Trump, advisers looking at ways to boost U.S. economy as markets fear recession

By Steve Holland and Lisa Lambert WASHINGTON (Reuters) - Even as they reject talk of a looming recession, President Donald Trump and his advisers are examining ways to provide a boost to the U.S.

Reuters August 21, 2019 04:06:11 IST
Trump, advisers looking at ways to boost U.S. economy as markets fear recession

Trump advisers looking at ways to boost US economy as markets fear recession

By Steve Holland and Lisa Lambert

WASHINGTON (Reuters) - Even as they reject talk of a looming recession, President Donald Trump and his advisers are examining ways to provide a boost to the U.S. economy should it be deemed necessary, officials said.

"We're very far from recession," Trump told reporters in the Oval Office, echoing a theme from him and his team that the fundamentals of the U.S. economy are strong.

But aware of how dangerous a recession could be to his re-election prospects in 2020, Trump has been looking at options for a stimulus behind the scenes.

Trump and his advisers have discussed the possibility of a payroll tax cut, which would give workers an immediate boost to spending but would add to U.S. deficit spending.

The option emerged from a meeting Trump had with his economic team on Monday. It was not viewed seriously, given it would be hard to get through the U.S. Congress, an administration official said.

Millions of U.S. workers pay payroll taxes on their earnings to finance the Medicare health insurance program for the elderly and Social Security, which provides income payments for retirees.

Trump said on Tuesday another option he is thinking about is indexing capital gains, which would provide a tax cut on profits from selling assets such as stocks, but that he was not talking about doing anything imminently.

Some conservatives, such as anti-tax crusader Grover Norquist, believe Trump has the regulatory authority to add an inflation adjustment to the calculation of capital gains taxes.

Such a step would likely be seen by Democrats as an attempt to circumvent the authority of the U.S. Congress and prompt a court fight.

Trump's senior economic adviser Larry Kudlow has been arguing behind the scenes that the United States should return to taxpayers the tariff money collected by higher tariffs on Chinese imports, an official said.

Republican Senator Rick Scott of Florida has offered legislation on this point.

There has been no clarity on how such a move would be carried out since China does not pay tariffs directly to the U.S. Treasury. The tariffs are paid by American companies when Chinese products enter the United States.

Trade tensions with China have stoked concerns that the U.S. economy is heading for a downturn, which could dampen Trump's prospects for re-election in 2020.

Trump said he would not need the approval of Congress to link the tax on profits from asset sales, known as capital gains, to inflation. According to tax code experts, investors would pay far less capital gains tax under an inflation index.

"I'm not talking about doing anything at this moment, but indexing is something that a lot of people have liked for a long time. And it's something that would be very easy to do," he said. "It is something I am certainly thinking about."

(Reporting by Steve Holland; Writing by Lisa Lambert; Editing by Rosalba O'Brien and Lisa Shumaker)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.