with Brent D. Griffiths


President Trump on Aug. 20 said the word “recession” was “inappropriate” and again called for the Federal Reserve to reduce interest rates by 100 basis points. (The Washington Post)

If you’re feel like you’re suffering from some disorienting deja vu trying to follow the Trump administration’s latest position on a payroll tax cut, it isn’t just the August heat. 

President Trump on Tuesday afternoon upended a day’s worth of denials from senior White House aides that such a plan is under consideration, telling reporters he is in fact mulling a temporary cut to put some extra money in Americans’ pockets. It came after the White House attempted to shoot down a Monday report from The Post’s Damian Paletta that top administration officials were discussing the move. 

“Payroll tax is something that we think about, and a lot of people would like to see that, and that very much affects the workers of our country,” Trump said.

The president’s statement fits a track record of his staff members denying reports that a move is imminent or being actively considered only to be undercut by Trump himself. It also appears likely to conform to a more important pattern: Trump has made a raft of promises about his economic program that he later abandoned or have failed to bear fruit. 

The payroll tax cut would need to pass a divided Congress at a time when the parties are bitterly divided over tax policy, among other things. That alone stacks heavy odds against such a proposal. But Trump’s significant history of failing to follow through with his own plans, and falling short of his own metrics of success for economic stewardship, should cast serious doubt about a payroll tax cut’s viability.

Here's a look at some of those broken promises:

1. The 2018 middle-class tax cut. Most similarly, Trump spent the weeks leading up to the 2018 midterms talking up a 10 percent middle class tax cut he said congressional Republicans would unveil after the election. “It’s going to be put in next week, 10 percent tax cut,” Trump told a Houston crowd at an Oct. 22 rally. The president claimed he’d been working on the plan for months with then-House Ways and Means Committee Chairman Kevin Brady (R-Tex.), though Brady at the time directed questions about it back to the White House. The effort unraveled before a proposal was unveiled. 

(That push itself was borne of a recognition that Trump’s signature 2017 tax cut failed to live up to its billing as focusing on the middle class, instead tilting its benefits disproportionately to businesses and the rich.) 

2. A major infrastructure package. Trump campaigned on a promise to pursue a major infrastructure package, an initiative that moved to the back burner as soon as he took office. But he has returned to the issue repeatedly, vowing to implement “the biggest and boldest infrastructure investment in American history,” and pledging at least a half-dozen times to make the matter a top priority. The project has gone nowhere. And the administration’s attempts to build momentum for it by declaring an “Infrastructure Week” have become Washington shorthand for its hapless efforts to stay on message amid nonstop controversies. 

President Trump has derailed White House "infrastructure week," meant to promote his infrastructure agenda, at least half a dozen times over the past two years. (The Washington Post)

3. Breaking up the big banks. The president also campaigned on a pledge to break up the big banks by restoring the Glass-Steagall Act’s firewall between commercial and investment banking. Back in 2016, he said he was “not going to let Wall Street get away with murder. Wall Street has caused tremendous problems for us.”

But his handpicked regulators have pursued what has amounted to a deregulatory bonanza for Wall Street, including most recently a rewrite of the "Volcker rule" that mega-banks have been agitating for since the imposition of the post-crisis rules on the industry (for more on that, please see today’s “Regulators” section below). The entire drive has raised alarms among former Federal Reserve officials, who have voiced concern the changes could exacerbate the next downturn. 

4. Eliminating the debt. Trump as a candidate promised to eliminate the federal debt within eight years. Instead, he’s on track to leave it 50 percent higher. The deficit is swelling to over $1 trillion annually, thanks partly to diminished revenue as a result of Trump's $1.5 trillion tax cut (which the administration pledged would pay for itself, though it isn’t) and higher federal spending. 

5. Protecting consumers amid the trade war. The president has insisted throughout his trade war with China that American consumers have been held harmless while Chinese exporters bear the burden of tariffs he’s imposed on the goods they ship to the U.S. Trump came the closest to an acknowledgment that domestic consumers are in fact on the hook when he last week postponed some import duties set to hit next month until mid-December, a move he said was aimed at shielding Christmas shoppers. Multiple studies, however, confirm that American businesses and consumers are already shouldering the vast majority of the tariffs. JPMorgan Chase economists now estimate Trump’s existing tariffs are costing the average American household $600 a year, a sum that will rise to $1,000 if he follows through with the next round of levies.

6. Lowering the trade deficit. The president’s animating drive in his trade offensive has been reducing America’s trade deficits with its key trading partners. As my colleague Heather Long noted Tuesday, the U.S. trade deficit has actually grown during Trump’s presidency: 

7. Reviving manufacturing. Trump also pledged to usher in a manufacturing renaissance, a core element of his appeal to blue-collar workers in the Upper Midwest who helped deliver his victory. Per Heather, “Trump’s tax cuts helped boost manufacturing in 2018 (blue-collar job growth hit the fastest pace since the early 1980s), but the president’s tariffs have since taken a toll, sending manufacturing into a “technical recession” in 2019." The chart: 

8. Boosting economic growth. And perhaps most relevant to the Trump administration's consideration of new stimulus measures is the economy's broader performance. Trump campaigned on a promise to goose economic growth as high as 5 or 6 percent. “We're bringing it from 1 percent up to 4 percent. And I actually think we can go higher than 4 percent. I think you can go to 5 percent or 6 percent,” Trump said in October 2016.

After approaching 3 percent last year thanks in part to stimulus provided by the tax cut and higher federal spending, growth has slowed this year and is now on track to settle in at around 2 percent, per the Fed. And nearly three in four business economists now say they expect Trump's policies will tip the U.S. economy into a recession by the end of 2021. 

Here’s another chart from Heather showing how growth under President Obama compares to the pace under Trump: 


Stay tuned for clues into the Fed debate over rate cuts. The WSJ's Nick Timiraos reports that minutes from the Fed's July 30-31 meeting, out today at 2 p.m., will reveal more about the split among monetary policymakers on the Fed's last interest rate cut — "and on what might compel them to consider reducing rates by more than another quarter or half percentage point this year."

Economic leaders worldwide are eyeing new stimulus. Bloomberg's Piotr Skolimowski: "The leaders of the world economy convene this week 8,000 kilometers apart with the same thing on their mind: What more stimulus do they need to support the weakest global growth since the financial crisis? Central bankers including Federal Reserve Chairman Jerome Powell will be in Jackson Hole, Wyoming from Thursday through Saturday, while Group of Seven leaders, with [Trump] among them, will hold talks in the French resort of Biarritz over the weekend and Monday.

"At the heart of the debate in both locations will be an economic outlook dimmed by the U.S.-China trade war and unnerving financial markets, with investors diving into the perceived safety of the dollar and still-positive yields on U.S. Treasuries."

Trump campaign braces donors for economic slowdown. Politico's Nancy Cook: "In public, [Trump] and top White House officials keep extolling the strength of the U.S. economy. In private, they’re increasingly worrying about a global economic slowdown triggering a U.S. recession — and weighing options to shore up the economy ahead of an election year.

"At a fundraising luncheon this week in Jackson, Wyo., headlined by both Jared Kushner and Ivanka Trump, acting White House chief of staff Mick Mulvaney acknowledged the risks to the GOP elite behind closed doors. If the U.S. were to face a recession, it would be 'moderate and short,' Mulvaney told roughly 50 donors, according to an attendee."

The president himself embraced the possibility on Tuesday. “I am doing this whether it’s good or bad for your statement about, ‘Oh, will we fall into a recession for two months?’ The fact is, somebody had to take China on,” Trump told reporters, per the Post's Aaron Blake. He continued: “Whether it’s good for our country or bad for our country, short term, it had to be done,” repeating that “whether it’s good or bad, short term, is irrelevant.” See him here: 

President Trump on Aug. 20 said “somebody had to take China on” and touted the “long-term” benefits of the trade war with China. (The Washington Post)

Trump is mulling end-running Congress to cut cap gains taxes. Bloomberg's Jordan Fabian and Saleha Mohsin: "Trump said he can cut taxes by indexing capital gains to inflation without congressional approval, a move the White House has been considering for months that would largely benefit the wealthy. 'We’ve been talking about indexing for a long time,' Trump told reporters at the White House on Tuesday. 'And many people like indexing and it could be done very simply. It could be done directly by me.' ...

"But indexing capital gains taxes would do very little to spur economic growth, according to the Tax Foundation. The group says the tax cut for investors would increase the size of the economy by 0.11% in the long run."

— White House tries to assuage farmers over biofuels: “[Trump’s] administration has been scrambling to stem the tide of rising anger in Farm Belt states after its decision this month to allow numerous oil refiners to mix less ethanol into their gasoline, sources told Reuters on Tuesday,” Reuters’s Jarrett Renshaw and Humeyra Pamuk report.

“Trump held a two-hour meeting on Monday with members of his Cabinet after hearing blowback from farmers after the decision to grant exemptions from the nation’s biofuel laws to 31 refineries, two sources familiar with the discussions said. Trump’s re-election campaign team also took notice of Democratic presidential candidates seizing on the unrest, the sources said.” 


— Pompeo says U.S. China trade war could end by 2020: “Secretary of State Mike Pompeo told a group of business executives and free-trade economists that he believes the trade war with China could come to an end by the 2020 presidential election, according to people who attended the gathering,” CNBC’s Brian Schwartz reports.

“At a private lunch in New York on Tuesday, Pompeo spoke in front of a crowd of about 40 people that included economics writer Stephen Moore, Blackstone CEO Steve Schwarzman, Gristedes supermarket founder John Catsimatidis and former New York GOP chairman Ed Cox, according to people who attended the gathering.”

— Trump floats E.U. auto tariffs, again: “‘Dealing with the European Union is very difficult; they drive a high bargain,’ Trump told reporters at the White House on Tuesday,” CNBC’s Yun Li reports. ‘We have all the cards in this country because all we have to do is tax their cars and they’d give us anything we wanted because they send millions of Mercedes over. They send millions of BMWs over.’”

“The threat came after Trump signed a deal with the EU earlier this month to boost U.S. beef exports, which partially relieved American farmers who have taken a big hit from the intensified trade war with China.

— U.S. Steel plans hundreds of layoffs: “United States Steel Corp will temporarily lay off hundreds of workers at its Great Lakes facility in Michigan in coming weeks, according to a filing the steelmaker made with the State of Michigan,” Reuters’s Rajesh Kumar Singh reports.

“The lay-offs call into question claims [Trump] has made about the resurgence of the domestic steel industry. Last week in Pennsylvania, Trump said his 25% tariff on foreign imports has turned a ‘dead’ business into a ‘thriving’ enterprise. Domestic steel prices did rise in the immediate aftermath of Trump’s tariffs. But they have fallen dramatically amid improved supplies and weakening demand from the auto and farm machinery sectors.”


Banks poised for Volcker relief. WSJ's Lalita Clozel: "Banks are on the verge of getting some relief from Volcker-rule limits on speculative trading, one of the industry’s priorities in amending the regulations put in place after the financial crisis. Two financial regulators on Tuesday approved changes relaxing trading restrictions for midsize banks and easing compliance for the biggest banks...

"The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency approved the changes to the Volcker rule. The Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission also have to approve them and are expected to endorse the changes without any significant revisions... The biggest banks, including JPMorgan Chase & Co., Citigroup , Inc. and Bank of America Corp., will get limited relief by no longer having to prove to regulators that trades held for less than 60 days weren’t made for the firms’ own short-term profit or otherwise prohibited."

CapAlpha's Ian Katz calls the development a positive for banks. "The move is, as expected, helpful to many banks that have felt burdened or confused by the rule for years," he wrote in a Tuesday note. "We’re skeptical that the change by itself will unleash a frenzy of increased trading activity. But it’s certainly possible that some trading operations will feel less shackled."

Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Banking Committee, called it dangerous. "As the threats from leveraged lending and global uncertainty increase, greedy Wall Street banks and Trump regulators are determined to put the financial system and working families in danger,” he said in a statement. “Trump regulators continue to open a Pandora’s box of risky trading and speculation at the expense of American taxpayers."

From the Bank Policy Institute, an industry lobby group: "The new Volcker Rule finalized today is recognition that the original rule was overly complex and unworkable. The changes in the new rule will help reduce the incidental damage the original rule has done to responsible banking activity and legitimate market making activity, and the massive and needless compliance costs it imposed.”

And from Gregg Gelzinis, policy analyst for Economic Policy at the Center for American Progress: "Gutting the Volcker rule will generate more risk in the banking system, just as other deregulatory changes to capital requirements, liquidity rules, stress tests, and living wills would weaken banks’ ability to safely handle risk. Taxpayers, workers, and families will again foot the bill when this toxic mix goes south."


 — Goldman in contention for Saudi's Aramco IPO. FT's Anjli Raval and co.: "Goldman Sachs has clawed its way into contention for a role in Saudi Aramco’s planned stock market listing, after a months-long charm offensive by top executives, including former Trump administration official Dina Powell, said several people briefed on the matter. Ms Powell, who left Goldman in 2017 to work at the White House and came back to the Wall Street bank a year later, has leveraged her knowledge of the region and relationships with the kingdom’s highest authorities to seek business for Goldman, said one person close to the Saudi state energy giant."

— Walmart sues Tesla: “Walmart is suing Elon Musk’s electric vehicle and clean energy company after Tesla solar panels atop seven of the retailer’s stores allegedly caught fire, according a court filing,” CNBC’s Lora Kolodny report.

“The Walmart suit alleges breach of contract, gross negligence and failure to live up to industry standards. Walmart is asking Tesla to remove solar panels from more than 240 Walmart locations where they have been installed, and to pay damages related to all the fires Walmart says that Tesla caused.” 

— Cereal makers try to improve sales: “Cereal makers, under increasing competitive pressure, are struggling to improve sales of puffed rice, wheat flakes and oat clusters that were once a standard part of Americans’ morning routines,” WSJ’s Micah Maidenberg and Jaewon Kang report.

“Fast-food chains are beckoning customers with new breakfast products and bacon-laden promotions. More people say they are eating less sugar and more protein, or forgoing breakfast altogether. Snack bars for on-the-go consumers are ubiquitous.”



  • The Federal Reserve's Federal Open Market Committee (FOMC) releases its July meeting minutes.
  • Target, Lowe's, Nordstrom, L Brands and the Royal Bank of Canada are among the notable companies reporting earnings, per Seeking Alpha.
  • Fed Vice Chairman Randal Quarles gives a speech on community development in Utah.


  • Dick's Sporting Goods, Hewlett-Packard, Hormel Foods, The Gap, Toro and Williams-Sonoma are among the notable companies reporting earnings on Thursday, per Seeking Alpha.
  • Fed chair Jerome H. Powell kicks off the board's annual Jackson Hole Economic Policy Symposium on Friday.
  • Foot Locker, Meredith, Red Robin Gourmet Burgers and the Buckle are among the notable companies reporting earnings on Friday, per Seeking Alpha