These are unprecedented economic times, and America’s economic vitality must be priority one. Although short-term steps to ameliorate the immediate economic challenges are important, the new Obama administration must be forward-looking and enact policies that will strengthen America’s competitiveness and promote economic growth for generations to come.

[IMGCAP(1)]Technology and globalization offer limitless possibilities, but they also present new challenges to America’s economic leadership. Brainpower, innovation and entrepreneurship are the keys to 21st-century prosperity. The new president should focus on policies that encourage capital formation, reward growth and job creation, drive investment in research and development and innovation, and improve worker retraining and education.

The United States has long been the preferred destination for investment capital because of the tremendous returns generated by our dynamic and innovative economy. Given our large and probably increasing national debt, it is even more important to focus on attracting capital. Increasingly, capital investment has been shifting elsewhere in search of higher returns and friendlier regulatory and legal frameworks.

A reformed tax policy is critical to creating, attracting and retaining capital. Only by doing so can we create the next generation of entrepreneurs and get the economy growing again. Raising tax rates on capital gains and dividends will yield exactly the opposite result. At a minimum, tax rates on capital gains and dividends should be maintained at their current levels. Lowering these tax rates should be given very serious consideration.

The U.S. levies the second-highest business tax rate in the world. Increasing taxes on American companies that have operations outside the United States is exactly the type of tax policy stick that will drive capital and job creation overseas.

Likewise, increasing taxes on “excess profits” will drive business, jobs and capital elsewhere. We should lower the tax rate on business. We should simplify the tax structure and reduce the overall level of taxation on businesses of all sizes. While government programs can create some jobs, we must count on business to grow our economy.

Small business in particular is the engine of economic growth and job creation in America. Over two-thirds of all Americans are employed by small businesses. And forming a small business represents the first step toward economic independence for many Americans. African-American, Hispanic-American, Asian-American and female-owned small businesses are among the fastest-growing segments of our economy.

Raising taxes on small-business owners and entrepreneurs hurts every worker. We must make it easier for small businesses to form, hire and prosper. A critical component of responsible economic policy must be to make permanent existing tax cuts for small businesses.

In considering health care reform or the redesign of Social Security and Medicare, we should pay particular attention to the impact on small business. Any government-mandated program that increases the tax burden or complicates the regulatory and compliance framework for small business will be a drag on our economy and dampen job creation.

As the economic crisis deepens, most of the current discussion on stimulus measures or rescue plans seems to be centered on consumers or big business. The new administration should focus on quickly loosening credit to small business and stimulating small-business creation.

Small businesses and startups are being starved of capital in this tough credit environment. Additionally, modifying depreciation schedules to permit small-business owners to expense capital equipment or technology purchases within one year can have a substantial impact on growth and job creation.

The financial crisis underscores the urgent need to revamp the regulatory framework in this country. There is broad agreement that the existing regulatory architecture is an inefficient and outdated patchwork of agencies with unclear charters, limited visibility and inadequate clout.

As important as specific policy prescriptions or interventions may be, agreement on guiding principles going forward is becoming equally vital. Effective markets require complete transparency, real accountability and even-handed consistency. The role of government should not be to pick winners and losers in industries but rather to articulate those conditions that may precipitate government intervention as well as the rules that will guide such intervention.

The unpredictability of government action to date has roiled markets and created uncertainty rather than relief. Capital market participants of all types must be prepared to accept a requirement for transparency in all markets and for all financial instruments. Chief executives and board members should put executive compensation up for shareholder vote. Conflicts of interest, such as those that may have existed for credit- rating agencies, must be exposed. And a company that receives a taxpayer-funded bail-out should be prepared to ask its chief executive officer and board to resign.

The United States has the most highly skilled and dynamic work force in the world. To ensure that Americans remain competitive in the global economy, we must prepare the next generation of workers. In a nation committed to opportunity, every student must have equal access to excellent schools. We must place parents and children at the center of the education process, empowering parents by greatly expanding their ability to choose among schools for their children.

Consumers are served better when there is choice and competition, and parents and children will be served better if there is choice and competition in public education. For example, vouchers and charter schools have demonstrated the ability to raise education standards. We must not settle for anything less than the best educational system in the world. The ability of our children to earn a decent living literally depends on it.

And we must not leave the current generation of workers behind. We should embrace the requirement for lifelong learning and retraining by investing in programs that ensure that displaced workers can build new skills. For example, we should reform the unemployment insurance system so that we prepare workers for the next job in addition to paying them for their lost jobs. Unemployment benefits should also include an opportunity to learn new skills. We should strengthen our commitment to technical training and build tight linkages between employers and community colleges. We can continue to prosper in the global economy if we invest to ensure that our workers remain the most productive and skilled in the world.

We cannot grow our economy or create jobs without fully participating in global trade. Trade has indeed created hardship for many American communities, and many jobs have been lost to lower cost labor markets. However, the U.S. gains far more jobs than it loses because of free trade. In fact, one in five American jobs depends on trade. And export-driven jobs are generally high-skill and high-paying. Constructing protectionist barriers will not save jobs, but will hurt economic growth.

Prospering in the global economy also requires us to lead in the innovative industries of this century, including energy, health care, space and information technology. Above all, this requires unleashing the power of American ingenuity on new areas of development. We must invest more in both privately financed and publicly funded R&D because maintaining this nation’s primacy requires cutting-edge research in the public and private sphere. Congress should expand R&D tax credits to encourage private- sector investment. Establishing a permanent tax credit equal to 10 percent of wages spent on R&D rewards activity in the U.S. and increases our competitiveness with other countries.

The federal government should increase its own expenditures on R&D. And agencies that sit at the heart of these important 21st- century industries, such as the Department of Energy, NASA and the National Institutes of Health, should be considered as vital to our national agenda as the departments of State or Defense.

In the 21st century, the country with the best brainpower wins. Our economy has always been strengthened by immigration. We must enact comprehensive immigration reform so that America continues to attract entrepreneurs, risk-takers and hard-working people from all over the world. We must continue to be the nation that attracts the best and brightest and encourages them to create and build better lives for themselves and their families. Our interests are served when students who come to be educated in our country choose to stay as adults.

We can no longer take for granted America’s position as the pre-eminent economic leader in the world. We need to consider policy options against the backdrop of an increasingly competitive global economy. We need to recognize that nations such as China are investing heavily to lead in industries where we have always dominated.

And yet, America has always prospered because we have relied on the hard work, ingenuity and creativity of generations of Americans.

We must do so again, by enacting policies that encourage and reward innovation, job-creation, entrepreneurship, education and training, and capital formation. America’s economic vitality — the very foundation for both global political power and military might — depends on it.

Carly Fiorina is chairman and CEO of Carly Fiorina Enterprises and was CEO of Hewlett-Packard from 1999 to 2005.