Trump flip-flops on tax cuts, citing 'strong economy'

A day after considering cutting taxes to promote economic growth, President Donald Trump on Wednesday changed course and said he would abandon the idea because the nation already had "a strong economy."

"I'm not looking at a tax cut now," he told reporters at the White House. "We don't need it. We have a strong economy."

President Donald Trump speaks with reporters before departing on Marine One on the South Lawn of the White House, Wednesday, Aug. 21, 2019, in Washington. Trump is headed to Kentucky. [Photo: AP/Alex Brandon]

Trump also knocked down the idea of indexing to the capital gains tax, which applies when investors sell assets, to inflation. He said he feared "it will be perceived, if I do it, as somewhat elitist."

Analysts have warned that a slowdown, if not full-blown recession, could hit before next year's election. Trump, however, has largely praised the economy's performance and his handling of it. He has often blamed the Federal Reserve (and Chairman Jerome Powell) and the global slowdown for creating dark clouds at home.

"Jay Powell and the Federal Reserve have totally missed the call. I was right and just about everybody admits that," Trump said Wednesday. "He raised interest rates too fast, too furious, and we have a normalized rate. And now we have to go the other direction."

Some White House advisers fear Trump has undercut Powell's credibility. They worry that the president's calls for rate cuts and his discussion of indexing or a payroll tax cut could spook, rather than reassure markets.

Trump indicated he had no choice but to impose the trade penalties that have been a drag on U.S. manufacturers, financial markets and, by some measures, American consumers.

The world economy has been slowing in recent months, and recent stock market swings have added to concerns that the U.S. economy is not immune. A survey Monday showed a big majority of economics expect a downtown to hit by 2021.

Addressing that possibility, Trump focused anew on pressuring the Fed to cut interest rates. Presidents have generally avoided criticizing the central bank publicly. Trump, however, has shown no inclination to follow that lead, positioning Powell to take the fall if the economy swoons.

"I think that we actually are set for a tremendous surge of growth, if the Fed would do its job," Trump said. "That's a big if." Trump recommended a minimum cut of a full percentage point in the coming months.

(Story includes material sourced from AP.)