Over the past week and a half, President Donald Trump and his top economic advisers have repeatedly tried to assure the American people that the U.S. economy is strong and there are no signs of a looming economic downturn such as a recession.
But in private, Politico reports, White House officials are warning Republican donors that they do expect a recession in the months ahead:
At a fundraising luncheon this week in Jackson, Wyo., headlined by both Jared Kushner and Ivanka Trump, acting White House chief of staff Mick Mulvaney acknowledged the risks to the GOP elite behind closed doors. If the U.S. were to face a recession, it would be “moderate and short,” Mulvaney told roughly 50 donors, according to an attendee.
And while the administration continues to try and put a happy face on recent reversals in the stock market and the strain being imposed by the president’s extended trade and tariff war with China, behind the scenes they’re lining up strategies to mitigate a recession if and when it arrives:
White House officials are discussing a broader package of measures than previously disclosed, including a cut of an additional percentage point or two to the corporate tax rate. That’s on top of a potential payroll tax cut, which the Obama administration had used to shore up the economy, and a move to index the capital gains rate to inflation, which potentially could be done through an executive order and has internal support from the National Economic Council, the vice president’s office and Mulvaney. Pegging the capital gains rate to inflation would exempt some gains from taxation.
However, it remains to be seen if yet another tax cut would be effective. The 2017 tax cut appears to have done little more than benefit the largest corporations and wealthiest Americans while also adding trillions to the national debt.
Also, further tax cuts would have to pass Congress, and it seems doubtful that Democrats in the House would go along with such a plan.
Another strategy being employed by the president is assigning blame to others, even though he has constantly claimed credit when the economy has produced positive results, recently remarking:
“I think the word ‘recession’ is a word that’s inappropriate because it’s just a word that the — certain people; I’m going to be kind — certain people and the media, are trying to build up because they’d love to see a recession. We’re very far from a recession.”
Very far from a recession? Actions speak louder than words, and the administration’s actions suggest we could be closer to a recession than ever before.
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