Trump's Speech Bragging About Tax Cuts Smacks Into a Nosediving Stock Market

Saul Bowman
February 7, 2018

WASHINGTON-President Donald Trump has maintained an uncharacteristic silence since the stock market took a nose dive, notable for a businessman president who regularly points to the rising market as evidence of the success of his presidency and economic policies.

The London FTSE 100 closed, on Monday, down 1.5 percent at 7,334.98, meaning all the major global stock markets had fallen.

Wall Street stocks endured a brutal session on Monday, with the Dow seeing one of its steepest ever one-day point drops, as the heady bullishness of early 2018 gave way to extreme volatility. You might have heard about them from President Trump.

His reaction highlighted the risks for politicians who take credit for soaring stocks: the fall. Last July, six months into Trump's presidency, Varney argued that Trump's election was responsible for adding trillions of dollars to the economy and lifting the wages of low-income workers.

"The President's focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening US economic growth, historically low unemployment, and increasing wages for American workers", Sanders said in a written statement issued in response.

"The President's tax cuts and regulatory reforms will further enhance the USA economy and continue to increase prosperity for the American people", she added.

Former White House chief strategist Steve Bannon won't appear before the House Intelligence Committee Tuesday, escalating a tense standoff with the panel. And if there is a correction in the market, it may benefit Trump and the Republicans for it to happen now and not closer to November.But if interest rates do spike and impact consumer confidence in a way that leads to a slowing economy, there could be a significant political impact at a time when Republicans are trying to cling onto the House and the Senate.And since markets usually price good news in, much of the impact of the GOP's tax reform bill was probably included in the giddy highs in the market late previous year - meaning that the political benefit of the tax reform law, on stock prices at least, may come too early to affect the midterms.Ironically though, one of the contradictions of Trump's cheerleading about stocks could help him now. "Somebody said treasonous? I mean, yeah, I guess, why not?" Reuters reported this month that the administration's plan will call for US$200 billion in new federal funding, offset by unspecified spending cuts, including US$100 billion in cost-sharing payments for state and local projects and US$50 billion dedicated for rural projects. "Why not. They certainly didn't seem to love our country very much". But it's now too late for President Trump and his surrogates to adopt a similarly bland and consistent response to Wall Street's gyrations. "That is not how democracy works".

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