Trump Mulls 2 Kinds Of Tax Cuts While Browbeating Fed About Interest Rates
The trump administration says the u._s. Economy is fundamentally healthy but the white house is now talking about doing some things that are often used to stoke in economy. That's not not doing so well this week. President trump talked about the possibility of implementing two different kinds of tax cuts and he keeps yelling at the federal reserve on twitter to cut interest interest rates. N._p._r.'s chief economics correspondent scott horsely is on the line good morning scott good morning oil okay so the president is talking first about cutting payroll taxes and that's something that would affect just about everyone who gets a paycheck in this country. Here's what president trump said about that payroll taxes something that we think about and a lot of people would like to she that that affects the workers the workers of our country and he's right about that so when in the past has the u._s. cut payroll texas this congress authorized a temporary payroll tax cut back in two thousand eleven <hes> it's important to note that lawmakers did that as we were digging our way out of the great recession recession <hes> the economy's a lot stronger now and to the extent there has been a a weak spot in the economy. It hasn't been consumer spending. It's really been business investment <hes> <hes> but let's say that congress worded do what they did back in two thousand eleven and once again cut the payroll tax by for example two percentage points that would would balloon the deficit by another hundred and fifty billion dollars a year it would put about eight hundred dollars in a typical workers <hes> pockets over the course of a year but a lot of that savings would then be eaten up by the president's own tariffs <hes> j. p. morgan chase estimated this week that if all the china tariffs go into effect that'll that'll cost typical household about a thousand dollars a year interesting so it could just be a wash regardless. The president's also talking about reducing the capital gains tax. Now that is is not something that would have any bearing on most americans. Can you explain it. This is an idea the administration has floated before and you're right this would overwhelmingly save money for the wealthy <hes> more than three quarters of all capital gains taxes are paid by people who make more than a million dollars a year capital gains are capital gains taxes are taxes on investments is like real estate or stocks that go up in value and what the president's talking about doing here is eliminating taxes on that part of the game. That's eaten up by inflation over over time. Now one thing the white house likes about this. Is they argue that they could do this without congress. They could do it through an i._r._s. Rulemaking process although there's actually some question about that and it would almost surely invite a legal challenge okay president trump also wants the federal reserve to help stoke the economy by cutting interest rates. He talks about this all the time time. That's also something that we see when economy is doing not so well or when it's expected to do not so well is the president getting any traction. They're the fed did cut interest rates by a quarter percentage point last month but trump wants to see much bigger cuts this week. He tweeted that the fed should cut rates by a full percentage point. Now yeah that sort of economic equivalent of that hypodermic to the heart in pulp fiction this is to put it in perspective back in two thousand eight when bear stearns collapsed and the economy me was sliding off a cliff the fed cut rates by three quarters of a percentage point so trump wants them to go even further now even though his administration continues continues to insist the u._s. Economy is solid here for example is vice president pence speaking this week in the swing state of michigan despite the wishful thinking of some naysayers in the media and in the democratic party. The american economy is strong. It's stronger than ever before if so it's hard to imagine why the administration's calling for such aggressive stimulus well is it impossible to say which it is is the economy strong or does it need intervention the way the president's been talking about. You know we're still adding jobs. We're still growing but it's definitely downshifted did and some of the biggest slowdown has come in the part of the economy that the administration likes to champion. Here's vice president pence again earlier this week. I'm talking about people who make things growth axe spend their days building more than a facebook page manufacturing has been particularly affected by the slowdown partly because the president's trade war or even industries that are supposed to benefit protect <hes> protectionism like steel are are suffering <hes> now. It's not a dramatic slowdown. We're not shifting into reverse but for a president whose reelection chances may hinge on the economy. Even a little slowdown can be scary. <hes> n._p._r.'s chief economic correspondent scott horsely. Thanks got you're welcome.