On The Money: Trump, in reversal, says he's not looking at tax cuts | Trump calls himself 'chosen one' to fight China on trade | CBO finds spending deal to add $1.7T to deficit

On The Money: Trump, in reversal, says he's not looking at tax cuts | Trump calls himself 'chosen one' to fight China on trade | CBO finds spending deal to add $1.7T to deficit
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Happy Wednesday and welcome back to On The Money, where there something -- likely Trump's approval rating -- rotten in the state of Denmark. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL-- Trump reverses, says he's not looking at any tax cuts: President TrumpDonald John TrumpJulián Castro: It's time for House Democrats to 'do something' about Trump Warren: Congress is 'complicit' with Trump 'by failing to act' Sanders to join teachers, auto workers striking in Midwest MORE on Wednesday backtracked on his interest in a set of tax cuts after saying just a day before that the White House was looking into the issue.

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

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Trump's remarks on Wednesday conflict with comments he made on Tuesday, when he said he was looking at a temporary payroll tax cut and suggested indexing capital gains to inflation, lowering the tax burden for investors.

"We're looking at various tax reductions. But I'm looking at that all the time anyway," he said on Tuesday.

But today, Trump moved away from that position, saying he's not looking to make the change to capital gains taxes because doing so is "probably better" for upper-income earners and he wants to help the middle class. The Hill's Naomi Jagoda explains what happened here.

 

The background: So why exactly was Trump considering a payroll tax cut? It likely has something to do with the slowing global economy, rising chances of a recession, and potentially devastating impact both of those could have on his re-election campaign.

Several of Trump's predecessors--including former Presidents George W. Bush and Obama--used payroll tax cuts or other short-term boosts to paychecks to help restore consumer confidence during economic turmoil.

Trump insists that the U.S. economy is strong and Americans shouldn't pay attention to the warnings from the "fake news" about a myriad of economic red flags. But the president has also acknowledged the rising odds of a recession with his actions to delay rounds of Chinese tariffs and frequent requests for a massive Federal Reserve rate cut.

 

Trump says he was 'chosen' to fight China: Trump on Wednesday rejected concerns that his trade war with China could slow the global economy into a recession, telling reporters he believes he is "the chosen one" to fight back against decades of trade cheating from Beijing.

Speaking to reporters at the White House, the president sought to distance himself from the mounting economic damage of his battle with China, arguing that he is simply cleaning up messes left for him by his predecessors. 

"Somebody said this is Trump's trade war. It's not my trade war. This is a trade war that should have taken place a long time ago by a lot of other presidents," Trump said, criticizing former Presidents Clinton, Bush and Obama.

"Somebody had to do it. I am the chosen one," Trump continued, glancing over his shoulder to gaze at the sky. "Somebody had to do it, so I took on China. I took on China on trade, and you know what? We're winning."

The Congressional Budget Office has a slightly different take: The nonpartisan budget scorekeeper said in a Wednesday report that President Trump's trade wars are expected to reduce the average U.S. household's income by $580.

 

LEADING THE DAY

Spending deal to add $1.7 trillion to deficit: CBO: A sweeping budget deal passed earlier this month to raise spending caps in 2020 and 2021 will add $1.7 trillion to the U.S. debt over a decade, according to a new analysis from the Congressional Budget Office (CBO).

The CBO estimates that while the bipartisan deal increased spending for next year by about 3 percent over current levels, or $50 billion, the cap is 15 percent higher than the roughly $125 billion in budget cuts that were scheduled to go into effect.

That projection was the result of the CBO comparing the new spending path to the scheduled cuts over a decade. Last year, the CBO also estimated what the deficit would look like if there were no scheduled cuts and spending only rose with inflation. When compared to that estimate, the spending deal didn't make a dent. 

The federal government will also rack up $12.2 trillion in deficits through 2029.

The Hill's Niv Elis breaks down the data here.

 

Trump orders elimination of student loan debt for thousands of disabled veterans: President Trump on Wednesday signed a memorandum directing the Department of Education to eliminate all federal student loan debt owed by tens of thousands of severely disabled veterans.

Trump signed the directive following a speech to AMVETS at the organization's 75th annual convention in Kentucky. The announcement drew applause from those in attendance, including Education Secretary Betsy DeVosElizabeth (Betsy) Dee DeVosClarence Thomas, Joe Manchin, Rudy Giuliani among guests at second state visit under Trump DeVos says Trump 'could talk about education more' Republicans to hand out 'baseball cards' mocking Gary Peters in Michigan MORE.

"Nobody can complain about that, right?" Trump said. "The debt of these disabled veterans will be entirely erased. It will be gone. They can sleep well tonight."

Trump said the memo will apply to more than 25,000 veterans who are "completely and permanently" disabled. Federal taxes will not be applied to the forgiven debt, he added.

 

GOOD TO KNOW

  • The Department of Commerce announced Wednesday it has reached a tentative agreement with Mexican tomato producers to stop cheap and low-quality produce from reaching the U.S., heading off a possible 25 percent tariff.
  • A major Hong Kong bank on Wednesday warned that protests in the city could harm the economy in both Hong Kong and mainland China, Reuters reported.
  • Approximately half of respondents in a new survey who voted for President Trump say they would blame him if the U.S. economy falls into a recession.