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Trump payroll tax cut, lower rate calls reflect White House recession fear



The White House has sought to downplay growing recession concerns among economists and investors. Yet its recent policy suggestions paint a picture of an administration keenly aware of an economy at risk.

“Now they are pushing a recession lie,” White House spokesman Hogan Gidley claimed of journalists Tuesday in an interview with Fox News. “The fact is so many on the left want these horrible things to be true, instead of pushing for more coverage about the incredible nature of our economy and how far it’s gone.”

Similar comments have flown from the West Wing this month, even after a key recession warning flashed Wednesday for the first time since June 2007.

President Donald Trump and administration officials largely wrote off the brief inversion of the yield curve, which has historically preceded downturns, and made baseless claims that the press and political rivals would like for the economy to slow.

“We’re doing very well on the economy,” Trump told reporters Tuesday, also claiming that the more than $350 billion worth of tariffs between the US and China had not hurt American companies and consumers.

But despite its insistence that the outlook for the economy remains rosy, the Trump administration is increasingly pressing for policies that could juice growth as the president campaigns for re-election and his trade policies weigh on business activity.

The White House announced Monday additional tax cuts were under consideration, on the heels of a $1.5 trillion package that took effect last year, though the details of those plans appeared murky. Trump has said he would examine both payroll tax cuts and a policy that would reduce taxes on capital gains by indexing them to inflation.

The suggestion for further stimulus measures followed repeated calls from the administration for aggressive interest-rate cuts and a return to a financial crisis-era program that injected trillions into the financial system.

Trump has said in recent days the Federal Reserve should lower borrowing costs by a “minimum” of a percentage point. On Wednesday, White House trade adviser Peter Navarro said the yield curve was in part behind a push for rate cuts.

“The kind of volatility you see today in the inversion of the yield curve is sending yet another signal that the Fed needs to lower … as quickly as possible,” Navarro said on Fox Business Network.

A downturn could significantly alter the political calculus for Trump, who has in general polled better on the economy than on his overall performance in office. He has long tied his own performance to economic indicators and financial markets.

“That is only more so because of the premium Trump places on a brand as a successful businessman, something which a recession could severely impact,” said Doug Heye, a former communications director for the Republican National Committee. “So it’s no surprise the White House would want to do anything it can to alleviate any economic concerns.

He added: “Unfortunately, mixed messages also project weakness, whether that is the intent or not.”

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