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Trump vows to continue China trade war even if recession hits US, as he says Russia should be readmitted to G7

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Trump's economic adviser dismisses recession fears

Donald Trump has said he will continue with his trade war with China even if it means the United States falling into recession.

The president stressed that he thought the US was “very far” from a recession but acknowledged that his administration was looking at a payroll tax cut to boost the economy, something that had previously been denied. And he said he was pressing on with his trade policies "whether it's good or bad for" the prospects of a recession.

Speaking at the White House after a meeting with the Romanian president, Klaus Iohannis, Mr Trump urged the Federal Reserve to cut interest rates, saying: “If the Fed would do its job we would have a tremendous spirit of growth .. you would see a burst of growth like you’ve never seen before.”

Fears of a possible economic downturn have been stoked by concerns over the president’s tariffs war with China, and by an inverted yield curve, an indicator that has preceded the last seven recessions.

However, the president insists that low unemployment and continued growth show that the economy is in good shape, and said that he was “not looking to do anything at this moment” on payroll tax.

Mr Trump also said he thought Russia should be readmitted to the G7. Russia was expelled from the then-G8 in 2014 after invading and annexing Crimea from Ukraine. In a typical swipe at his predecessor, Mr Trump made up his own reason for Russia’s expulsion, saying that Barack Obama had pushed for it because Vladimir Putin had “outsmarted” him.

The president - who has consistently spoken in glowing terms of Mr Putin, including taking his side over US intelligence agencies - has previously called for Russia’s readmission to meetings of the world’s richest nations.

He once again accused Democratic congresswomen Ilhan Omar and Rashida Tlaib - whom Israel barred from a planned visit at his request - of being antisemitic, and questioned why so many American Jews vote Democrat.

He said that “any Jewish people that vote for a Democrat, I think it shows either a total lack of knowledge or great disloyalty”, although he did not explain to what or whom they would be showing disloyalty. The Jewish Virtual Library, a project run by the lobby group AICE, says that 71% of Jewish voters backed Hillary Clinton in 2016, with 24% choosing Trump.

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Hello and welcome to The Independent's rolling coverage of the Donald Trump administration.

Joe Sommerlad20 August 2019 09:05
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Donald Trump could be about to face a Republican primary challenge from Mark Sanford, the former governor of South Carolina, who told CNN’s Don Lemon he is “nearing a decision” on running against the president in 2020 last night, promising to reach a verdict within six days.

"The obvious thing is, in human terms, there's a bit of fear and trepidation in a project so daunting, um, and impossible and I don't relish the idea of being a human pinate in front of Donald Trump," he explained, not entirely convincingly.

"And on the other side of the equation, a lot of different friends have encouraged it and their point of view is, look, you've spent a lot of time over a long number of years talking about debt and deficit and the way our government spends, you talked about different things vital to our system of government, whether you're Republican or Democrat, in the way that the Founding Fathers set up the system and a lot of things are being challenged on that front right now and we need to have a serious conversation as Republicans about what it means to be a Republican these days and so it's for that reason that I'll think strongly about it particularly given its implication in my four boys lives going forward."

Joe Sommerlad20 August 2019 09:15
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Sanford denied he was in cahoots with Anthony Scaramucci, Trump's short-lived ex-spokesman, who appeared on CNN's New Day yesterday to announce he was assembling a coalition of former cabinet members to speak out against Trump and who has previously called for him to face a primary challenger. So far only ex-Massachusetts governor Bill Weld has stepped forward.

The Mooch's decision to do that, one of many attacks he has made on his former employer in response to the president's racist tweets spree attacking four Democratic congresswomen in July, led Trump to unleash a series of furious posts on social media going after him as a "mental wreck" and a "dope" and accusing him of abusing staff during his 11-day tenure as White House director of communications.

The target responded by writing an op-ed for The Washington Post, lamenting his initial support for Trump and pledging to "do what it takes to help make things right".

Here's Tom Embury-Dennis on the latest presidential outburst.

Joe Sommerlad20 August 2019 09:30
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A new poll for NBC/The Wall Street Journal has meanwhile found that approval of his handling of the economy is just 49 per cent, compared to 46 per cent who disapprove. That's a huge fall from last July when the net difference was 16 per cent, with 50 per cent in favour and 34 per cent against.

That leaves his overall approval rating at 43 per cent, with 55 per cent disapproving of his performance in office.

Again, quite a discrepancy from the 51 per cent the man himself is quoting, which happens to come from Zogby International, a company once described by Nate Silver of FiveThirtyEight as "the worst pollster in the world".

Meanwhile, 68 per cent of Hispanic voters and 72 per cent of white women with college degrees disapprove of Trump’s performance in the Oval Office, indicating just how reliant he remains on his hard-line base for support.

The research also had a few other interesting things to say on trade, mass shootings and who would definitely NOT be voting for the president in 2020.

Joe Sommerlad20 August 2019 09:45
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On Twitter, the president joked last night about his interest in buying Greenland, displaying rare self-awareness in satirising his own gaudy taste.

Here's the latest on that fanciful notion from Zamira Rahim.

Joe Sommerlad20 August 2019 10:00
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New Mexico congressman Ben Ray Lujan, the assistant speaker of the House of Representatives, has come out in favour of the impeachment of President Trump, making him the 123rd to do so (218 would be needed to win a majority).

"I support moving forward with an impeachment inquiry, which will continue to uncover the facts for the American people and hold this president accountable. This is not a position I've reached lightly," the representative said in a statement.

"Not only has he ignored the warnings that our Democracy is being targeted, but he has also actively encouraged Russian interference.

"The Trump presidency is creating grave national security concerns. Our country's intelligence agencies have confirmed that the Russian government attacked America during the 2016 elections. Numerous experts have warned that these attacks are ongoing to this day. And when faced with this evidence from his own government, President Trump has failed to act. Not only has he ignored the warnings that our Democracy is being targeted, but he has also actively encouraged Russian interference.

"When Special Counsel [Robert] Mueller released his report, I read it in full. I was alarmed by the Trump campaign and the Trump White House's brazen disregard for the rule of law. The report detailed sustained and frequent attempts by the Trump campaign to establish ties to the Russian government and an eagerness to benefit from hacked information stolen from our fellow Americans. The Special Counsel also detailed ten different attempts by President Trump to obstruct justice during the investigation. This would be unacceptable behavior from any president.

“President Trump’s lack of action is jeopardising our elections, national security, and Democracy."

Lujan, who will run for the Senate in 2020, becomes the highest-ranking Democrat to back impeachment, heaping on pressure on his boss Nancy Pelosi to change her tune on the matter.

Joe Sommerlad20 August 2019 10:15
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The White House is continuing to insist the "fundamentals" of the US economy are solid, invoking an ill-fated political declaration of a decade ago as concerns mount among administration insiders that a recession could imperil Trump's re-election. 

Exhibiting no such anxiety, senior adviser Kellyanne Conway told reporters yesterday with a sneer: "It's nice to see the media finally cover the Trump economy. You seem to cover it only when you can use the Sesame Street word of the day, 'recession'... The fact is, the fundamentals of our economy are very strong." 

It's a phrase with a history. Republican John McCain was accused of being out of touch when he made a similar declaration during the 2008 presidential campaign just hours before investment bank Lehman Brothers filed for bankruptcy, setting off a stock market crash and global financial decline. 

A case can be made for the White House position. The US job market is setting records for low unemployment and the economy has continued uninterrupted growth since Trump took office. But growth is slowing, stock markets have swung wildly in recent weeks on recession fears and indicators in the housing and manufacturing sectors have given economists pause. A new survey on Monday showed a big majority of economists expecting a downturn to hit by 2021 at the latest, according to a report from the National Association of Business Economics. 

Trump begs to disagree. 

"We're doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money," he said on Sunday. "I don't think we're having a recession." 

Still, the president took to Twitter on Monday to urge the Federal Reserve to stimulate the economy by cutting interest rates and returning to "quantitative easing" of its monetary policy - an indication of deep anxiety beneath his administration's bravado. And he backtracked last week on taking the next step in escalating in his trade war with China, concerned that new tariffs on consumer goods could hamper the critical holiday shopping season. 

White House aides and campaign advisers have been monitoring the recent turbulence in the financial markets and troubling indicators at home and around the world with concern for Trump's 2020 chances. 

Any administration has to walk a fine line between reflecting the realities of the global financial situation and adopting its historical role as a cheerleader for the American economy. For Trump, striking that balance may be even more difficult than for most. 

For decades, economic performance has proven to be a critical component of presidential job approval, and no American leader so much as Trump has tied his political fortunes to it. The celebrity businessman was elected in 2016 promising to reduce unemployment - a task at which he has succeeded - and also to bring about historic GDP growth, where he has had less success. 

The situation today isn't nearly as dire as in September 2008, when the US and the world were heading into the "Great Recession." There are no waves of home foreclosures, no spike in layoffs, no market meltdowns and no government rescues to save powerful banks and financial companies in order to contain the damage. What does exist is a heightened sense of risk about the economy's path amid slowing global growth and the volatility caused by the trade dispute between the United States and China. 

There are other reasons as well for the administration's rosy pronouncements, said Tony Fratto, a former Treasury Department spokesman in the Bush administration during the onset of the financial crisis. He said he sympathised with the Trump administration for having to choose between answering "honestly or responsibly" or otherwise about the state of the economy, noting that any hint of concern "could be self-fulfilling." 

"So much of the story of the economy is how people feel about it," said Lanhee Chen, a Hoover Institution fellow and former economic adviser to 2012 GOP nominee Mitt Romney. "And that's an inherently a difficult thing to measure." 

Highlighting a disconnect between the nation's broad economic indicators and the "personal economies" of voters in swing states is a priority for Democratic candidates and outside groups heading into 2020. 

Trump's advisers acknowledge there are few tools at his disposal to avert a slowdown or recession if one materialises: Internal concerns over a ballooning federal deficit, in part due to the president's 2017 tax law, are stifling talk of stimulus spending and scepticism abounds over the chances of passing anything through a polarised Congress ahead of the election. But that hasn't stopped the White House from exploring ways to make the political cost less painful. 

Seeking to get ahead of a potential slowdown, Trump has been casting blame on the Federal Reserve, China and now Democrats, claiming political foes are "trying to 'will' the Economy to be bad for purposes of the 2020 Election." 

If the Federal Reserve would reduce rates and loosen its grip on the money supply "over a fairly short period of time," he tweeted, "our Economy would be even better, and the World Economy would be greatly and quickly enhanced - good for everyone!" Those actions he's talking about are the sort a central bank would traditionally take to deal with or try to stave off a slowdown or full-blown recession. 

Strong fundamentals? A lot depends on which ones the administration highlights or ignores in public comments. 

Conway and other Trump aides have accurately described the rising retail sales and the solid labor market with its 3.7 per cent unemployment rate as sources of strength. 

Yet factory output and home sales are declining, while business investment has been restricted because of uncertainties from Trump ratcheting up the China trade tension. 

Even if the economy avoids a recession, economists still expect growth to weaken. 

Federal Reserve officials estimate that the gross domestic product will slow to roughly 2 per cent this year, down from 2.5 per cent last year. During his presidential campaign, Trump had boasted he would achieve long-term growth of 4 per cent, 5 per cent or more. 

Joe Sommerlad20 August 2019 10:30
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Having insisted publicly that everything is fine, the White House has meanwhile been forced to deny a Washington Post story suggesting that several senior administration officials have been privately discussing pressuring Congress into approving a temporary payroll tax cut to stimulate the economy. 

The New York Times also reported on the plan and went further, suggesting reversing some of Trump's trade tarrifs was also on the table.

"Cutting payroll taxes is not something under consideration at this time," a White House spokesman said, while a representative of Senate Finance Committee chairman Chuck Grassley went further, telling The Hill: "At this point, recession seems more of a political wish by Democrats than an economic reality."

Barack Obama enacted a payroll tax cut - impacting Social Security, Medicare and the national deficit to aid the middle class - for the same reason during his presidency.

National Economic Council director Larry Kudlow was asked on Fox News Sunday at the weekend if the White House might follow its corporate income tax rate cut of 2017 with a a 10 per cent middle class tax cut, he replied, "We're looking at it. Tax cuts 2.0, we are looking at all that."

Joe Sommerlad20 August 2019 10:45
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For Indy Voices, here's Max Burns asking whether Trump understands the consequences on his trade war with China, which risks dragging the US towards recession.

Joe Sommerlad20 August 2019 11:00
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Trump accused Google of manipulating the 2016 election in favour of his democratic rival Hillary Clinton on Twitter yesterday, citing a conservative judicial activist site that frequently makes false accusations and spreads conspiracies against liberals.

Hillary herself wasted no time in responding with devastating clarity.

Clark Mindock has more.

Joe Sommerlad20 August 2019 11:15

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