WASHINGTON (CN) – President Donald Trump confirmed Tuesday that he is considering a temporary payroll tax cut to boost the economy, as more Americans grow concerned about the possibility of a recession ahead of the 2020 election.
During a meeting in the Oval Office with Romanian President Klaus Iohannis, Trump said that the administration had been looking at lowering payroll taxes as well as an adjustment to the capital gains tax.
“So we’re talking about indexing and we’re always looking at the capital gains tax, payroll tax,” he said. “Payroll tax is something that we think about and a lot of people would like to see that. That very much affects the workers of our country.”
The president also said that while his administration is considering a payroll tax cut, it wasn’t “talking about doing anything at this moment.”
Trump’s comments come nearly a week after one of the worst days of the year for the U.S. stock market. The Dow Jones Industrial Average, a longstanding indicator of economic health, fell by 800 points last Wednesday, dropping a total of 3%. Other indices like the S&P 500 and Nasdaq took similar hits on the same day, falling by 2.93% and more than 3%, respectively.
The president downplayed concerns over a recession Tuesday, saying the word was not an appropriate descriptor for the economy’s current state. Reiterating recent comments, he said the Federal Reserve should be lowering interest rates even further to boost growth.
“We’re very far from a recession. In fact, if the Fed would do its job I think we’d have a tremendous spurt of growth,” Trump said. “I think that we actually are set for a tremendous surge of growth, if the Fed would do its job.”
Trump has been vocal in his criticism of Federal Reserve Chairman Jerome Powell, tweeting Monday that Powell has a “horrendous lack of vision.”
The president also suggested that the Federal Reserve cut its interest rates by 100 basis points, or a full percent. Last month, the central bank cut rates by 0.25%, the first decrease since the start of the last recession more than a decade ago.
“The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!” Trump tweeted.
While Trump may not be worried about an economic downturn, many Americans are. A poll released Monday shows 73% of respondents said they were very or somewhat concerned that they will be hit by another recession.
Archil Cheishvili, CEO for GenesisAi, which uses artificial intelligence to form an analytics platform for capital markets, said an adjustment to the capital gains tax would increase inequalities between working-class Americans and the wealthy.
These disproportions would eventually be detrimental, he said in an interview Tuesday.
“Wealthy people have most of their money in capital markets, stocks, bonds and so on. So if their capital gains tax goes down, that means they have more disposable income; but nothing is really changing if normal people don’t really have much left in the markets,” Cheishivili said. “And this increase in inequality will be very, very bad, both in the long term and the short term.”
Cheishivili also said last week’s 800-point drop in the Dow Jones reveals more about the nation’s effect on the worldwide economy. For example, the drop will affect and expose the wounded economy of China more than America, due to the high percentage of non-performing loans being issued in the country, he said.
“I think in the short term, the Dow Jones going down, we don’t think it means much because the U.S. economy is strong, but we believe these types of drops will gradually expose China’s weaknesses in China’s economy, which will trigger a recession in China and that will trigger a global, worldwide recession,” Cheishivili said.