SUPERNEWS

Macro

Trump Advisers Clash on Tax, Fed Amid Election Focus

Trump's advisers debate over flat tax and Fed reforms, causing campaign frustration amid focus on legal and electoral strategies.

By Mackenzie Crow

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4/28, 14:30 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Citigroup, Inc.
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Key Takeaway

  • Trump's economic advisers are divided on policies including a flat tax and Fed reforms, creating public discord and campaign distractions.
  • Despite various proposals, Trump has not officially endorsed any economic plans, leaving markets uncertain about his second-term agenda.
  • The debate over Federal Reserve's independence is a key point of contention among Republicans, with some advisers seeking ways to increase presidential control.

Economic Advisers Clash Over Trump's Policy

Donald Trump's economic advisers are publicly disagreeing over policy ideas for his potential second term, including proposals for a flat tax, reforms to the Federal Reserve, and penalties for countries moving away from the US dollar. These discussions have not been endorsed by Trump, causing frustration among his campaign staff. The campaign is focused on managing Trump's appearances at his criminal trial and strategizing for the general election, leaving little room for these unauthorized economic proposals.

Fed Independence Under Scrutiny

The debate over the Federal Reserve's independence is a divisive issue among Republicans. Trump has previously pressured the Fed to keep interest rates low, a stance that contrasts with the central bank's independence. Citigroup Inc.'s global chief economist, Nathan Sheets, warns that any policy undermining the Fed's independence could lead to market volatility. Historical attempts by presidents to influence the Fed, such as by Richard Nixon and Ronald Reagan, have had mixed outcomes.

Trump's Economic Circle and Proposals

Trump is advised by former officials and wealthy donors, with many opposing ideas to interfere with the Fed. Conservative think tanks are preparing for Trump's potential return by generating policy proposals. However, the Trump campaign has stated that unless information comes directly from Trump or an authorized campaign member, it should not be considered official. This statement aims to control the narrative amidst the flood of economic ideas from various factions.

Street Views

  • Nathan Sheets, Citigroup Inc. (Neutral on the Federal Reserve's independence):

    "Any kind of policy that eroded independence in an appreciable way would be greeted by the markets very vigorously and adversely and would be a source of great pressure and volatility."

  • Stephen Myrow, Beacon Policy Advisers (Neutral on potential influence over the Fed):

    "We act like, ‘Oh my god, this could never happen.’ But it’s not like it hasn’t been attempted or succeeded in the past... gall is not an issue for Trump."