U.S. Budget Deficit Is Already Over $1 Trillion

U.S. Budget Deficit Is Already Over  Trillion
Credit…Stefani Reynolds for The New York Times

The federal budget deficit topped $1 trillion for the first five months of the fiscal year, as the United States recorded red ink at a record clip while trying to combat the coronavirus pandemic.

Treasury Department figures released on Wednesday showed a shortfall of $1.04 trillion from October of last year through February. That was far higher than the $624 billion deficit the United States notched in the first part of 2020, before the pandemic set in.

The monthly deficit in February was $311 billion and reflected outlays associated with the $900 billion relief bill that Congress passed last December, which included $600 stimulus payments, expanded jobless benefits and small-business loan money. In February, the government spent $559 billion and took in $248 billion in tax revenue.

The Congressional Budget Office projected in February that the federal budget deficit will hit $2.3 trillion this year. Those numbers do not account for the $1.9 trillion relief package that Congress passed on Wednesday, which the C.B.O. estimates will add that amount to the deficit over the next 10 years.

Republicans in Congress have been expressing growing concern about the nation’s debt burden as they look to resist the Democrats’ policy agenda.

Once the stimulus package is enacted, the White House is expected to push a costly infrastructure bill that it hopes will pass later this year.

The United States recorded a record $3.1 trillion deficit in 2020 and is on pace to top that in 2021.

Adam Aron, AMC’s chief, said the distribution of vaccines would be the company’s “real salvation.”
Credit…Cristobal Herrera-Ulashkevich/EPA, via Shutterstock

Adam Aron, the chief executive and president of AMC Entertainment, the world’s largest theater chain, called the past year “the most challenging market conditions in the 100-year history of the company,” when presenting year-end earnings on Wednesday that included the loss of $4.6 billion.

Yet Mr. Aron struck an optimistic note about his company’s outlook for the year ahead based on the reduction in coronavirus cases, the reopening of theaters and the slate of blockbuster movies set to arrive beginning in May. He pointed specifically to Disney’s “Black Widow,” Universal’s “F9” and Paramount’s “Top Gun: Maverick.”

He added that “the real salvation” of AMC would be the jump in vaccinations both domestically and around the world.

“The most important person in the entire movie business,” Mr. Aron said, is not employed by “a studio nor any movie theater circuit,” but is Albert Bourla, the chief executive of Pfizer.

“He and his colleagues and those of Moderna and J&J have given us our newfound fortitude,” he added.

AMC lost $946 million in the quarter ending Dec. 31, even as theaters started to open back up after being closed for months.

At year’s end, 78 percent of the company’s U.S. operations had reopened with limited seating capacity. Internationally, 90 percent of the company’s theaters resumed operating in October, only to have to close again in the fourth quarter owing to a resurgence of the virus.

AMC said it shut down 60 low-performing theaters in 2020: 48 in the United States and 12 internationally. It also spent the year renegotiating its terms with studios, specifically Universal and Warner Bros., as they sent more films to their streaming platforms with theaters closed.

“Over the past several years, AMC has indicated that it is willing to be the most experimental movie circuit around with respect to window strategies,” Mr. Aron said, adding that the deals have to be good for AMC shareholders. “I continue to be optimistic that having been partners for a century, we can adjust our business relationships so they support both streaming and theatrical releases and do so, not at our expense.”

Facebook said the government’s lawsuits failed to prove the company was a monopoly and harmed competition.
Credit…Dado Ruvic/Reuters

Facebook on Wednesday asked a federal court to dismiss antitrust lawsuits brought by federal and state regulators, saying the suits failed to prove the company was a monopoly and harmed competition.

In a filing with the U.S. District Court of the District of Columbia, Facebook argued that it faced ample competition and that the Federal Trade Commission and 48 attorneys general from states and territories could not prove the company has harmed consumers.

“Antitrust laws are intended to promote competition and protect consumers,” Facebook said in a blog post. “These complaints do not credibly claim that our conduct harmed either.”

Facebook’s motion to the court is its first legal statement in what is expected to be a yearslong court battle over the power of the company and its future. Last December, the F.T.C. and attorneys general filed lawsuits claiming the company illegally built a monopoly through its mergers of Instagram in 2012 and WhatsApp in 2014 and had since used its dominant power to suppress competition.

Letitia James, the New York attorney general, who led the states’ complaint, said that Facebook was wrong about the law.

“We are confident in our case, which is why almost every state in this nation has joined our bipartisan lawsuit to end Facebook’s illegal conduct,” she said in a statement.

The F.T.C. declined to comment.

The lawsuit is seen as a landmark case to rein in the power of Big Tech. The Justice Department and dozens of state attorneys general have also sued Google for allegedly abusing its monopoly in search and advertising. Together, the cases have set the stage of the biggest effort by government regulators to tame the power of tech giants since a lawsuit against Microsoft two decades ago.

Facebook will have a steep burden to prove the claims in the lawsuits are not valid to win a motion to dismiss the case. The F.T.C. and states are expected to respond in April.

Stocks on Wall Street rallied for a second day on Wednesday after a monthly reading of inflation in the United States came in within economists’ expectations and government bond yields retreated further.

The trading carried all the hallmarks of a recent rotation out of high-flying technology shares and into stocks that will benefit from the economic recovery. It came as the House of Representatives passed a nearly $1.9 trillion economic relief bill, sending it to President Biden to sign into law.

Banks, energy companies and producers of raw materials were among the day’s best performers. The S&P 500 rose 0.6 percent, while the Dow Jones industrial average gained about 1.5 percent to close at a record. The technology-heavy Nasdaq composite was flat.

Investors and policymakers have been closely watching inflation and expectations about where it will go next. After years of very low inflation, some economists and investors argue that too much fiscal stimulus during the recovery from the pandemic could cause the economy to overheat and send prices surging.

Inflation rose modestly last month, nudged by an increase in gasoline prices that lifted the overall Consumer Price Index by 0.4 percent. Excluding the volatile food and energy categories, the C.P.I. rose by 0.1 percent, the Labor Department reported Wednesday morning.

Economists surveyed by Bloomberg had forecast an increase of 0.4 percent for overall C.P.I., and 0.2 percent for the “core” measure, which had excludes food and energy costs.

U.S. stocks, especially shares of tech companies, have been rattled by higher bond yields for various reasons, including the fact that higher interest rates increase borrowing costs and eat into the value of a company’s future earnings.

On Wednesday, the yield on 10-Year U.S. Treasury notes fell to 1.52 percent.

  • The Stoxx Europe 600 rose 0.4 percent while the FTSE 100 was flat.

  • The European Central Bank begins its two-day policy meeting on Wednesday. Like in the United States, bond yields are rising in Europe. German 10-year yields are at minus 0.3 percent. Policymakers have been debating whether they will need to take action to stop yields rising too high. Some analysts say the central bank on Thursday could announce a plan to pick up the pace of its bond purchases to push down yields.

  • The Hang Seng Index in Hong Kong closed 0.5 percent higher and the Nikkei 225 in Japan ended the day little changed.

  • Cathay Pacific shares fell after the Hong Kong-based airline reported a $2.8 billion loss for 2020. The company’s share price has dropped about 30 percent since the end of 2019. Last year, the airline cut 8,500 jobs.

Ken Feinberg’s law firm will distribute the funds for the families of those killed in a pair of crashes of Boeing’s 737 Max jet.
Credit…Jacqueline Larma/Associated Press

The Justice Department has appointed Ken Feinberg’s law firm to oversee distribution of a $500 million compensation fund for the families of those killed in a pair of crashes of Boeing’s 737 Max jet, the firm said on Wednesday.

“We are pleased that the Department of Justice chose us to do this work and we think we are well placed based on our experience in the design and implementation of these funds over the past 25 to 30 years,” said Camille Biros, the president of the Law Offices of Kenneth R. Feinberg.

Mr. Feinberg’s firm has developed a specialty in administering such funds, including those for victims of the Sept. 11 attacks and the Deepwater Horizon oil spill.

Boeing had previously appointed Mr. Feinberg and Ms. Biros to oversee distribution of $100 million in compensation following the crashes in late 2018 and early 2019, in which a total of 346 people were killed.

The Feinberg firm has finished the distribution of those funds, work that will give it a head start on its new assignment, Ms. Biros said. The $500 million fund was established as part of a $2.5 billion January settlement between Boeing and the federal government. A Justice Department spokeswoman declined to comment on the appointment. In a statement, Boeing said it looked forward to working with the firm “to ensure the prompt distribution of these funds.”

The news, first reported by Reuters, came on the two-year anniversary of the second Max crash, in Ethiopia. To mark the milestone, the families of the 157 people killed in that accident planned vigils and protests throughout the day. Some also met with the transportation secretary, Pete Buttigieg, to share their lingering safety concerns over the Max, which recently started flying again after a nearly two-year grounding.

“It’s a culture of profit over passengers,” Tor Stumo, whose sister Samya Rose Stumo died in the crash, said while protesting outside a Boeing office in Arlington, Va., on Wednesday.

Mary Margaret will start as editor in chief of Entertainment Weekly in April.
Credit…Meredith Corporation

Entertainment Weekly named Mary Margaret its editor in chief, filling a spot that has remained empty since last November, when the former editor, J.D. Heyman, abruptly left the publication.

Ms. Margaret, 36, who will take up the role in April, said in an interview that, as the first woman and person of color to lead Entertainment Weekly, she was looking forward to bring diverse perspectives to the Hollywood-focused brand.

She started her career as a journalist at Newsweek and worked at Parade and People. Later, she led a product content strategy team at Facebook and was the first editorial director at Roku.

“For me, it’s really an opportunity to leverage everything that I’ve learned in my career, both in publishing, entertainment and tech, and really leverage that to figure out what is the best path forward for this brand, how can we better earn the share of attention of our readers,” she said.

“I really want to bring that mind-set of understanding where readers are and really serving them and bringing them something of value,” she added.

Ms. Margaret will move from Dublin to Los Angeles in the coming weeks.

“Mary has an impeccable track record for shaping the editorial direction and content strategy for some great brands,” Doug Olson, president of Meredith Magazines, the unit of Meredith Corporation that includes Entertainment Weekly, said in a statement Wednesday.

Marathon Petroleum plans to sell its Speedway convenience store business to the owner of 7-Eleven.
Credit…Justin Sullivan/Getty Images

Months into a contract dispute with Marathon Petroleum, the Teamsters union is objecting to the company’s $21 billion deal to sell its Speedway convenience store business to the owner of 7-Eleven, DealBook reported exclusively. Its effort is in part a bet that the Biden administration will be tougher on antitrust and more favorable toward unions — and pits the union against Elliott Management, the huge hedge fund that helped make the proposed sale possible.

The Teamsters asked the Federal Trade Commission to pause its review of the deal. In a letter sent on Wednesday to the agency’s acting chairwoman, Rebecca Slaughter, the union requested that the F.T.C. wait for one of two things:

  • Congress passes a bill by Senator Amy Klobuchar, Democrat of Minnesota, that would make broad changes to antitrust rules. The legislation would change the framework used by the F.T.C. to evaluate the deal, allowing the regulator to reject transactions based on the possibility of competitive harm, instead of a determination that it will create such harm.

  • Or, at the least, until the agency ensures “that all competitive effects from the transaction have been fully considered and remedied.”

There are other issues at play. Marathon has locked out 200 union workers at a refinery in Minnesota. And unions have had an often tense relationship with activist hedge funds like Elliott, which they have accused of calling for layoffs that affect union members. (In its letter to the F.T.C., the Teamsters union criticized what it called “Elliott’s singular desire to liquidate Marathon’s assets to fund enormous share buybacks and special dividends.”)

But the agency is already far along in its review. Marathon executives, who hope to close the deal by the end of the first quarter, confirmed on a call with analysts last month that they had responded to a second request for information from the F.T.C. and were working on solutions. (The proposed buyer of Speedway, Seven and I Holdings, is reportedly looking to sell up to 300 gas stations to ease the agency’s concerns.)

The F.T.C. must follow statutory timelines for reviewing deals, which means the agency can delay its examination only for so long, even if it wanted to. And it’s not clear whether Ms. Klobuchar’s bill will pass, or in what form.

The election of Bob Sternfels as the global managing partner of McKinsey comes weeks after the firm’s partners effectively voted out Kevin Sneader from the firm’s top role.
Credit…Arnd Wiegmann/Reuters

Partners of McKinsey & Company chose Bob Sternfels as their new global managing partner, the consulting giant said on Wednesday, as it seeks to recover from a series of scandals that damaged its reputation in recent years.

The election of Mr. Sternfels, 51, comes weeks after McKinsey partners effectively voted out Kevin Sneader from the firm’s top role. The ousting of Mr. Sneader, who did not make the final ballot of the election, was the first time a McKinsey leader had been denied re-election in decades.

When Mr. Sneader took the top role in 2018, he was confronted with controversy over the firm’s role advising a South African state-owned power company, and later criticism over its work for U.S. Immigration and Customs Enforcement and over conflicts of interest in its bankruptcy practice.

Now Mr. Sternfels will inherit blowback from the consultancy’s agreement to pay nearly $600 million to settle an investigation into its role in the opioid crisis. The settlement with 49 states and the District of Columbia centered on McKinsey’s work advising drug makers on how to “turbocharge” opioid sales.

Other recent controversies include the firm’s work advising the French government on its coronavirus vaccine rollout, which has been derided for being too slow.

Among the most pressing internal priorities facing Mr. Sternfels is how to tighten oversight of a 650-member partnership that has traditionally operated with significant autonomy — and sometimes resisted efforts to impose more centralized authority.

A 26-year McKinsey veteran based in San Francisco, Mr. Sternfels leads the firm’s client capabilities operations. He beat out Sven Smit, a partner based in Amsterdam who is co-chairman of the McKinsey Global Institute, its research division.

Mr. Sternfels said in a statement that he was “committed to build on the important changes that Kevin helped launch and our partnership embraced — and on the good work our firm does with our clients and in society.”

A jet engine at GE’s aviation engine overhaul facility in Petropolis, Rio de Janeiro, in 2016.
Credit…Yasuyoshi Chiba/Agence France-Presse — Getty Images

General Electric said on Wednesday that it would sell its airplane leasing unit to a rival, AerCap, in a deal that would reshape an aviation industry already transformed by the coronavirus pandemic.

The deal, valued at $30 billion, would combine the world’s two largest aircraft leasing companies, creating a behemoth that owns or manages about one out of every six leased planes globally, according to Cirium, an aviation data firm. If the sale is approved, the combined company will have about 300 customers globally and more than 2,000 aircraft in its portfolio, AerCap said in a statement.

The sale of the unit, GE Capital Aviation Services, could give the new business even more negotiating power over aircraft manufacturers Boeing and Airbus as well as the airlines to which AerCap and G.E. lease planes. It would also advance G.E.’s yearslong effort to simplify its business and reduce finance debt.

For years, G.E. has been focusing on its core industrial businesses and moving away from the financing activities of its G.E. Capital unit, which included the plane leasing arm. From the end of 2018 to the end of 2020, the value of G.E. Capital’s assets shrank from $86 billion to $68 billion. If the sale to AerCap goes through, the finance arm would go down to $21 billion.

“I hope what you see here this morning is a truly tremendous catalyst in the journey that we’re on to transform G.E.,” the company’s chairman and chief executive, H. Lawrence Culp Jr., said in a conference call with investors and analysts.

If the sale is approved, G.E. will also have reduced its debt by more than $70 billion since the end of 2018, G.E.’s chief financial officer, Carolina Dybeck Happe, said on the call.

Under the terms of the deal, which has been approved by the boards of both companies, G.E. will receive more than 111 million AerCap shares, $24 billion in cash and $1 billion of AerCap notes or cash. The transaction is expected to close in nine to 12 months, pending shareholder and regulatory approval.

G.E. is expected to own about 46 percent of the combined company and will be entitled to nominate two directors to the board of AerCap, which is based in Dublin.

Covid-19 information pamphlets with a mask and disinfectant kit distributed in San Jose, Calif.
Credit…Ulysses Ortega for The New York Times

Black and Hispanic communities are confronting vaccine conspiracy theories, rumors and misleading news reports on social media.

The misinformation includes false claims that vaccines can alter DNA or don’t work, and efforts by states to reach out to Black and Hispanic residents have become the basis for new false narratives.

“What might look like, on the surface, as doctors prioritizing communities of color is being read by some people online as ‘Oh, those doctors want us to go first, to be the guinea pigs,’” said Kolina Koltai, a researcher at the University of Washington who studies online conspiracy theories.

Research conducted by the nonprofit Kaiser Family Foundation in mid-February showed a striking disparity between racial groups receiving the vaccine in 34 states that reported the data.

State figures vary widely. In Texas, where people who identify as Hispanic make up 42 percent of the population, only 20 percent of the vaccinations had gone to that group. In Mississippi, Black people received 22 percent of vaccinations but make up 38 percent of the population. According to an analysis by The New York Times, the vaccination rate for Black Americans is half that of white people, and the gap for Hispanics is even larger.

The belief that doctors are interested in experimenting on certain communities has deep roots among some groups, Ms. Koltai said. Anti-vaccine activists have drawn on historical examples, including Nazi doctors who ran experiments in concentration camps, and the Baltimore hospital where, 70 years ago, cancer cells were collected from a Black mother of five without her consent.

An experiment begun in the 1930s (not conducted in 1943, as an earlier version of this item reported) on nearly 400 Black men in Tuskegee, Ala., is one of the most researched examples of medical mistreatment of the Black community. Over four decades, scientists observed the men, whom they knew were infected with syphilis, but didn’t offer treatments so that they could study the disease’s progression.

Researchers who study disinformation followed mentions of Tuskegee on social media over the last year. The final week of November, when the pharmaceutical companies Moderna and Pfizer announced promising results in their final studies on the safety of their Covid-19 vaccines, mentions of Tuskegee climbed to 7,000 a week.

The American Rescue Plan, which gained final approval from Congress on Wednesday and was signed by President Biden on Thursday, will pump $1.9 trillion into the economy.

The New York Times’s personal finance experts, Ron Lieber and Tara Siegel Bernard, combed through the law to explain what it means in real terms to real people. Here are some of the questions they answer:

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