Economic slowdown is a chief fear of the White House heading into the 2020 election, and the Trump Administration is looking for ways to juice the economy.
One option: Rotate Federal Reserve governors to gut Chairman Jerome Powell’s power.
A Washington Post report that was compiled after interviews with 25 former and current members of the administration revealed this and many other strategies the White House is considering. Top economic advisers had other ideas, including a currency transaction tax that would weaken the U.S. dollar and make exports cheaper, and reducing the corporate tax to 15%, according to CNBC.
The report dropped right before Powell’s keynote speech at an annual meeting of many of the world’s central banks in Jackson Hole, Wyoming. President Trump launched another Twitter salvo at Powell and the Fed after the chairman did not signal another rate cut would be coming in September.
….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?
— Donald J. Trump (@realDonaldTrump) August 23, 2019
Chairman Xi, of course, is a reference to Chinese President Xi Jinping, who Trump is currently locked in an ever-escalating trade war with. In today’s other big news, China announced another round of tariffs on $75 billion of U.S. exports as the world’s two largest economies don’t seem to be in any rush to ink a new trade deal.
The White House did not give any indication of what strategy Trump would consider, according to the Washington Post report, but being able to check the power of Powell could be enticing as Trump continues to attack the Fed leader that he appointed.
Trump’s main criticism of the Fed and Powell revolves around interest rates, which the president believes are too high compared to other countries around the world. With lower interest rates, countries can weaken their currencies to make imports into the U.S. more attractive for consumers and further balloon the U.S. trade deficit. A currency transaction tax could provide a boost to American exports, as well.
Larry Kudlow, Trump’s top economic adviser, also hinted at a potential tax cut before the 2020 election in an interview on Fox Business Network this week.
“You very may well see a new rollout of additional middle-class tax relief and small-business tax relief,” Kudlow said. He added that he didn’t see any reason to provide a stimulus any time soon because “we believe the economy is quite healthy. … But longer run, why not?”