President Trump, as we all know, is on a crusade to get the Federal Reserve to lower interest rates. In typical Trump style, he’s doing it by attempting to bully Fed Chair Jerome H. Powell. Recently this has included asking Twitter followers if Powell is a “bigger enemy” than Chinese President Xi Jinping and claiming that he and others on the Fed “let us down” for refusing to bring down interest rates.
But Trump gave the game away Wednesday, revealing in a tweet why he’s so passionate about the topic: “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN.”
And guess who has such loans with interest rates that could be brought way down? Always remember the first rule of Donald Trump: It’s always about Donald Trump’s bottom line.
Last month, Post reporters Jonathan O’Carroll, David A. Fahrenthold and Heather Long revealed that Trump could save “millions of dollars annually” if the Fed lowered interest rates. That’s because lowering the short-term interest rate would also lower the interest rate on outstanding loans on such Trump Organization properties as the Trump hotels in Washington and Chicago, as well as the Doral golf resort near Miami.
And you thought Trump wanted to bring down interest rates simply because he wants to help the economy. Ha! Ha!
Negative interest rates make saving things such as bonds less attractive, which means more money gets pumped into everything from the stock market to the local shopping mall. That, in turn, juices the economy.
Yes, there is some evidence the U.S. economy is not as robust as it was a few months ago. Of course, that’s in large part because of the tariff war that Trump is waging with China, but the president is not going to admit to fault or back down. His ego can’t stand it.
However, there is also evidence — and plenty of it — that the U.S. economy is doing just fine . Jobs are plentiful, and Americans seem willing to continue spending freely. So prudence would suggest waiting the situation out.
It’s obvious that Trump is afraid his reelection chances will implode if the economy craters. Political analysts will tell you it’s extremely hard — not impossible, but difficult — for a president to get reelected if the economy goes into a tailspin. Trump’s thin-skinned ego can’t handle a loss at the polls. Trump is the man, after all, who talked about a third term and then said he was ” only kidding .”
Trump is always about Trump. Remember his 2017 tax reform package? The one that was so generous to Trump that Seth Hanlon, a senior fellow at the Center for American Progress, claimed , “The Republican tax bill looks like it was written by Donald Trump’s accountants and tax lawyers, and I’m not even joking”? Trump has said he would like to do another round of tax cuts. One of the proposed ideas — a plan to index capital gains to inflation — would also almost certainly benefit billionaire real estate owners such as, er, Donald Trump.
And don’t suggest giving Trump the benefit of the doubt. He doesn’t deserve it. Trump is all but put an open-for-business sign on the White House lawn. Just ask Vice President Pence, who last week felt an urgent need to stay at a Trump property in Ireland, located a convenient flying distance away from his official meetings in the country.
For Trump, a Fed rate cut to zero is a good thing. Win reelection and save money? For Trump, this is the definition of a win-win. And if that leaves the Fed with fewer tools in the kit to address an economic downturn after the 2020 election — well, do you really think Trump is going to worry about that?
Robert J. Samuelson: Why the Fed shouldn’t pick a fight with Trump
The Post’s View: Trump can’t soothe markets by blaming his Fed chair
Catherine Rampell: Trump has a dream team for mismanaging a recession
Fareed Zakaria: Trump is leading a global attack against central banks. It could end in disaster.
The Post’s View: President Trump should leave the Fed alone
LINK ORIGINAL: Washington Post