongoing relationship.Tough but thoughtful negotiations over strate-gic,military and economic concerns including unfair competition

217、should lead to a better situ-ation for all.If America provides strong leader-ship,and keeps the Western world together,China will be better off forming partnerships with a strong Western world than with nations like Russia,Iran and others.We should also rec-ognize what critical common interests with

218、 China we share in combating nuclear prolifera-tion,climate change and terrorism.What China does so well is manage its country as a whole coordinating government and business so that they are able to further some of their stra-tegic goals.We must improve our ability to act in a more organized and st

219、rategic way to succeed in this new global landscape.Simply put,if we keep our economy the strongest and maintain the strength of our alliances,we will thrive.2222AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWWe should promote healthy economi

220、c alliances,which includes fair trade.Global trade is enormous,amounting to approxi-mately$20 trillion a year,of which only$2.5 tril-lion is with the United States.And global trade will take place with or without us.We should remember that other nations have choices,both in the short term and in the

221、 long term,and they will make these choices in their own self-interest based on economics,security and reliability.Many countries need trade to help grow their economies.The European Union,for example,has the largest trade network with 40 individual agreements.China has applied for and signed severa

222、l new trade agreements(e.g.,the Regional Comprehensive Economic Partnership,Digital Economy Partnership Agreement,and Compre-hensive and Progressive Agreement for Trans-Pacific Partnership).The United States lacks trade agreements with some of its closest allies,many of whom have signed trade deals

223、with China.We should more actively be seeking free(and,of course,fair)trade agreements,par-ticularly with strong allies like Australia,Japan,the United Kingdom and we hope one day the European Union.These can be done in a way that is clearly beneficial to both sides.We already trade with most nation

224、s on the planet and,of course,we should always be trying to make it better and fairer for America.Deepening high-standard trade with key trading partners is good economics and great geopolitics.And we dont need to ask many nonaligned nations,like India and Brazil,to align with us but we can bring th

225、em closer to us by simply extending a friendly hand with trade and investment.There are many ways to combat unfair trade industrial policy is one of them,but it should be done right or not at all.For hundreds of years,countries have used trade practices to get a leg up on other coun-tries.This econo

226、mic competition is often exer-cised through industrial and trade policy,and it comes in many forms:banning or limiting trade(quotas),tariffs,subsidies,grants,tax credits or accelerated depreciation,loan guarantees,long-term purchase agreements and capital controls.These tools are generally intended

227、to give a company or an industry an unfair competitive advantage,and when used together,they can create unbeatable economies of scale.In their harshest form,they can be used by countries as a tactic to try to unfairly dominate whole industries.This should not be allowed.There are other unfair trade

228、practices that need to be mentioned;e.g.,nontrade barriers,such as regulations that effectively stop specific types of trade and various unfair tax policies that range from value-added taxes to a particular countrys tax schemes.Many countries use some of these tools in various forms(including the Un

229、ited States).So trade agreements have many flaws and need to be carefully negotiated.Practices such as permitting countries to circumvent trade restric-tions imposed on them for example,allowing China to use agreements that it has with other nations to bypass tariffs on Chinese goods can and should

230、be stopped.Obviously,where the United States is treated unfairly,we should demand that those agreements be fixed.It would also be good to acknowledge that we have sometimes treated others unfairly(for example,parts of the Inflation Reduction Act unfairly favor American business).Industrial policy me

231、chanisms,when used,should be as targeted and as simple as possible.The cleanest of these is tax credits in various forms.Whatever the policy,two rules should not be violated:(1)there should be no social engi-neering and(2)markets should allocate capital,not the government lest the result is a buffet

232、 where corporate America gorges.The govern-ment is simply not good at allocating capital in a free market.One example should suffice:In our attempt to create a more competitive chip man-ufacturing industry in the United States(it costs two times more to manufacture these chips in America,and,therefo

233、re,our manufacturers would fail if they tried to compete),the govern-ment could have given land grants for the land,accelerated depreciation and lowered taxes or offered tax credits for an extended period.Then the companies and the capital markets would have competed to decide how best to do this.No

234、netheless,we need to acknowledge that there have been real negative job impacts as a result of trade(in 1990,manufacturing created 18 million jobs in this country versus 13 million today),which are usually concentrated around certain geographic areas and businesses.So 2323AMERICA AND THE WORLD ARE A

235、T A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWany new trade policy should be combined with a greatly enhanced and effective Trade Adjustment Assistance program,which provides retraining,income assistance and relocation for those workers directly impacted by trade.Amer

236、ica already trades with more than 200 countries,territories and regional associations.We should strike the best and,of course,the most fair trade agreements that we can.And we should do this while maintaining our close economic relations with our allies.Whats the truth about trade deficits?Trade def

237、icits,by their nature,are not necessar-ily good or bad.Even if our country had no net trade deficit,it would likely be running deficits with some countries and surpluses with others.Sometimes a high trade deficit results from a countrys extraordinary attractiveness as an open investment destination,

238、and these invest-ments help that country grow and prosper.This may be true for part of Americas trade deficit.However,trade deficits for pure consumption may mean a country is slowly selling parts of itself to someone else,and Im not sure thats a good idea.Our trade deficit over the last 20 years ha

239、s totaled over$12 trillion,and this is probably too large.The other side to the trade deficit is an investment surplus,which has resulted over the years in foreign investors owning$30 trillion of U.S.securities,while U.S.investors own only$16 trillion of foreign securities.In 2005,these numbers were

240、$6.3 trillion and$4.3 trillion,respectively.You can see that,over time,foreign investors have come to own an increasing share of the United States.(For your information,Chinas holdings of U.S.assets are approximately$1.5 trillion,of which half is U.S.Treasury securities.)It is good to remember that

241、our trade deficit is also driven by our large government deficit.Therefore,it is perfectly reasonable for us to focus on our“twin”deficits:our$2 trillion fiscal deficit and our$1 trillion trade deficit.While the numbers in the above paragraph highlight the attractiveness of the American economy,they

242、 also reveal certain underlying risks:If America,for whatever reason,becomes a less-attractive investment destination,the U.S.dollar and the economy could suffer if foreigners sold their U.S.assets.Our extraordinary energy position is a massive competitive advantage,ensuring affordable,reliable,safe

243、 and ever cleaner energy,both for us and critically for our allies.The United States has a huge competitive advantage in that it is essentially self-sufficient on energy and will be for decades.This reduces the cost of so many things in our country(e.g.,up to 40%of the cost of food is related to ene

244、rgy)and makes it much easier for American compa-nies to compete.Its also an enormous geopoliti-cal benefit for us to be able to export safe,afford-able,secure liquefied natural gas overseas to our allies.This binds them to us,gives them greater security and is economically beneficial for the United

245、States.It also has the virtue of being good for the climate as cleaner liquefied natural gas replaces dirtier coal.America should lead the way in generating more energy to meet greater demand,including from AI,which will require huge amounts of energy.And we need an“all of the above”strategy for dev

246、eloping renewable energy,as well as tapping conventional energy sources.We should not forget that to make energy ever more efficient and cleaner,we also need more rapid permit-ting,investment in the grid and access to critical minerals.I am convinced that,over time,our innovative capabilities will m

247、ake energy cleaner and solve the carbon emissions problem.In this country,we have made many mistakes around climate policy and I believe a lot of money will ultimately be wasted.We also made many bad decisions.For example,we failed to build the pipeline that would bring gas from Pennsylvania to New

248、York this would have replaced coal(in a cleaner way)and dramatically decreased the cost of energy for New Yorkers.Its also important to remember that pollution in the United States was significantly reduced because we effectively outsourced the produc-tion of“dirty”manufacturing,like steel,to other

249、nations that have lower emissions standards than we do.One last point:Billions of people around the world still lack access to affordable and reliable energy,a fundamental driver of higher and healthier living standards.Meeting this demand improves lives on a global scale.2424AMERICA AND THE WORLD A

250、RE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWThere are many other critical foreign economic policies that could be used to promote the American economy and protect our allies.Essentially,they are:We must keep Americas tax system interna-tionally competitive so as

251、 not to drive capital,companies,intellectual property or people overseas.There is a complexity to this because so many countries play games with their tax systems but staying competitive can be done.It would be a huge mistake for America to put itself at a disadvantage there are better ways to colle

252、ct taxes(more on taxes in the next section).U.S.development finance institutions,includ-ing the two main ones(the U.S.International Development Corporation and the Export-Import Bank of the United States),are gener-ally used to develop projects in and support exports from developing nations.Our deve

253、l-opment finance is very small relative to the size of our country in total,Americas devel-opment finance investment is approximately$60 billion.We are virtually absent compared with China.By contrast,Chinas government-led Belt and Road initiative has lent or invested$1.4 trillion in 155 different c

254、ountries.China does this to promote its business expansion overseas and to enhance its own energy,minerals or supply chains.In addition to the Belt and Road initiative,China has foreign direct investment of approximately$3 trillion in the rest of the world.This invest-ment was virtually zero in 2000

255、.By compari-son,Americas foreign direct investment totals$6.7 trillion.In my travels in Africa and Latin America,the absence of American business or government investment is palpable.African and Latin American nations want more of America,but they are getting what they need from China.Done right,Ame

256、rica could dramat-ically increase its development finance it is not a giveaway,it can be quite profitable,and it has the virtue of promoting America and its businesses overseas.We need to do a better job,in general,of pro-moting American business overseas.Ameri-cas development institutions can work

257、with American businesses far more effectively,for instance,by providing political insurance on large capital investments.This insurance would protect businesses and enable them to make investments in unstable regions by covering risks like government takeovers or political unrest.At the same time,wh

258、ile laws like the Foreign Corrupt Practices Act have helped reduce corruption and level the playing field abroad,such laws often put firms at a disadvantage,including American firms and international firms with a U.S.nexus.The rules can be vague,the guidelines are ambiguous and the penalties are ste

259、ep making impacted companies hesitant to compete.This needs to be fixed.We need to constantly educate and inform the world about Americas values and virtues.We dont need to be condescending or lecturing,just consistently educating and sharing the lore of freedom and democracy combined with a gentle

260、assist will eventually win the day.Americas strong economy plays a critical role in preserving the U.S.dollar as the worlds reserve currency.The U.S.dollar is a“fiat”currency.Some say this makes the dollar purely a matter of trust.This is simply not true.The Federal Reserve,which issues dollars,owns

261、 assets(mostly U.S.Treasuries)supporting each dollar it issues.Those assets carry the full faith of the U.S.government,backed by its taxing power on the most prosperous nation the world has ever seen.If you have U.S.dollars,you are essentially free to do with them as you see fit that is not true in

262、many autocratic nations.The U.S.dollar is the worlds reserve currency because of Americas open markets,the strength of our economy and our rule of law upholding property rights all protected by the U.S.military.These are also the reasons why the United States is such an attrac-tive investment destin

263、ation for anyone wanting to invest their money.A well-functioning international monetary sys-tem is good for the United States and for our allies,particularly since the rules are set by us and our allies(although some reform is needed).The U.S.dollar is foundational to a healthy global economic syst

264、em,and its the cornerstone of Americas commanding global influence.The strength of our financial system gives America considerable clout,not only in allocating capital 2525AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWefficiently but also in

265、 creating a huge informa-tional advantage for our country.The U.S.finan-cial system writ large is the best in the world with extraordinary knowledge and capabilities,it is a critical flywheel of the American economy.To protect the status of our global economic influence and of our reserve currency,A

266、merica also needs to be broadly trusted and reliable.Good trade should be enabled to flourish.Sanc-tions are a powerful tool(against not just finan-cial corruption but global bad actors)but they should only be used judiciously and for the right purpose and,generally,done in concert with our allies.I

267、n addition to the benefits mentioned above,being the reserve currency saves the United States$100 billion a year at current inter-est rates.People around the world actually carry approximately$2.5 trillion of paper U.S.dollars,which,in effect,is borrowing without paying interest.There is a correlati

268、on between the strength of our economic and military alliances and our status as reserve currency:The stronger our alli-ances,the stronger our reserve currency status.However,the opposite is also true.History has shown that as countries become weaker,their currency loses reserve currency status.AFFI

269、RM THAT OUR NATIONAL SECURITY AND THE WORLDS BEST MILITARY,AT WHATEVER COST,ARE PARAMOUNT AND NECESSARY FOR PEACE.In todays troubled world,weve seen several stark reminders that national security is and always will be paramount even if that idea seems to recede in tranquil times.America remains the

270、arsenal of democracy and the bastion of free-dom for the whole world.We must explain to the American public,over and over,how Ukraine and the terrorist activity in Israel,fueled mainly by the Iranian regime,are the actual battlefields of freedom.It is our hope that these terrible events have awakene

271、d all of us to the fact that the world is never safe.As President Ronald Reagan once wisely said,“The only way to stay safe is peace through strength.”Having the best military is expensive,but it is not nearly as expensive as dealing with what would happen without it.We must maintain the worlds stro

272、ngest military,without question.Of course,it is reasonable to expect allies to pay their fair share of global military expenses but we should also recognize that it is in our own strategic self-interest to keep our allies together.The U.S.military presence around the world should not be viewed as me

273、re protection for hire its a critical pillar of global stability and a reflection of our leadership.We hope one day there will be a lasting and per-manent peace for Israel and the Middle East.Ukraine needs a proper resolution one that provides it with sovereignty,stability and secu-rity putting thei

274、r country on a path to healthy growth.Sovereignty means that they are a free nation left to make their own decisions.If Ukraine is left in a weakened position(meaning,essentially,that Russia succeeded),we will see a fracturing of Americas military alliances as countries,Europe in particular,search f

275、or better security arrangements.One more point about military security:There was always a thought that America was far from European wars,even though we have been dragged into them many times.With the advent of cyber war,satellites and hypersonic missiles,the world has changed;other countries milita

276、ry capabilities are already on our doorstep.We need to employ all instruments of national power.The exercise of power isnt measured by military force alone but also includes other instruments of national power:diplomacy,economic devel-opment,foreign assistance(all done in a strate-gic,efficient and

277、accountable way)and constant education about the benefits of freedom.Again,as President Reagan said,“Freedom is special and rare.Its fragile;it needs protection.”Funda-mentally,we need to realize that power is also based on trust:trust that we will do the right thing,that we can do the right thing a

278、nd that we are not just strong but reliable.We need to immediately change certain policies to secure and enhance our military capabilities.Sustaining Americas position of power requires major changes in the funding and planning of our military.This includes major changes in trade,production capacity

279、 and supply chains to make our military as resilient and capable as possible.Some specifics will suffice:2626AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOW We dont have multi-year plans for critical military expenditures and often rely on sh

280、ort-term continuing resolutions to fund our mili-tary.This costs the military billions of dollars a year and creates instability and uncertainty for the defense industry.Switching to multi-year plans could potentially provide$40 billion in savings a year(out of a 2024 Defense Department budget of al

281、most$850 billion)and greater stability for the military.We need to allow greater flexibility on the reallocation of money;i.e.,to continuously innovate(buy the newest drones and other items).Our stockpiles of vital munitions are seriously inadequate if there was a war in the South China Sea,we would

282、 run out of missiles in seven days.If it were up to me,I would be stockpiling ammunition,air and missile defense,rare earths and other critical com-ponents,importantly to preserve peace.We dont maintain sufficient excess produc-tion capacity in our defense industrial base to ramp up the production o

283、f weapons,if neces-sary.We dont even have the proper capacity to build battleships anymore.It would be rather easy for the government to work with the private sector to help maintain factories capable of producing military materials that would be required at a wartime pace.We also lack sufficient la

284、bor necessary to do everything outlined above.It can take up to six years to train workers on the complex skills that are needed to manufacture this equip-ment and we dont have six years.We need to immediately restructure some of our trade and supply chains.Surprisingly,many of the essential items w

285、e would need in case of war would come from potential adver-saries.These products range from rare earths to penicillin and other pharmaceutical ingredi-ents to certain types of steel,semiconductors and even some manufactured components.We need to use all of the tools at our disposal to do this as ex

286、peditiously as possible.Taking the proper unilateral actions on very targeted investment and export restrictions(chip making equipment,advanced chips and other hard-to-duplicate technology used for military purposes)is essential.However,we should only expect these kinds of actions to slow down our c

287、ompetition,not necessarily stop it.Finally,the extraordinary science that comes out of our national labs and our exceptional universities has been critical to creating and maintaining our scientific discoveries and advances,which have not only fueled Americas economy but have also maintained our mil

288、itary superiority.There are lots of complaints some legitimate about Americas elite universities,but this cannot and should not be one of them.Protecting our country goes way beyond just the military and includes,among other items,grid security,data centers,communications and cybersecurity in genera

289、l.Foreign policy is realpolitik.Americas alliance system is the foundation of our geopolitical advantage and is the special sauce of American leadership.Foreign policy must be grounded in realpolitik a pragmatic approach that prioritizes national interest over ideological considerations.Realpolitik

290、means that many decisions are properly subordinated to national security.For example,while address-ing global challenges,like climate change,is important,such efforts should not overshadow the strategic imperatives of our foreign relations.We need to bring our allies along and help them build their

291、own capabilities.A weak Europe is ultimately very bad for America.Among other things,our allies need reliable,safe,secure and affordable energy or they will be in a terrible position.Diplomacy and our economic relation-ships,including trade,are a critical part of main-taining these alliances.While w

292、e should educate other nations about the virtues of our values,we should stop lecturing we dont need them to have all our values,but we do need them to be strong allies.2727AMERICA AND THE WORLD ARE AT A CRITICAL CROSSROADS:COMPREHENSIVE ACTION AND LEADERSHIP ARE IMPERATIVE NOWWe should do everythin

293、g we can to drive healthy growth in the economy.By doing so,we create the resources to constantly reinvest in our country,and we create the conditions to pro-mote greater opportunity and well-being for all our citizens.In this section,I describe nine criti-cal policies that I believe are essential t

294、o making our economy strong putting us in the best position to deal with any issue in front of us,economic or geopolitical,and guaranteeing our ongoing military and economic predominance.In compiling this list,I tried to look at the United States as I would any large complex company that we might ac

295、quire.(Of course,our country is much more complicated than any one com-pany.)A full assessment of all critical issues allows you to develop a game plan.The issues Ive highlighted and there may be more are those that I believe are holding us back and causing much of the“grievances”I wrote about in th

296、e first section.In all cases,I tried to be prac-tical in my approach,and,in some cases,I offer ideas for potential fixes.I tried to look at this without regard to how posi-tions might be labeled;i.e.,conservative,liberal,progressive,red or blue.Whether my views are right or wrong,it is critical that

297、 we start to fix that which is broken.Government as a whole needs to demonstrate to the American public that it is effective,efficient,competent and principled as any institution should do in developing policies that are conducive to maximizing long-term growth,jobs,competitiveness and fairness with

298、out micromanaging the economy.The government,like all institutions,should continuously prioritize and allocate resources to streamline its operations and reduce red tape to improve service delivery,enhance responsive-ness and achieve cost efficiencies.Every department should focus not just on the am

299、ount of money spent but on what it expects the out-comes should be,what the outcomes actually are and how it can deliver more at a lower cost.Instead,we have a broken bureaucracy that fails to fully acknowledge or effectively deal with our biggest problems.Even worse,the power of the government over

300、 the years has been used to attack parties,businesses and individuals,par-ticularly those not in favor by the party in power.This needs to stop.It begins by always remind-ing the American public about the founding principles of the United States of America the principles embedded in our Declaration

301、of Inde-pendence and the Constitution liberty,free-dom,individual rights and justice for all.The economic machine is extraordinarily complex.We need to focus on proper policies that are conducive to growth.Micromanaging coupled with misguided,ill-informed policies not based on reality and pragmatism

302、 often have huge unintended consequences.People frequently twist accurate data with bad logic to kill good policy.Many times,it is easier to throw money at a problem,mostly on the demand side(i.e.,spend more money),than to formulate good policy or spend money appropriately to help the supply side.Go

303、od supply-side policies,such as those promoting job creation and infrastructure development,are critical to achieving productiv-II.A Compendium of Critical Domestic Policies to Drive Growth,Opportunity and Well-BeingA COMPENDIUM OF CRITICAL DOMESTIC POLICIES TO DRIVE GROWTH,OPPORTUNITY AND WELL-BEIN

304、G28ity and,therefore,to maximizing long-term growth.While innovation is the cosmological constant always driving growth,sometimes its downside is used to block it.This is a huge mis-take.We should foster innovation and then cre-ate policies that help those who are negatively affected.WE NEED CONSIST

305、ENT AND RESPONSIBLE TAX AND FISCAL POLICIES.America could benefit from a bipartisan,binding mechanism to achieve fiscal responsibility,simi-lar to a Simpson-Bowles type of commission but with real congressional authority.Some countries,such as Sweden,have implemented a fiscal policy framework with s

306、pecific guidelines.Swedens framework establishes a debt-to-GDP ratio of 35%plus or minus 5%.This allows the country to run deficit financing at the same rate as its economic growth and still maintain a debt-to-GDP ratio of 35%.Adhering to this kind of consistent fiscal standard makes it easier to ma

307、nage the country in general.The United States should eventually establish similar guide-lines that would make it easier to run this“ship of state”and reduce the uncertainty that results from constant flip-flopping between sometimes radically different fiscal policies.Additionally,we should eliminate

308、 the debt ceil-ing.The debt ceiling is essentially a“weapon of mass destruction”that can be misused by politi-cians who dont understand the damage it can do.Its hard to even contemplate the harm that would be done to the trust in America and in our economy if we actually failed to meet our debt obli

309、gations.We must learn to account for investments differently from the way we account for expenses,particularly in areas such as infrastructure.The lack of proper accounting by the U.S.govern-ment is astounding and is almost laughable.Unfortunately,the practice drives terrible deci-sion making.For ex

310、ample,in determining the deficit,the government treats investments in infrastructure(roads,hospitals,ports)the same way that it treats expenses.But we should put them in completely different budgetary catego-ries.Good investment spending has long-term productivity benefits that many expenses do not.

311、The United States now spends only 0.55%of its GDP on infrastructure.The OECD average is at 0.81%,and Chinas is a staggering 5.56%.We need to spend more money on productive infra-structure,not less.Borrowing to invest is funda-mentally different from borrowing to consume.The government also makes a l

312、ot of loans,but it doesnt have to account for them in the same way that a bank does which makes bad lending easy to do.For example,the government contin-ues to extend a significant amount of student loans with improper or no underwriting.When the student loan system was taken over by the government

313、in 2010,loan losses had been rea-sonable,and loans outstanding were$750 bil-lion.Through the magic of government account-ing,the government actually forecasted more than$60 billion in profit from when they took over the program.Thirteen years later,the out-standing debt from student loans has more t

314、han doubled to$1.6 trillion,and we estimate that the government has lost,with proper accounting,at least$500 billion.Yet the government continues to make many of these bad loans.The stakes are even higher regarding the gov-ernments control of two of the largest financial institutions in the world,Fa

315、nnie Mae and Freddie Mac,whose combined assets of$7.7 trillion largely represent mortgages these organiza-tions have guaranteed.It is incumbent on our government to properly manage institutions like these to protect U.S.taxpayers from tremen-dous losses(they lost$265 billion in the great financial c

316、risis)and to shield U.S.and global economies from severe damage.To make the U.S.tax system conducive to economic growth and job creation,we should incorporate these overall objectives:Be agnostic to specific industries,setting aside favoritism.Offer a system that is stable with standards consistentl

317、y applied.Ensure that our practices keep the United States competitive with other countries.Provide effective incentives for growth and innovation.A COMPENDIUM OF CRITICAL DOMESTIC POLICIES TO DRIVE GROWTH,OPPORTUNITY AND WELL-BEING29The 2017 Tax Cuts and Jobs Act(TCJA)took significant steps toward

318、achieving these goals by(1)broadening the tax base,(2)reducing the federal corporate rate to 21%(which is approxi-mately the OECD average)and(3)reforming the international tax rules.The first point is some-times forgotten:While the reduction of the head-line tax rate from 35%to 21%was projected to r

319、educe corporate taxes by$1.4 trillion(over 10 years),the broadening of the base offset$1 trillion of that reduction.Regarding international tax rules,a key part of that reform was the removal of gimmicks that allowed U.S.corpora-tions to indefinitely defer tax rules on their over-seas earnings.As a

320、result,our international tax system strikes about the right balance between recognizing the importance to U.S.companies of serving overseas markets while not incentiv-izing them to move capital,skills and R&D outside the country.Although there is certainly room for improve-ment,overall,the changes m

321、ade by the TCJA recognize that reducing and rationalizing taxes on business income are critical to spurring eco-nomic growth and producing more“bang for the buck”than cutting taxes on individual income.Importantly,these reforms benefited most Americans.In the first two years after the TCJA went into

322、 effect,we saw real median income rise more than in the previous 10 years and the low-est unemployment rate for adults without a high school diploma.In the year following enactment,we also saw GDP growth of 3%and a 20%increase in domes-tic investment for affected firms.Corporate taxes paid have rise

323、n to record levels not because the tax burden on corporations was increased,but because corporations were more profitable;they were doing more business,hiring more people,making more investments.None of this would have been possible without a competitive corporate tax rate.Our Internal Revenue Code

324、can be further amended to incentivize growth and ensure a fairer tax system overall.On the first point,our tax system should provide effective incentives for growth and innovation to support entrepreneurs and small businesses.Two such examples were in the tax code for decades before Congress recentl

325、y phased them out:(1)recognizing the importance of capital investments and(2)increasing expenditures for R&D.Both are proven ways of growing the econ-omy and creating jobs.As to ensuring a fairer system,there are still numerous provisions for Congress to go after.On the business side,the rules inten

326、ded to pre-vent artificial shifting of taxable income outside the United States need strengthening and a number of specific industry tax breaks need eliminating.On the individual side,there are also many tax breaks that primarily benefit a certain segment of the population:the wealthy.These include

327、carried interest,the ability to deduct up to$10,000 of state and local taxes,and too many creative estate tax planning techniques.These tax breaks not only cost revenue but also have the additional stigma of being perceived by the American public as just another example of institutional bias and fav

328、oritism toward a special interest group.And consistent with ensuring a fairer system,the U.S.tax code should incorpo-rate the“Buffett Rule”so that high-income earners pay a minimum tax on realized income.Everyone,including the wealthy,would benefit enormously from the increased growth that would fol

329、low if we amended our system the right way.I think many people would have fewer objections to paying a slightly higher tax rate if they thought the money was being used wisely to attack Americas biggest problems.Finally,the tax code plays an important role in helping to raise up those at the bottom

330、of the economic ladder.This includes incentives to ensure an adequate and affordable housing supply,such as the credit provision for building affordable housing.Its important that any tax credit and social benefit program be properly phased in so that it doesnt dis-incent work.One way the code could

331、 incentivize labor force par-ticipation is to expand and reform the Earned Income Tax Credit(EITC).The EITC gives an A COMPENDIUM OF CRITICAL DOMESTIC POLICIES TO DRIVE GROWTH,OPPORTUNITY AND WELL-BEING30individual earning$14,000 a year with two chil-dren a$5,600 tax credit(and with no children a$35

332、0 tax credit).I would almost double this tax credit and remove the child requirement.While this would cost a lot of money,it has many vir-tues.It would give those with lower income far more money to spend,without government interference,on what they and their families need education,food,better hous

333、ing and more.And much of it would be spent locally,in lower-income neighborhoods.It has the virtue of rewarding work,which would grow the GDP.Jobs not only bring dignity but better social out-comes in terms of less homelessness and crime,improved health outcomes and more household formation,among other benefits.For many peo-ple,that first job is just the first rung on the lad-der of a career.I hav