On The Money: Trump blames Fed, not China, for economic woes | Wild week on Wall Street | Stocks recover after morning plunge | Democrats push Mnuchin not to cut capital gains taxes

On The Money: Trump blames Fed, not China, for economic woes | Wild week on Wall Street | Stocks recover after morning plunge | Democrats push Mnuchin not to cut capital gains taxes
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Happy Wednesday and welcome back to On The Money, where we've got plenty to cover from a crazy recess week. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

 

Programming note: On The Money will only be running once a week throughout August. Look for us in your inbox on Wednesdays. We'll still have plenty of coverage of Trump's trade war, the state of the economy, the battle over Trump's tax returns and far more at TheHill.com.

 

LEADING THE DAY

Trump blames Fed, not China, for economic woes: President TrumpDonald John TrumpWarren unveils Native American policy plan Live-action 'Mulan' star spurs calls for boycott with support of Hong Kong police Don't let other countries unfairly tax America's most innovative companies MORE on Wednesday accused the Federal Reserve of doing more harm to the U.S. economy than China has, pushing the central bank to slash interest rates to aid his trade agenda.

In a series of tweets, Trump ripped the Fed for maintaining higher interest rates than other central banks while the president has sought to strike tougher trading terms with economic partners.

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"Our problem is not China," Trump tweeted. "Our problem is a Federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much.

"They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW," Trump added, referring to the Fed's ongoing sale of bonds purchased to stimulate the economy during the 2008 recession.

I've got more on Trump's latest attack on the Fed here.

 

The context: Trump's latest attack on the Fed comes as trade tensions between his administration and China have reached new heights. 

  • The president announced last week that he would impose new tariffs on Chinese goods, which prompted Beijing to reduce the value of its currency Monday and halt imports of American agricultural products. 
  • Stock markets plunged soon after, but recovered Tuesday after China stabilized the value of its currency in the wake of the Treasury Department labeling the country a currency manipulator. 

 

The snag: Trump's tweets referenced Wednesday decisions from the central banks of India, New Zealand and Thailand to cut rates to levels below what economists had projected. The moves triggered deeper concern about the health of the global economy, which has slowed significantly over the past two years.

But the Fed has maintained relatively higher interest rates than other central banks because of the relative strength of the U.S. economy.

Stay tuned...

 

Senate Dems urge Mnuchin not to cut capital gains taxes: Forty-two Democratic senators are urging the Trump administration against taking unilateral action to cut capital gains taxes after a group of Senate Republicans last week pressed the administration to do so.

"This unilateral move would almost exclusively benefit the wealthiest Americans, add to the ballooning federal deficit, further complicate the tax code, and ignore longstanding Justice Department policy," the Democrats wrote in a letter Wednesday to Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Morning Report — Trump and the new Israel-'squad' controversy Trump pressured Mnuchin on labeling China a currency manipulator: report Business groups to Trump: Tariff delay isn't enough MORE.

 

The proposal: The Trump administration has been considering executive action to reduce capital gains taxes by indexing capital gains to inflation, reducing the amount of investment gains that are subject to taxes.

  • Twenty-one GOP senators sent a letter to Mnuchin last week urging him to move to index capital gains, arguing that doing so would boost economic growth.
  • But Democrats, who all opposed the 2017 tax law, argued in their letter Wednesday that indexing capital gains would exacerbate the fact that the 2017 law is not paying for itself.

The Hill's Naomi Jagoda breaks down the debate here.

 

GOOD TO KNOW

  • Stocks recovered from a Wednesday morning plunge to close roughly even amid rising trade tensions and concerns about the health of the global economy.
  • The Department of Defense, the General Services Administration and the National Aeronautics and Space Administration issued an interim rule Wednesday banning federal purchases of telecommunications equipment from Huawei and four other Chinese companies.
  • President Trump and the Republican National Committee (RNC) on Tuesday filed a pair of lawsuits in federal court in California, opposing a new state law that would require Trump to release his tax returns.

 

ODDS AND ENDS

  • FedEx is ending its ground delivery partnership with Amazon, FedEx said on Wednesday, news that comes as Amazon moves to expand its own delivery network.
  • International pizza chain Domino's has reportedly spent $8.5 million to stockpile imported ingredients in case they're not available in the event of a no-deal Brexit.