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Is Trump's economic team up for a trade war?
WASHINGTON — Facing a trade war against China that has shaken the global economy, President Donald Trump gathered his most trusted economic aides in the Oval Office.
The assembled brain trust for Friday's urgent consultations included an economics chief best known for his stint as a cable TV commentator; a trade adviser whose pro-tariff views are outside the economic mainstream; and a treasury secretary (joining by phone on his way back from vacation) who made millions off the housing crisis and then turned to financing Hollywood movies.
Where past presidents have relied on top academics, business leaders and officials with experience in prior administrations, Trump has gone a different route, building a crew of economic advisers known more for their allegiance to him than their policy chops.
Now, facing a test caused largely by Trump's determination to force China to provide the U.S. with better trade terms, questions are mounting about whether the team is up to the challenges that lie ahead — and whether Trump would listen to them anyway.
The key for any president in a moment of economic uncertainty is to have a talented team of advisers he can listen to and trust, said Austan Goolsbee, a University of Chicago economist who was a top aide to President Barack Obama.
"The tougher the situation, the more important it is to have good advisers," Goolsbee said. "But President Trump does not show any sign of listening to economists, so it probably doesn't matter who is on the econ team. But, boy, is that a scary idea if we are going through a serious downturn."
As Trump's concern over the economy has grown, so has the pool of voices from which he seeks advice.
He has called prominent friends like New England Patriots owner Robert Kraft and Fox Business Network host Lou Dobbs. He praises surrogates' appearances on television after they praise his handling of the economy. And he grouses about the quality of the advice he is receiving from aides, according to two Republicans close to the White House who spoke on condition of anonymity because they were not authorized to speak publicly about private conversations.
A big focus of Trump's team has been messaging — convincing the public there is no reason for alarm, despite a decline in factory output, the volatile stock market and the recent drop in consumer confidence.
The aides point to consumer spending and the low 3.7% unemployment rate born out of the decade-plus expansion as reasons why a downturn is unlikely, yet their devotion to the president's desire to project strength has at times strained their own credibility.
Larry Kudlow, the president's top economic adviser and a former CNBC commentator, said on CNBC that 2017's $1.5 trillion worth of tax cuts had "virtually paid" for themselves through stronger growth — even though the budget deficit has jumped more than 20% this year.
Treasury Secretary Steve Munchin told reporters ahead of the 2018 elections that a separate middle-class tax cut was being developed, but it never materialized as promised.
Trade adviser Peter Navarro, a cheerleader for tariffs, told CNN this month that the tariffs are "not hurting anybody here" — even though Home Depot, Macy's and other companies have warned about the damage to corporate profits and academic research has quantified a cost being borne by U.S. consumers.
Trump, for his part, has tried to put the blame for the recent turbulence on Federal Reserve Chair Jerome Powell, whose credibility and political independence is deemed crucial for calming financial markets worldwide. Trump remains frustrated with Mnuchin for recommending Powell — one reason some think acting chief of staff Mick Mulvaney has taken on an increasingly active role.
Trump's team has its fans.
Stephen Moore, a longtime Trump economic adviser whose nomination to a seat on the Federal Reserve board was pulled, praised Kudlow as "spectacular" and said Mulvaney's role advising Trump on the economy has been underappreciated. He called Mulvaney probably the second most important economic voice in the administration.
"Everybody's concerned about the fact the economy's slowed down," said Moore, who thinks the problem has been overstated. "I think people are going to look foolish a couple of months from now."
Trump originally chose Gary Cohn, a former Goldman Sachs president, to run the National Economic Council and Kevin Hassett, a Ph.D. economist with a respected track record, to oversee the Council of Economic Advisers. But both have left since White House.
The risk for Trump isn't necessarily a recession, but a slowdown in growth that undermines his promise to voters that the economy has been renovated for the better under his watch.
Trump pledged consistent growth of more than 3% annually, yet the Congressional Budget Office forecast Wednesday that it will be closer to 2% in 2020 and drifting further downward in the years to come.
An organic slowdown in growth — not even a recession — would be tough on Trump's reelection chances and he knows it, which is why he has aides talking up the economy on TV as he repeatedly hammers the Fed, said a former senior White House official who spoke on condition of anonymity to discuss private conversations.
The surest relief Trump could offer on the economy would be backing off the trade wars with China. But for the moment, the president is headed in the opposite direction, announcing increased levels of tariffs on Chinese goods Friday.
The Trump White House appears to be conducting its economic policy on a more improvised basis than past administrations, said Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the center-right American Action Forum.
He added that the president is getting a real-time lesson that a market economy seldom follows orders.
"They are learning the painful truth, which is the White House doesn't run the economy," Holtz-Eakin said. "This is the United States and the economy is a large, multifaceted animal that runs on its own."
- AP
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Discussions
1 person likes this. Showing 25 of 25 comments
well...u know what I mean......that child boy hero of yours is a destroyer..........
2019-08-24 19:29
The best malay proverb to describe Trump; Bagai Tikus Membaiki labu. wakaka
2019-08-24 19:38
Trump is depending on interest rates cuts and more tax cuts to rescue his election chances.........................
so while US is doing financial engineering, China should just be China and China will emerge strong and capable..........
2019-08-24 19:38
Orange Juice/// Anyway, last night, Donald signal that he is willing to burn the bridge with China! It's the point of no return! So Xi has another 4 days to think it over! If he continues completing the trade draft then good for China! If he digs in more, i tell you, US is a sure winner!
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Why US is a sure winner???
Pls state your reasonings ...
2019-08-24 20:13
The biggest question is : Why China announced its retaliation, 2 hours before US Fed Reserve gave important speech in Jackson Hole?
Trump did not response to retaliation but waited until Jerome Powell finished speech?
Why China delayed its retaliation on Friday instead of usual Monday?
I think the biggest purpose is to sink Trump's biggest love: the stock market.
2019-08-24 20:24
juice....your donald belongs to Tg Rambutan if he is not President of USA..............
2019-08-24 20:29
Why China promised retaliation last week waited until two hours before Jerome Powell speech in Jackson Hole on Friday?
China's retaliation has a purpose. Something fishy.
Usually retaliation us quick without much delay. But this round delayed for more than a week. The timing is just nice to screw up stock markets and confused US Fed Reserve and US president.
To me, it seems like a trap set up by China.
2019-08-24 20:36
Trump only plays poker with Xi.
Remembered how Trump played poker with North Korea's Kim.
This year 2019, Kim shoots rockets, Trump doesn't even care about them. Compared to last time Trump retaliated Kim's rockets firing...
2019-08-24 20:46
End of the day,
If us economy go into recession, it will not bound back like previously.
China will be eventually the winner if it's citizen stay united as now.
Chinese is different from Kui Lau, they can survive hardship.
Us are too late to press China. 15 years ago should already act.
USA now not even able to press Iran.
We are going to long recession. Opportunity for those hv cash.
2019-08-24 22:15
The stupid idiot Trump is the enemy of the world.
People in the world in fact to be united to give some lessons to this idiot who try to ruin the wolrd economy!
2019-08-24 22:56
juice...bottom line very simple...The donald choose the wrong victim to bully, to apply his Art of the Deal.....
Its lucky Xi himself is also gangster chief , u want to fight? let's fight....We all know Trump will be long gone, Xi will still be President of China................
2019-08-24 22:56
“The best thing you can do is deal from strength, and leverage is the biggest strength you can have. Leverage is having something the other guy wants. Or better yet, needs. Or best of all, simply can’t do without,” Trump wrote.
trump's bargaining tactic.do not fall for it.
2019-08-24 23:01
if trump crashes the stock market ,bye bye to his next presidential election.He will keep the US stock market stay bullish .
2019-08-24 23:22
Mayb his purpose is to force the FED lower rate only leh.. cause recent two time also happen after FED signal no more rate cut..
How u think
2019-08-24 23:37
ed by ming > Aug 24, 2019 11:37 PM | Report Abuse
Mayb his purpose is to force the FED lower rate only leh
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of course u are right....Trump bets on interest cuts ( and further tax cuts ) to rescue him from his disastrous policies......
so while America carry on financial engineering, China just carry on being China, and the world is China's to win.........
2019-08-25 00:12
Ooi Teik Bee > Aug 25, 2019 12:02 AM | Report Abuse
qqq3's investment capital in KLSE is less than 10k, he has no more money to invest in KLSE.
He is good in telling lies only.
I believe qqq3 will lose until bankrupt.
It is a matter of time only.
He will disappear permanently from I3 very soon.
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me? I have never done better.......and cycling can help one's trading / speculating.......don't know how/ why, but it works.
and my daughter starts work at > $ 5000 salary a month....she inherited my brains.........
2019-08-25 00:22
23 years old, fresh graduate, first job, salary > $ 5000 a month, pretty good in Malaysia.........
2019-08-25 00:35
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donald? Donald is just a child boy.......His mission is to destroy every thing that he touches........
2019-08-24 19:25