THEBUSINESS AGENDA, - Dow Jones & Company

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JOURNAL REPORT

? 2017 Dow Jones & Company. All Rights Reserved.

THE WALL STREET JOURNAL.

MIKE

PENCE

`By eliminating the mandate, we will enact tax relief for working families.'

BETSY

DEVOS

`We still fundamentally operate on a model that was brought to us 150 years ago by the

Prussians.'

Monday, November 20, 2017 | R1

THE BUSINESS

AGENDA,

At the annual gathering of The Wall Street Journal's CEO Council, top executives heard from the

administration about what it has

ONE YEAR IN accomplished--and the prospects for more change in the near future

AMY

KLOBUCHAR

`My issue with this reform bill is the debt

piece, the $1.5 trillion.'

GARY

COHN

`We need to make our businesses more

competitive.'

STEVEN

MNUCHIN

`This is about middleincome tax cuts and making our business taxes competitive.'

WILBUR

ROSS

`Job creation is the real purpose of reducing the

trade deficit.'

MITCH

McCONNELL

`This is not your father's Democratic Party. There are very few moderate Democrats left.'

KEVIN

HASSETT

`We're going into next

year with a significant amount of momentum.'

INSIDE

Mike Pence on tax reform, trade and the president's leadership qualities, R2 Steven Mnuchin says with reform the corporate tax rate isn't going above 20%, R4 Wilbur Ross explains why the administration prefers bilateral trade deals, R4

Mitch McConnell on taxes, bipartisanship and divisions in the Republican Party, R6 Amy Klobuchar and Mark Warner lay out the Democrats' vision of tax reform, R8 Gary Cohn on the GOP tax plan's impact on productivity and the housing market, R11

Anne Case and Angus Deaton discuss the dire state of white, working-class Americans, R12 Kevin Hassett tells how the U.S. can get to sustained 3% GDP growth, R12 Betsy DeVos says the education system needs to turn around and look forward, R13

Lawrence Summers sees dangers in the Trump administration's approach to trade, R14 PLUS John Ford on how who is benefitting most from innovation, R6 John Ferriola on the Trump administration's engagement with manufacturers, R8

Jay Walker imagines a lie-detecting app at the intersection of biology and business, R9 Jerry Kaplan on the effects of artificial intelligence on society and labor, R11 Chris Liddell says the White House will listen to businesses of all kinds, R13

PAUL MORSE FOR THE WALL STREET JOURNAL

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PAUL MORSE FOR THE WALL STREET JOURNAL

R2 | Monday, November 20, 2017

JOURNAL REPORT | CEO COUNCIL

THE WALL STREET JOURNAL.

The Vice President on Taxes and Trade

Mike Pence says the administration thinks they have the votes for tax reform--and offers a defense of the president's leadership qualities

The Trump administration is one of the most pro-business in recent memory. What do its agendas mean for companies? Vice President Mike Pence spoke on the state of the nation, and then discussed a range of issues with The Wall Street Journal's executive Washington editor, Gerald F. Seib. Here are edited excerpts.

Where we are

MR. PENCE: The president is winging his way back from a journey across the Asia Pacific. He has been about the business of restoring American leadership on the world stage. He joined President Xi in China to announce agreements that will benefit the American economy.

President Trump earlier this year made the decision to withdraw from the Trans-Pacific Partnership. America will pursue bilateral trade agreements. We expect that markets will be open to an equal degree on both sides.

America's economy, and confidence in America, is rebounding. Businesses from the outset of this administration have created 1.5 million new jobs. The stock market is setting new records. The economy has grown by at least 3 percentage points for the past two quarters. Before the end of this year, we're going to cut taxes for working families and businesses.

Let me also say that the president and I welcome word that the Senate Finance Committee will include the repeal of the individual mandate of Obamacare. By eliminating the mandate, we will enact tax relief for working families.

The trade issue

MR. SEIB: In his work in Asia, the president enunciated a paradigm shift in trade. We're going to focus on bilateral deals that are better for the

U.S. But let me pose the problem that some people see with that approach, which is that by leaving the multilateral arena, you're creating a vacuum, in Asia in particular, that China will step in and fill. Is that a concern to you? MR. PENCE: President Trump believes in free and fair trade, but that multilateral deals result in the United States losing leverage. He believes we'll be able to advance the interests of our country and the countries we're trading with more effectively with arm's-length relationships. MR. SEIB: When the other 11 countries in the Trans-Pacific Partnership say, "We're moving on," is that a train leaving with us left behind? MR. PENCE: We don't think so. This is the most powerful economy in the history of the world. We're in the midst of renegotiating the North American Free Trade Agreement. The president is very passionate about this, that the United States has not pressed our interests enough in recent years.

I have heard it many times in private, but the president has said it very much in public this week, "Well, I don't blame China for a bad trade deal." He blamed the policy makers in the United States who have allowed that kind of a relationship to evolve.

So I think the honesty of that kind of dialogue, the strength of the American economy, puts us in a position to move toward what the president envisions, bilateral winwin trade relationships. MR. SEIB: Let me turn to your sales pitch on the tax bill. We did a national poll in which only 16% said they favored cutting corporate taxes. And 37% said businesses are paying less than their fair share, which would suggest you've

MIKE PENCE | `We believe that we've isolated North Korea economically and diplomatically in ways that have never occurred.'

got a way to go to make the sale about a combination of a corporate tax cut and an individual cut. Can you do that? MR. PENCE: I think we can. I traveled around the country, meeting with businesses large and small, and people get it. They understand what a barrier our tax code has been to growth and to jobs. But we need business leaders in this country to tell that story too.

MR. SEIB: Are you going to have 52 Senate votes going forward, or is this problem in Alabama going to cost you one of those? MR. PENCE: We believe we'll have the votes. We believe that we're making steady progress in the United States Senate and in the House of Representatives and that we'll have the votes. But we're taking nothing for granted.

Dealing with Korea

MR. SEIB: Is there an opening for diplomacy to solve the North Korea nuclear problem? MR. PENCE: President Trump made very clear what our policy is. First and foremost, the era of strategic patience is over. We're absolutely committed to resolving this issue. All options are on the table, but we continue to hope and we continue to work to resolve this issue peaceably, by bringing economic and diplomatic pressure to bear.

We believe that we've isolated North Korea economi-

Biggest Worries

Percentage of CEOs in the U.S. who say they are extremely concerned about these threats to their organization's growth prospects

Overregulation

56%

Cyberthreats

50%

Increasing tax burden

41%

Uncertain economic growth

38%

Geopolitical uncertainty

34% Source: PricewaterhouseCoopers

survey of 114 CEOs in the U.S. as

Speed of technological change 32%

part of the 2017 Global CEO Survey, conducted from

Protectionism

27%

September to November 2016. THE WALL STREET JOURNAL.

cally and diplomatically in ways that have never occurred before. China's taken action that they've never taken before. We believe they need to do more. Other countries in the region need to do more.

President Trump is absolutely committed to achieve what is the consensus objective of the world community, and that is that North Korea would abandon its nuclear and ballistic missiles program. And that we would have a nuclearfree Korean Peninsula. MR. SEIB: We earlier today canvassed this group and asked them for questions that I might pose to you. One person said, "I voted for Trump 12 months ago. I would vote for him today. I believe our system needs to be shaken up, but it's painful to watch at times. Being a sensible Midwesterner," that's you, "how

do you put up with all the chaos and periodic silliness?" MR. PENCE: I couldn't be more proud to be vice president for Donald Trump. The American people elected the right man at the right time.

When we got the call about being considered for this job, I'd only met the president twice. We said we were honored, but never expected we would be asked.

I said, "There's two things I'd want to know. Number one, I'd like to know the job description." Because there's only one person that writes it. The second thing I said is, "We'd need to know them as a family." I said, "Now, I know none of that's possible." This was late June. I said we wouldn't be able to spend the kind of time together that we could get to know each other.

Two days later I got a call that said, "Not only did the

candidate like your response, but he wanted to invite you to spend Fourth of July weekend with him, and bring your whole family. And his family's going to be there." We arrived on a Friday night. We went to the clubhouse. My wife and my daughter were with me.

Dave's been running Bedminster since the president bought it a number of years ago. He walked over to the table and he said to me, "I just wanted to check and make sure everything's OK, and you guys have what you need." I said, "Oh, it's wonderful."

Dave said, "You know how he is. He's called a couple of times from the car to make sure everything is squared away."

There were two things in that moment that I've seen every single day with President Donald Trump. Number one is, he has high standards. Things have to be right. I've spoken to the president every day during this trip, with few exceptions, and every day he's talked to me about tax cuts. He's totally focused.

The other thing I saw was another quality of leadership, because when Dave said to me, "He's going to want to make sure things are right," he said it with a smile. There's two great qualities of leaders. Vision and standards. Number two, you've got to inspire people to want to work for you. That's the kind of leader President Trump is.

CEO COUNCIL MEMBERS

(Chief executive officers except as noted)

Dennis Abboud, Readerlink Nicholas Akins, American

Electric Power Keith Allman, Masco Corp. Mukesh Ambani, Chairman

and Managing Director, Reliance Industries Ltd. Carl Armato, Novant Health Johan Aurik, Global Managing Partner and Chairman, A.T. Kearney Ziv Aviram, OrCam Mitch Barns, Nielsen John Barrett, Western & Southern Financial Group Dominic Barton, Global Managing Director, McKinsey & Co. Patrick Bass, Thyssenkrupp North America Inc. Inga Beale, Lloyd's Brendan Bechtel, Bechtel Todd Becker, Green Plains Swan Gin Beh, Chairman, Singapore Economic Development Board Marc Benioff, Salesforce Aneel Bhusri, Workday Inc. Richard Bielen, Protective Life Corp. Benjamin Breier, Kindred Healthcare Inc. Heather Bresch, Mylan Vincent Brun, President, Vacheron Constantin North America Michael Burke, Aecom Gregory Cappelli, Executive Chairman, Apollo Global William Carstanjen, Churchill Downs Inc. Anil Chakravarthy, Informatica Jim Chirico, Avaya Michael Choe, Charlesbank Andrew Collins, Sentient Jet Steven Collis, AmerisourceBergen Corp. Steven Corwin, NewYorkPresbyterian Hospital Roger Crandall, Massachusetts Mutual Life Bal Das, Chairman, BGD J. Roberto Delgado, Founder and Group Chairman, Transnational Diversified Group Inc. Douglas DeVos, President, Amway Corp. Craig Donohue, Options Clearing Corp.

Michael Dowling, Northwell Health

Gina Drosos, Signet Jewelers

Francisco D'Souza, Cognizant

Joachim Eberhardt, President, Jaguar Land Rover North America LLC

Richard Edelman, Edelman Bilal Eksi, Turkish Airlines Hikmet Ersek, Western

Union Sharb Farjami, Global CEO,

Storyful Michael Farrell, ResMed Thomas Farrell, Dominion

Energy Bradley Feldmann, Cubic John Ferriola, Nucor Corp. Dan Florness, Fastenal Co. John Forsyth, Wellmark Inc. Eric Foss, Aramark Simon Freakley,

AlixPartners Adena Friedman, Nasdaq Jack Fusco, Cheniere Energy Ignacio Galan, Iberdrola SA Mark Ganz, Cambia Health Robert Garrett, Co-CEO,

Hackensack Meridian Health Thomas Gayner, Co-CEO, Markel Eli Gelman, Amdocs Patrick Gelsinger, VMware Mike George, QVC Kristalina Georgieva, World Bank Eric Gernath, SUEZ North America Seifi Ghasemi, Air Products & Chemicals Inc. Susan Gilchrist, Group CEO, Brunswick Group Daniel Glaser, Marsh & McLennan Cos. Alex Gorsky, Johnson & Johnson Services Inc. C.P. Gurnani, Tech Mahindra Ltd. Mauricio Gutierrez, NRG Jim Hagedorn, Scotts Miracle-Gro Co. John Haley, Willis Towers Watson Gregory Hayes, United Technologies Corp. Tom Hayes, Tyson Foods Edward Heffernan, Alliance Data Systems Inc. David Holmberg, Highmark Health Lisa Hook, Neustar Inc.

David Hunt, PGIM Basheer Janjua, Integnology Barbara Jenkins,

Superintendent, Orange County Public Schools Jo Ann Jenkins, AARP Alan Joyce, Qantas Airways Rana Kapoor, Yes Bank Alex Karp, Palantir Michael Kasbar, World Fuel Services Corp. Brad Katsuyama, IEX Group Margaret Keane, Synchrony Declan Kelly, Teneo Brian Kesseler, Tenneco Inc. Christopher Klein, Fortune Brands Home & Security Daniel Knotts, RRD Henry Kravis, Co-Chairman and Co-CEO, KKR & Co. Sarah Krevans, Sutter Health Vinod Kumar, Group CEO, Tata Communications Donald Layton, Freddie Mac Claude LeBlanc, Ambac William Lewis, Dow Jones Jim Lico, Fortive Robert Livingston, Dover James Loree, Stanley Black & Decker Peter Lowy, Co-CEO, Westfield Corp. Rob Lynch, VSP Global Elie Maalouf, CEO, the Americas, IHG Alex Mahon, Channel 4 Kevin Mandia, FireEye Inc. William Mansfield, MUFG Securities Americas Inc. Kathryn Marinello, Hertz Global Holdings Masahiro Maruyama, Mainichi Newspapers Timothy Mayopoulos, Fannie Mae John McAvoy, Con Edison Bill McDermott, SAP SE Karl McDonnell, Strayer Education Inc. Tom McGee, ICSC Thomas McInerney, Genworth Financial Inc. Michael McKelvy, Gilbane Building Co. Richard McKenney, Unum William McMullen, Kroger Manoj Menda, Corporate Chairman, RMZ Corp. Fernando Merc?, Nestl? Waters North America Larry Merlo, CVS Health Chris Michalak, Alight Solutions

Shunichi Miyanaga, Mitsubishi Heavy Industries Ltd.

Matthew Moynahan, Forcepoint

Deanna Mulligan, Guardian Life Insurance

Oscar Munoz, United Airlines

Rupert Murdoch, Executive Chairman, News Corp

Clarke Murphy, Russell Reynolds Associates

Eileen Murray, Co-CEO, Bridgewater Associates

Albert Nahmad, Watsco Pierre Nanterme, Accenture Ronald Nersesian, Keysight C.L. Max Nikias, President,

University of Southern California Ray Nolte, Managing Partner, Chief Investment Officer, SkyBridge Capital Indra Nooyi, PepsiCo Inc. Gary Norcross, FIS John Noseworthy, Mayo Clinic Patrick Pacious, Choice Hotels International Inc. Paul Perreault, CSL Behring Stefano Pessina, Walgreens Boots Alliance Yitzhak Peterburg, Teva Pharmaceutical Douglas Peterson, S&P Global Charles Phillips, Infor Nicholas Pinchuk, Snap-on Richard Plepler, Home Box Office Inc. Anne Pramaggiore, ComEd Anthony Pratt, Executive Chairman, Visy Industries Lawrence Prior, CSRA Inc. Serge Pun, Chairman, SPA Myanmar Joel Quadracci, Quad/Graphics Thomas Quinlan, LSC Communications Inc. Karan Rai, Asgard Partners Krishnan Rajagopalan, Heidrick & Struggles D. Rajkumar, Chairman and Managing Director, Bharat Petroleum Corp. Nitin Rakesh, Mphasis Ltd. Punit Renjen, Global CEO, Deloitte Gina Rinehart, Executive Chairman, Hancock Prospecting Group Girish Rishi, JDA Software Chuck Robbins, Cisco

Ginni Rometty, IBM John Rosanvallon, Dassault

Falcon Jet Panu Routila, Konecranes Mitchell Rudin, Vice

Chairman, Mack-Cali Gisbert Ruehl, Kloeckner Tim Ryan, U.S. Chairman,

PwC Amy Schabacker Dufrane,

HR Certification Institute George Schindler, CGI David Seaton, Fluor Corp. Jahja Setiaatmadja,

President Director, PT Bank Central Asia Tbk Charles Shaver, Axalta Takumi Shibata, Nikko Asset Management Michael Silvestro, Flexjet Keith Skeoch, Standard Life Frederick Smith, FedEx Gerry Smith, Office Depot Martin Sorrell, Group CEO, WPP PLC K.R. Sridhar, Bloom Energy Arthur Steinmetz, OppenheimerFunds Inc. Todd Stevens, California Resources Corp. Motokuni Takaoka, Airweave Anthony Tersigni, Ascension Robert Thomson, News Corp Alan Trefler, Pegasystems Paul Tufano, AmeriHealth Caritas N.V. Tyagarajan, Genpact Tien Tzuo, Zuora Jing Ulrich, Managing Director, Vice Chairman of Asia Pacific, J.P. Morgan C. Vijayakumar, HCL Jay Walker, Upside Jeffrey Walker, CIMC Capital Timothy Wallace, Trinity Industries Inc. Mark Weinberger, EY Dion Weisler, HP Inc. Elliot Weissbluth, HighTower Jim Whitehurst, Red Hat Michael Wolf, Activate Mark Wrighton, Washington University in St. Louis JefferyYabuki, Fiserv Inc. Yuanqing Yang, Lenovo Harold Yoh, Day & Zimmermann Wei Zhao, Executive Director, President, ZTE

PARTICIPATING GUESTS Anne Case, Professor of

Economics and Public Affairs, Emeritus, Princeton University Gary Cohn, Director, National Economic Council Angus Deaton, Nobel Laureate in Economics; Senior Scholar and Professor of Economics and International Affairs, Emeritus, Princeton Betsy Devos, U.S. Secretary of Education John Ferriola, Chairman, President and CEO, Nucor Martin Ford, Author, "Rise of the Robots: Technology and the Threat of a Jobless Future" Michael Froman, Distinguished Fellow, Council on Foreign Relations; former U.S. Trade Representative Kevin Hassett, Chairman, White House Council of Economic Advisers Jerry Kaplan, Adjunct Professor, Stanford; Author, "Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence" Sen. Amy Klobuchar (D., Minn.) Chris Liddell, Assistant to the President, Director of Strategic Initiatives, The White House Steve Mnuchin, U.S. Secretary of the Treasury Theresa Payton, President and CEO, Fortalice Solutions; former CIO, The White House Mike Pence, Vice President of the United States Wilbur L. Ross Jr., U.S. Secretary of Commerce Matthew J. Slaughter, Dean, Tuck School of Business, Dartmouth Lawrence H. Summers, President Emeritus, Harvard; former U.S. Secretary of the Treasury Jay Walker, Founder and CEO, Upside; Founder, ; Founder, Library of the History of Human Imagination Sen. Mark Warner (D., Va.)

P2JW324000-0-R00300-1--------XA

THE WALL STREET JOURNAL.

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R4 | Monday, November 20, 2017

JOURNAL REPORT | CEO COUNCIL

THE WALL STREET JOURNAL.

The Bottom Line on the Tax Cuts

Treasury Secretary Steven Mnuchin, optimistic about completing tax reform before year-end, says the corporate rate isn't going above 20%

STEVEN MNUCHIN | `Fundamentally we believe that the federal government should get out of the business of subsidizing the states.'

It's a time of tremendous confidence in the U.S. economy and stock market. But there are large question marks about the immediate and longterm prospects--from proposed tax changes to the fate of trade deals.

To put those matters in perspective, Wall Street Journal Editor in Chief Gerard Baker spoke with Treasury Secretary Steven Mnuchin. Here are edited excerpts of the discussion. MR. BAKER: Does it worry you that expectations in the market and in business and consumer confidence are maybe too high? MR. MNUCHIN: No, it doesn't worry me. People are very excited about what the Trump administration's economic policies are. The president has been very clear this is all about creating growth. That we've been in a period for the

last eight years of very low growth. The president fundamentally believes we can get back to 3% or higher sustained GDP.

We have a high degree of confidence in getting tax reform done between now and the end of the year. It's critical to the economy. MR. BAKER: Taxes are very much a moving target right now because we have the House proposal for tax reform and the Senate proposal, and obviously those two have to be reconciled in some way. Twenty percent corporate rate of tax. The House proposal is to have it begin immediately in the next fiscal year. The Senate defers it for a year. Does that worry you? Given that we have these high expectations for a lower-tax environment, does it concern you that the Senate defers that tax cut?

MR. MNUCHIN: It doesn't. Our preference is to start this sooner. But let me just put this in perspective. When you look at fundamentally where we are, the president's objectives, the House's objectives and the Senate's objectives are all aligned.

We want to create a competitive business-tax system. We have one of the highest tax rates in the world. We have a crazy concept of, "If you leave the money offshore, you don't pay taxes." So it's not a surprise trillions of dollars are sitting offshore.

The president also wants us to have middle-income tax cuts. That's what the House plan is about. That's what the Senate plan is about. When you look at them, there are some minor differences. But the good news is, the objectives are exactly the same. Whatever differences there

PAUL MORSE FOR THE WALL STREET JOURNAL (2)

are, I'm comfortable that we will get them together. MR. BAKER: Is that 20% rate low enough in terms of the international environment to get the kind of boost to investment in the U.S., investment in jobs that you want? How important is it that it stays as close to 20% as possible? Because there is some suggestion that as part of the compromise process it might drift up. MR. MNUCHIN: No, it's not going up. I can tell you this is one of the things that the president feels very strongly about. Twenty percent. So this will be a significant tax cut for corporations. MR. BAKER: Turning to some of the provisions on the personaltax side, one that's causing a lot of neuralgia for a lot of members of Congress, particularly Republican members of Congress in high state- and local-tax states, is the provision to eliminate or to significantly reduce the deductibility of state and local taxes.

You know very well there are a number of Republicans who have already come out in the House and said they can't support it. The Senate does away with it completely in its proposal. Is that something that you'll be willing to be flexible about? MR. MNUCHIN: The issue here is fundamentally we believe that the federal government should get out of the business of subsidizing the states. Having said that, if you're in New York, you're in New Jersey or you're in California, for a median income of $75,000, a family of four, you're going to get a tax cut that's over $1,000. For someone who makes $300,000, you're going to get a tax cut, even in the high-tax states, of several thousand dollars.

For someone who makes $1 million in the high-tax states, you are going to get an increase. But those people will get the benefit of lower busi-

ness taxes. As the president said, this is not about cutting taxes for rich people. This is about middle-income tax cuts and making our business taxes competitive. MR. BAKER: Almost the very first thing the president did as he took office was to take the U.S. out of the Trans-Pacific Partnership. The other 11 TPP signatories or planned signatories have agreed to go ahead and push on with their own trade pact. The worry is that the U.S. is missing out here on an opportunity for leadership that other countries in the region are seizing. Isn't it a risk that you're not going to be part of critical discussions as this critical region continues to grow and seek opportunities for growth? MR. MNUCHIN: We fundamentally disagree with that interpretation. When I showed up at my first G-20 meeting, it was right after the president had been elected. People were concerned. People were concerned about our policies on trade. People were concerned about protectionism.

Let me be clear. The presi-

dent believes in free and fair trade. We are one of the largest trading partners in the world. We have one of the most, if not the most, open investment market in the world. The president wants to make sure that other markets are as open to us as we are to them.

Two of the conversations the president had with President Xi were on trade and North Korea. The president wants to make sure these other markets are open and that we have fair trade for the U.S. MR. BAKER: What about Nafta? The president keeps threatening to withdraw the U.S. from Nafta if it doesn't get the kind of concessions it wants. The Wall Street Journal polls economists, and 89% of the economists polled said for the U.S. to pull out of Nafta would hurt the U.S. economy. Are they wrong? MR. MNUCHIN: If the end result is we have a better deal, which is what the president wants, that will be better for the U.S. economy and for U.S. business. I'm optimistic that we will renegotiate this deal.

Deficit Outlook Before Tax Reform

The Congressional Budget Office's comparison of its baseline estimate of federal budget deficits and its estimate of deficits under President Trump's proposed budget, in billions of dollars

$1,500

1,250

Baseline Budget

1,000

750

500

250

0

2018 '19 '20 '21 '22 '23 '24 '25 '26 '27

Note: The amounts shown do not include estimated macroeconomic feedback effects on

the federal budget. Taking into account the smaller deficits under the president's budget,

the CBO estimates that the effects of that economic feedback would further reduce the

cumulative deficit between 2018 and 2027 by roughly $160 billion. The resulting cumulative

deficit would be 2.8% of estimated gross domestic product, compared with 2.9% of GDP

excluding such feedback.

Source: Congressional Budget Office

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Talking About Trade

Wilbur Ross explains why the administration prefers bilateral deals to multilateral ones

President Donald Trump, who has called for new trade deals since he hit the campaign trail, made it clear on his recent trip to Asia that the U.S. will drop out of the Trans-Pacific Partnership. The North American Free Trade Agreement, meanwhile, is being renegotiated. Secretary of Commerce Wilbur Ross discussed what revamped trade policies could mean for the U.S. and its trading partners with Paul Gigot, editorial page editor of The Wall Street Journal. Edited excerpts follow.

Out of TPP?

MR. GIGOT: You don't think there's a chance the U.S. might enter the TPP, even to be able to renegotiate some of the terms? MR. ROSS: First of all, why do we favor bilateral versus multilateral? The problem we see with multilateral is, first of all, it takes too long to do. TPP itself took something like 10 years, then never even came into being. Now, during that kind of a period you've got a sort of negotiation exhaustion. Can you imagine if at the end of 10 years you go back to your spouse and you say, "You know, dear, I just blew 10 years of my life. We couldn't make a deal." That's a tough, tough thing. So by the end of it, you get to where people want a deal even if it isn't the deal.

Second problem is, let's say you're China and let's pretend you were going to be part of TPP, and I say, "I want these reforms from you," intellectual-property rights, so on. You'll say, "Sure, but here's what I want in return." So we get a little nick for that.

Then maybe he's Japan and I say, "Well, we need from you more agricultural reforms." And he says, "Fine, but I need this from you."

What does that mean? You both benefit from the nicks each other took out of us, even the ones you didn't ask for. Reproduce that 12 times and you have a pretty well nickedup body.

WILBUR ROSS | `The problem we see with multilateral is, first of all, it takes too long to do.'

MR. GIGOT: But you're talking about having what the president announced on this trip. He's willing to do bilaterals with all comers. That means 11 different bilaterals. Those are not easy either. MR. ROSS: Let's take a look at Nafta. Nafta is on a very short time fuse. It's a very large agreement, a very complicated agreement, needs a tremendous amount of revision. If in fact that's accomplished by more or less March of next year, which is what the current hope and plan is, mostly due to the political calendar, that would be an enormously complex thing done in a year. MR. GIGOT: You'll line up any number of bilateral deals those TPP countries are interested in? You'll knock 'em off? MR. ROSS: I think so. And one of the things we hope will come out of Nafta, even though it's a trilateral rather than a bilateral, is some language that we can roll out in other agreements. For example, intellectual-property rights is not a particularly huge issue between us and Canada and Mexico. So we should be able to get a decent set of wording for intellectualproperty rights. Same thing with some of the other sections. We think that having some standardized language,

rather than starting with a blank book every time you negotiate, will also save a lot of time.

Tax bill

MR. GIGOT: Would you agree that one of the goals of the tax bill, particularly the corporate reform, is to make the U.S. a real Mecca for investment? MR. ROSS: Absolutely.

MR. GIGOT: Let's say it passes in a form close to what the House and the Senate have now submitted. Have you told the president that, if that happens, the dollar is likely to go up, because investment's going to flow here, and you're likely to see a big increase in the dollar? MR. ROSS: The dollar going up would be a function of a whole lot of things. Monetary policy comes into effect. The amount of the federal budget deficit is going to have an impact. There's a lot other than taxes that would have an impact on where the dollar trades.

MR. GIGOT: If you get that big capital inflow, you're going to get an increase in the trade deficit, almost by definition. And that's not something the president says he wants. MR. ROSS: It is true, obviously, that both sides must balance

Please see ROSS page R9

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JOURNAL REPORT | CEO COUNCIL

THE WALL STREET JOURNAL.

McConnell on Taxes And Bipartisanship

The Senate majority leader also weighs in on the Alabama race and the divisions within the Republican party

As the GOP tax bill heads toward completion, are congressional Republicans in sync with the president?

Gerald F. Seib, The Wall Street Journal's executive Washington editor, spoke with Mitch McConnell, the U.S. Senate majority leader. Here are edited excerpts. MR. SEIB: We've had a lot of conversations about tax cuts, tax bills, tax reform. You're the guy who has to make it happen. Will this happen, and will it happen by the end of this year? [The House passed a tax bill after this interview took place.] SEN. MCCONNELL: Yes, it will happen. Everybody believes it's important for the country, and obviously it's important to

us politically. We'll pick it up in the Sen-

ate the week after Thanksgiving. The markup, the drafting of the bill in the finance committee, is going on as we speak this week. It'll be on the floor the week after Thanksgiving. MR. SEIB: The president's made it clear via Twitter that he hopes you will include in the tax bill an elimination of the individual mandate under Obamacare. That complicates the picture because you're commingling taxes and health. Are you going to do that? SEN. MCCONNELL: The Senate finance committee has decided to include that. It helps in several ways. The additional revenue helps do a couple of

things that are important. I think it gives us a shot at making the corporate tax rate permanent, and it provides some additional funding to middle-class tax relief. So it's pretty appealing to us. MR. SEIB: What do you want to happen in Alabama? You said you hope Roy Moore withdraws from the race. Do you think that's going to happen? If that doesn't happen, what recourse do you have? SEN. MCCONNELL: First, it will not impact taxes. No matter who's elected they won't be certified till Dec. 23, and so we're pretty confident that the tax issue will be dealt with by the current members of the Senate.

With regard to the Alabama

VOICES FROM THE CONFERENCE

"Once machines were clearly tools. They were something that workers used that made those workers more valuable. Now, increasingly, at least relative to many workers, the machines are becoming autonomous. This means that rather than complementing workers and making workers more valuable, the machines are, in many cases, substituting for workers.

"In fact, making those workers less valuable. And I think that that is one of the things that's driving this significant gap between compensation and productivity. In essence, what's happening here is that the fruits of innovation and of progress are now accruing almost entirely to people at the top of the income-distribution scale. It's business owners, managers, investors. And average people are really getting very little of that."

John Ford, Author, "Rise of the Robots: Technology and the Threat of a Jobless Future"

SEN. MITCH McCONNELL | `I think the administration's doing an outstanding job to begin to roll back regulations.'

race, Roy Moore should withdraw. The women who've come forward are completely credible.

His campaign is collapsing, and from a Republican point of view it produces a dilemma because the ballots have been printed. I've spoken with the president. He called me from Vietnam. I talked to Gen. Kelly and the vice president.

We're in discussion about how to salvage this seat if possible. It appears as if the only option would be a writein, and that's very seldom successful, although we had an example of it in 2010. Lisa Murkowski from Alaska ran a write-in campaign in the general election and actually won.

The name being most often discussed may not be available, but the Alabamian who would fit that standard would be the attorney general. That obviously would be a big move for him and for the president, but as the president is winding his way back to the United States, I'm confident this is an issue they're discussing. MR. SEIB: If he wins, would you seat him or would you seek to have him expelled? SEN. MCCONNELL: The Supreme Court in a case in 1969 said the act of seating someone, swearing them in, is limited to constitutional qualifications.

For example, are you a resident? Are you 30 years old? Continued service is a different matter. It's safe to say that if he were sworn in, he would immediately be in a process before the Senate ethics committee under which the women would be sworn in. He would be asked to testify under oath as well. It would be a rather unusual beginning. MR. SEIB: Does it bother you that we are continuing to try to enact big domestic, social and economic changes along partisan lines? SEN. MCCONNELL: It's a pretty partisan period. This is not your father's Democratic Party. There are very few moderate Democrats left.

We look at the last eight years and find not achieving one year of 3% growth a pretty underperforming economy. I think the administration's doing an outstanding job to begin to roll back regulations. If we can put on top of that pro-growth tax reform, we think there's a legitimate shot at getting the growth of our country up.

They don't look at it the same way. They think the economy's stagnant, and no matter how you arrange taxes, behavior doesn't change. If you're looking for bipartisanship, I don't think you're going

to see it on this issue. MR. SEIB: It's not your father's Republican party, either, and Steve Bannon is busy proving that. He says you should be out of your job by the end of the year, or the end of next year at least. There's a deep rift in your party, and is that going to stop you from having cohesion on important legislation? SEN. MCCONNELL: We've dealt with this element for several years. I remind people that those who win elections make policy, and losers go into another line of work.

This is an element that emerged in 2010 and 2012, succeeded in nominating candidates who lost in November and kept us from taking the Senate back.

I said, "This is not working. We need to start being assertive in primaries, start nominating people who can actually win." We did that in 2014, took the majority. Did it again in 2016, kept the majority. MR. SEIB: Did not do it, arguably, in Alabama in 2017. SEN. MCCONNELL: Very unusual situation in Alabama. A special election. It's an odd time. And we're optimistic that we're not going to allow people like Roy Moore to be nominated in any other state.

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P2JW324000-0-R00700-1--------XA

THE WALL STREET JOURNAL.

Monday, November 20, 2017 | R7

Seizing Opportunity Despite Uncertainty

What will America look like in 2026, when it reaches its 250th birthday?

CEOs across industries agree that this is a period of unprecedented change. But opportunities abound for those who can see what's coming down the road.

Consumers@250

Retailers and branded consumer-goods companies need to understand the ongoing consumer shift from affluence to influence.

Health@250

Providers, payers, manufacturers, and patients will experience an accelerating disruption of centuries-old approaches to managing human health.

Manufacturing@250

The Fourth Industrial Revolution will fundamentally remake global value chains and create entirely new business models.

Join the discussion: #America250

P2JW324000-0-R00800-1--------XA

R8 | Monday, November 20, 2017

JOURNAL REPORT | CEO COUNCIL

THE WALL STREET JOURNAL.

How Democrats See It

MR. BECKETT: Do you, yes or ternational companies from no, approve of a 20% corpo- continuing to use tax havens

rate tax rate?

in a way that I think will even

SEN. KLOBUCHAR: I don't ap- see further abuse than we've

prove of the bill right now got right now. So whether the

with that rate in it, for a lot of rate is 20% or 25%, if you've

the reasons Mark just out- got large multinationals pay-

lined. But I do want to bring ing effective rates of 2% or 3%,

down the corporate tax rate. I that is not fair to our domestic

want to simplify the taxes. core who are going to be pay-

My issue with this reform ing a much, much higher rate

bill is the debt piece, the $1.5 in the current plan.

trillion. I wish, when the presi-

dent had gotten elected, that Recent gains

he had worked with Sen. MR. BECKETT: Democrats had

Chuck Schumer--who wanted very good elections in Virginia

to do something about the and in New Jersey and Wash-

overseas money--and tied it in ington state last week. One

with infrastructure, which had lesson from each of you, suc-

always been our plan, and cinctly please, on what we

then combined that with should take away from that.

things that could truly help SEN. WARNER: If the Republi-

PAUL MORSE FOR THE WALL STREET JOURNAL (2)

the middle class, which would can party continues down this

include a minimum-wage in- civil war, and an agenda that

crease that we haven't seen is anti-immigrant, divisive in

for years, doing something an America that is increas-

about the student-loan refi- ingly diverse, they're going to

nancing.

get wiped out in not just tradi-

There are a number of tional areas but in the sub-

things that we could've done. urbs. And increasingly, we

But right now, this waited till even saw in parts of rural Vir-

after all this divisiveness, and ginia, a shift around. So I

we are where we are.

think those of us who are pro-

Amy Klobuchar and Mark Warner

business, who are pro-compet-

MR. BECKETT: Should I take itive, maybe there could be

Sens. Amy Klobuchar and Mark Warner say they are for tax reform. But not the way the Republicans are going about it.

that as a long no? SEN. KLOBUCHAR: OK. SEN. WARNER: At $20 trillion in debt, a 100-basis-point increase in interest rates adds

some strange new alliances. MR. BECKETT: Your one takeaway, Sen. Klobuchar? SEN. KLOBUCHAR: People want

about $150 billion, $160 billion a positive message. They

With Republicans in control national-security issues with does not keep us competitive. term as a full-time employee. a year, in additional debt pay- didn't like how Ed Gillespie

of all three branches of the finding out that Russia actu- But the real disadvantage Those jobs, again, are disap- ments. That's more than we [the losing Republican candi-

federal government, Paul Beck- ally used rubles to buy ads on spot right now is for low- and pearing. Think about a tax- spend federally at the Educa- date for governor in Virginia]

ett, Washington bureau chief Facebook. But it is bigger than moderate-income people not code reform that's going to be tion Department and Home- ran the campaign. And all this

of The Wall Street Journal, that: $1.4 billion was spent on having the training they need forward-leaning. And unfortu- land Security together.

negativity is going to boomer-

asked two Democratic sena- these online ads by political to continue to upgrade their nately, I don't think that's There's nothing in this tax ang back at the people that

tors--Amy Klobuchar of Min- campaigns, by issue groups, skills.

what's taking place right now. code that will discourage in- run campaigns like that.

nesota and Mark Warner of just in the last election. So If we're going to do repatri-

Virginia--what their party's this isn't about regulating the ation, which I agree, and give

message will be heading into internet. You're going to have folks an enormously advanta-

the 2018 elections. Edited ex- another set of eyes looking at geous rate, why not say part

cerpts follow.

these ads, to help ferret out of the price of that repatria-

VOICES FROM THE CONFERENCE

where they came from.

Social-media ads MR. BECKETT: You are both GOP tax plan

tion would be a meaningful worker-training program for anybody that makes less than

"This administration and particularly this president has been very engaging with manufacturing com-

sponsors [along with Sen. MR. BECKETT: Republicans $80,000 a year so that there is

panies, businesses in general. I think that's some-

John McCain] of a bill that would require disclosure of sponsorship for political advertising on social media, as is

sound very optimistic about getting tax cuts through. That will give them some momentum going into 2018, and an

some assurance that the benefits that are going to go, writ large, to corporate America, will at least flow through to

what expected, given his background. But I have found the president and the administration to be more open and willing to engage and have serious

required in other media, like economic stimulus and some of the workforce?

discussions about the issues that face manufac-

television. What's behind that achievement they can tout. Why not think about a porbill and does it have any What is the Democratic mes- table-benefit system so that

turing, more so than in the past."

chance of passage?

sage to counter that?

people can move from job to

John Ferriola, Chairman, President and Chief

SEN. KLOBUCHAR: I think it SEN. WARNER: We need sub- job? We have a social-benefits does have a chance of passage. stantial tax reform; having the system where you only get so-

Executive Officer, Nucor Corp.

First of all, there's the obvious highest nominal corporate rate cial benefits if you work long-

The Wall Street Journal would like to thank the sponsors of the 2017 CEO Council Annual Meeting

for their generous support.

For more information, please visit CEOCouncil.

? 2017 Dow Jones & Co. Inc. All rights reserved. 6DJ6150

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