Visits: 3
Donald Trump
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The White House is reportedly discussing a variety of options to try to juice U.S. economic growth ahead of the 2020 election, including a rotation of Federal Reserve governors that would make it easier to check the power of Chairman Jerome Powell.
Other ideas pitched by top economic advisors range from a currency transaction tax that could devalue the dollar and make U.S. exports less expensive as well as reducing the corporate tax rate to 15%, according to interviews with more than 25 current and former administration officials conducted by The Washington Post.
The proposals come as top administration officials grow nervous about a growing number of internal reports suggesting that the American economy could pull back over the next 12 months and hamper the president’s path to reelection, the report added.
The White House did not immediately respond to CNBC’s request for comment. The report came just before Powell was set to give a major policy speech on Friday from Jackson Hole, Wyoming, where investors are hoping the Fed Chief will signal further rate cuts are ahead.
The Washington Post report said that White House aides do not have a firm idea of which of these policies the president would seriously consider adopting.
The chance to check the Fed chair’s influence over the U.S. economy could be especially enticing to President Donald Trump, who’s used Twitter to lambaste Powell — whom the president nominated to lead the central bank — for almost his entire tenure.
Central to the president’s criticism of the Fed is the level of interest rates in the U.S., which remain high when compared to those of several European countries like Germany. Trump argues that lower interest rates abroad help weaken foreign currencies and make imports more attractive to American consumers, accentuating the current U.S. trade deficit.
A currency transaction tax could also, in theory, juice American exports.
“Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed,” Trump wrote on Wednesday. “We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, ‘highest Dollar in U.S.History.’ No inflation. Wake up Federal Reserve.”
Top Fed officials are currently gathered in Jackson Hole for an annual symposium to discuss monetary policy. Speaking to CNBC from the event on Thursday, both Kansas City Fed President Esther George and Philadelphia Fed President Patrick Harker both said that they don’t see the case for additional interest rate cuts after the central’s bank quarter-point reduction in July.
Powell will speak at 10 a.m. ET on Friday.
Top White House economic advisor Larry Kudlow said Thursday that Trump could also advocate for a tax cut before the 2020 presidential election.
“You very may well see a new rollout of additional middle-class tax relief and small-business tax relief,” Kudlow said in an interview on Fox Business Network. He later added that “there is nothing in the near term” because “we believe the economy is quite healthy.” “But longer run, why not?” he added.
—Click here for the original report from The Washington Post.