The Wall Street Journal - 13.09.2019

A2| Friday, September 13, 2019 **** THE WALL STREET JOURNAL.

WASHINGTON—U.S. busi-

ness groups are ramping up

efforts to win passage of the

Trump administration’s trade

agreement with Canada and

Mexico, even as House Demo-

crats and other critics say the

deal needs revisions before a

vote.

Dozens of farmers and

other supporters rallied

Thursday on the National Mall

to advocate passage of the

U.S.-Mexico-Canada Agree-

ment, or USMCA. That fol-

lowed scores of events across

the country last month aimed

at showing support to law-

makers in their home districts.

“It’s the dairy products that

are going to benefit,” said

Dave Daniels, who with family

members and partners owns

575 dairy cows in southeast-

ern Wisconsin. The U.S. “will

be able to probably expand

the amount of product going

into Canada by $250 million,

about one-third more than we

had been able to get in that

country,” said Mr. Daniels,

who attended Thursday’s

event.

Businesses and farmers

hope a revised and ratified

trade pact for North America

will restore certainty to key

trading relationships as Presi-

dent Trump is imposing broad

tariffs on imports and ques-

tioning the benefits of trade

with China and other longtime

partners. Mr. Trump in the

past has threatened to pull out

of the 25-year-old North

American Free Trade Agree-

ment if the USMCA, its re-

placement, gets bogged down.

A delay remains a distinct

possibility. Most House Demo-

crats, backed by labor groups,

want to continue working with

U.S. Trade Representative

Robert Lighthizer on ways to

enhance the agreement and

make sure new labor provi-

sions can be enforced in Mex-

ico.

House Speaker Nancy Pelosi

(D., Calif.) said Thursday that

she wanted to see stronger la-

bor-enforcement mechanisms

for Mexico from Mr. Lighthi-

zer as part of the deal. Many

Democrats felt burned after

supporting Nafta in 1993 only

to see U.S. jobs leave to Mex-

ico and overseas.

“We’re just waiting for lan-

guage about enforceability,”

she told reporters on Thurs-

day.

In response, Rep. Jim Banks

(R., Ind.) said improving work-

ing conditions in Mexico is al-

ready a big part of USMCA.

“Democrats are grasping at

straws,” he said.

Mrs. Pelosi almost certainly

has the votes to sidetrack

USMCA if Mr. Trump seeks ex-

pedited consideration of it un-

der 2015 trade legislation.

In their effort to secure

passage, business and farm

groups are seeking to win over

newly elected Democrats in

conservative or swing districts

who have an interest in work-

ing across party lines. The

vast majority of Republicans

appear supportive of Mr.

Trump’s deal.

—Siobhan Hughes

contributed to this article.

BYWILLIAMMAULDIN

ANDNATALIEANDREWS

Businesses

Press for

Passage of

Trade Pact

House Democrats

want to ensure labor

provisions can be

enforced in Mexico.

U.S. WATCH

CHICAGO

Schools Vow to Act

On Sex-Abuse Cases

Chicago Public Schools sys-

temically failed to address sex-

ual violence complaints and the

district has agreed to undertake

a corrective action plan, the U.S.

Department of Education said.

The department’s Office for

Civil Rights found that for years,

the district’s management and

oversight of complaints of stu-

dent-on-student and adult-on-

student sexual harassment vio-

lated federal law, with

investigations into complaints in-

adequate and often conducted

by untrained staff.

“Too many innocent students

suffered because adults didn’t

do their jobs,” Education Secre-

tary Betsy DeVos tweeted

shortly after the findings were

made public Thursday

Janice K. Jackson, the dis-

trict’s chief executive officer, said

the district has already begun

making improvements, including

creating an office to coordinate

the response to allegations of

discrimination, harassment and

abuse.

—Tawnell D. Hobbs

BAHAMAS

New Storm Poised

To Strike Islands

A storm brewing near the

Bahamas is threatening to

drench the islands, including ar-

eas devastated by the deadly

Hurricane Dorian less than two

weeks ago.

A weather system located

about 310 miles southeast of

Freeport on Grand Bahama Is-

land on Thursday afternoon was

expected to become a tropical

storm near the northwestern

Bahamas, U.S. forecasters said.

The Bahamas government is-

sued a tropical storm warning

for several islands, including the

Abacos and Grand Bahama,

which were hard hit by Dorian,

forecasters said.

Some 5,000 people had been

evacuated because of Dorian as

of Tuesday, according to the Ca-

ribbean Disaster Emergency

Management Agency. Roughly

2,000 were staying in shelters,

and an estimated 15,000 were

in need of aid, it said. The death

toll from Dorian stood at 50,

though officials expect that

number to rise significantly.

—Erin Ailworth

Brian Hook, the U.S. spe-

cial representative for Iran,

was incorrectly called ambas-

sador in a U.S. News article

Thursday about officials who

have been mentioned to suc-

ceed former White House na-

tional security adviser John

Bolton.

The nameof insurance and

professional-services company

Marsh & McLennanwas mis-

spelled as Marsh & McClennan

in some editions Thursday in

a U.S. News article about the

9/11 anniversary.

The U.S. federal-funds rate

target was raised to a range of

0.25% to 0.5% in December

2015. In some editions Mon-
      day, a chart with a Business &
      Finance article about rising
      global debt levels incorrectly
      showed that the increase oc-
      curred in February 2015. Also,
      the fed-funds rate target has
      been expressed as a range
      since December 2008, and the

chart showed the upper level

of the target’s range from that

date. A footnote to the chart

in some editions incorrectly

said the line reflected the up-

per level of the range since

December 2016.

Robert Chapman, founder

of California investment firm

Chapman CapitalLLC, said he

sold part of his stake in

GrouponInc. on Tuesday. In

some editions Thursday, a

Business News article about

Groupon’s acquisition plans in-

correctly said he sold his stake.

Some schoolsand scholar-

ship providers require the

Free Application for Federal

Student Aid for consideration

for certain scholarships and

grants (in addition to need-

based aid). A college-finance

article in the Investing in

Funds & ETFs report on Mon-

day incorrectly suggested that

the Fafsa is always required

for any aid.

Readers can alert The Wall Street Journal to any errors in news articles by [email protected] by calling 888-410-2667.

CORRECTIONSAMPLIFICATIONS

U.S. NEWS

1, or 4.4% as a share of gross

domestic product.

The last time the U.S. re-

corded a budget gap of that

magnitude in the first 11

months of the fiscal year was

in August 2012, when the defi-

cit totaled $1.16 trillion, a pe-

riod when the U.S. was still

climbing out of a deep reces-

sion. Deficits began to decline

soon after amid concerns

about rising red ink, after Re-

publicans and Democrats

agreed to cut spending.

No such agreement is on

the horizon now, and forecast-

ers project trillion-dollar an-

nual deficits for decades to

come.

A strong economy typically

leads to narrower deficits, as

rising household income and

corporate profits help boost

tax collections, while spending

on safety-net programs such

as unemployment insurance

tends to decline.

The U.S. economy has been

growing for 10 years as of

July, the longest economic ex-

pansion on record. Yet annual

U.S. deficits are on track to ex-

ceed $1 trillion starting this

year, due in part to the 2017

tax law, which constrained

federal revenue collection last

year, and a 2018 budget deal

that busted spending caps en-

acted in 2011.

Senior Treasury officials at-

tributed this year’s higher def-

icit primarily to a surge in

government spending, and em-

phasized that federal revenues

have climbed nearly 7% since

May. Corporate tax revenue in

particular has rebounded in

recent months, after a period

when analysts were unsure

why it was running below

Congressional Budget Office

projections.

Still, revenue growth has

continued to lag the broader

economy, and is below where

forecasters projected it would

be prior to the 2017 tax cuts.

Federal spending has con-

tinued to climb. The Treasury

said Thursday that spending

on the military and interest

costs on government debt

each rose 9% from October

through August, and Medicare

expenses increased 10%.

It isn’t yet clear whether

the deficit will exceed $1 tril-

lion for the full fiscal year, be-

cause the government usually

collects more revenue in Sep-

tember than it spends, which

could bring the overall figure

down. The White House Office

of Management and Budget in

July projected the deficit

would hit $1 trillion by the

end of September, while the

CBO last month said it ex-

pected a total deficit of $

billion in fiscal 2019.

Growing deficits have led

the Treasury to ramp up bor-

rowing. The government said

it expected to borrow more

than $1 trillion for the second

year in a row in 2019. Govern-

ment debt held by the public

has risen from $14.4 trillion

at the start of the Trump ad-

ministration, to nearly $

trillion.

Treasury Secretary Steven

Mnuchin said Thursday the

government was considering

financing options that could

reduce borrowing costs, in-

cluding introducing a 50-year

bond and lengthening the ma-

turity of Treasury borrowing.

WASHINGTON—The U.S.
budget gap widened to more
than $1 trillion in the first 11
months of the fiscal year, the
Treasury Department said
Thursday, the first time year-
to-date deficits have topped
that amount in seven years.
Higher spending on the mil-
itary, rising interest expenses
on government debt and weak
revenues early in the fiscal
year combined to push the
deficit up 19% from October
through August, compared
with the year-earlier period.
Government spending climbed
7%, to $4.1 trillion, outpacing
higher federal tax receipts,
which grew 3%, to $3.1 trillion.
That brought the total defi-
cit to $1.07 trillion so far in
fiscal 2019, which started Oct.

BYKATEDAVIDSON

U.S. Deficit Now Tops $1 Trillion

THE WALL STREET JOURNAL

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TEXAS

Death Penalty Urged

In Walmart Shooting

The anti-immigrant gunman
who allegedly killed 22 people
and wounded 25 more at an El
Paso Walmart last month has
been indicted on capital murder
charges by a local grand jury. El
Paso County District Attorney
Jaime Esparza said that he will
seek the death penalty against
21-year-old Patrick Crusius.
He is being held without
bond in the county jail.
Mark Stevens, the attorney
representing Mr. Crusius, said he
didn’t yet have a copy of the in-
dictment. “We need to see the
indictment before we comment
on it,” Mr.Stevenssaid.
—Erin Ailworth

ECONOMY

Weak Energy Prices

Hold Down Inflation

U.S. consumer prices rose
slowly in August, held down by
weak energy prices that masked
a broader firming in inflation.
The consumer-price index,
which measures what Ameri-
cans pay for items from fresh
whole milk to lawn-care services,
rose a seasonally adjusted 0.1%
in August from a month earlier.
The sluggish pace of overall
inflation largely reflected a de-
cline in energy prices. Core con-
sumer prices, which exclude the
volatile categories of food and
energy, increased 0.3% from the
previous month. From a year
earlier, the CPI increased 1.7% in
August and core prices climbed
2.4%, the fastest annual pace
since July 2018 when core prices
also rose 2.4%.
— Likhitha Butchireddygari

STORM DAMAGE: Grand Rapids, Mich., on Thursday began assessing the havoc brought by severe thunderstorms and possible

tornadoes the day before. Tens of thousands of people lost power. No injuries were reported.

NEIL BLAKE/THE GRAND RAPIDS PRESS/ASSOCIATED PRESS

escalating,” said Rufus Yerxa,

president of the National Foreign

Trade Council. “Given what’s

happened before, I’d be cautious

about assuming this means

we’re on a quick path to a deal.”

Beijing hopes to adopt a

two-track approach before the

planned talks between its trade

team, led by Vice Premier Liu

He, and the U.S. delegation, led

by Trade Representative Robert

Lighthizer, these people said.

While Mr. Liu would continue

to lead talks on trade issues, a

separate team would be as-

signed to manage the other

geopolitical matters, they said.

Deputy-level Chinese trade

officials plan to head to Wash-

ington next week to pave the

way for the high-level meeting,

another person familiar with

the matter said.

If talks progress, there is a

possibility the two sides could

achieve a deal that would be far

more limited than the sweeping

agreement that was pursued in

May, but one that could pause

or even roll back U.S. tariffs to

cover just $250 billion of Chi-

nese imports, a person familiar

with the efforts said.

Asked about that possibility

of a limited deal later Thursday,

Mr. Trump said he would con-

sider it, but “I’d rather get the

whole deal done.”

U.S. business groups support

any progress toward a deal,

pointing to the increasing toll

tariffs will take on U.S. compa-

nies and consumers. “We urge

both sides to work toward elim-

inating tariffs, realize the con-

crete progress that is possible

today, and build momentum for

longer-term negotiations on the

most challenging issues,” said

Craig Allen, the president of the

U.S.-China Business Council.

In Washington, Treasury

Secretary Steven Mnuchin said

the U.S.’s top concerns remain

intellectual-property rights and

forced joint ventures, as well as

currency issues.

Unrest in Hong Kong isn’t

under discussion as part of the

trade talks, Mr. Mnuchin said,

but he didn’t address whether

negotiators would discuss Hua-

wei Technologies Co., which the

U.S. regards as a security threat

amid a global shift to next-gen-

eration wireless networks.

He also dismissed specula-

tion that the administration

would accept a watered-down

deal ahead of the 2020 election.

Mr. Trump, a Republican, “is

prepared to keep these tariffs in

place,” the secretary said. “He

is prepared to raise tariffs if we

need to raise tariffs.”

He said agricultural pur-

chases by China would be a

central piece of any deal. Mr.

Trump, in a brief morning

tweet, echoed those remarks:

“It is expected that China will

be buying large amounts of our

agricultural products!”

China has taken tentative

steps in that direction. Ahead of

October’s talks, Beijing has been

looking to lighten the mood by

making more purchases of U.S.

agricultural goods, which could

include pork and soybeans, to

show its sincerity in meeting a

demand for which Mr. Trump

has pressed hard throughout

the trade dispute.

Trade talks fell apart in May,

when the U.S. accused Beijing

of backtracking on pledges to

enact deeper changes to its eco-

nomic system. Chinese officials

denied such charges and said

any agreement between the two

countries has to be balanced—

meaning the U.S. would have to

make compromises, too.

In a sign that Beijing is be-

coming more eager to move

forward with talks, China has

played up the need for the two

countries to work together

through its state media. “The

tone has changed,” said Huo Ji-

anguo, the former head of a

trade-policy body under China’s

Commerce Ministry. “The Chi-

nese side is putting out a signal

of urgency.”

While business groups wel-
comed the efforts, many of the
nations’ sharpest disagree-
ments remain unresolved.
Stocks rose on the news, but
some business leaders cau-
tioned that both sides have ap-
peared close to reaching an ac-
cord in the past, only to have
negotiations break down.
The two nations remain di-
vided on how to remove tariffs
that cover the majority of trade
between them, China’s practices
with intellectual property and
investment restrictions on U.S.
businesses, as well as Beijing’s
extensive reliance on state-
owned enterprises.
“It’s a hopeful sign that
they’re de-escalating rather than

ContinuedfromPageOne

China

Focuses on

Trade Rift

The two sides could

reach a deal far more

limited than the one

pursued in May.