Trump Considers Policy Changes
Author: Greg Valliere
April 16, 2025
WITH THE ATLANTA FED predicting negative GDP growth of 2.4% this quarter, amid rising anxiety over a recession, Trump Administration officials are considering policy changes.
IN THE FINEST WASHINGTON TRADITION, officials are floating two trial balloons which would be blockbusters.
THE ADMINISTRATION has become more aggressive in seeking to oust Federal Reserve Chairman Jerome Powell, whose term doesn’t expire until May of 2026.
PRESIDENT TRUMP HAS HEATED UP his rhetoric, demanding a rate cut, which does not appear to be imminent. Powell will be closely watched as he speaks today in Chicago.
JAWBONING BY TRUMP now is combined by hints that the Administration wants Powell out; Treasury Secretary Scott Bessent said earlier this week that the Administration is compiling a list of potential replacements.
POWELL HAS NO INTENTION of stepping down: He has told friends that he’s prepared to serve his full term, which could become increasingly controversial if he shows no urgency to cut interest rates. At the least, he will be a convenient scapegoat for Trump if the economy slides into recession.
THERE’S A FISCAL TRIAL BALLOON AS WELL: The White House is weighing tax increases on big corporations and wealthy individuals — that’s right, tax increases — because there’s a need for revenues to pay for other tax cuts such as a tax relief on tips.
TRUMP HAD ASSERTED THAT AGGRESSIVE TARIFFS would pay for new tax cuts, but it’s sinking in that tariff deals are many months away.
IN THE MEANTIME, there will be intense pressure for spending cuts and regulatory reforms, which have adequate support on Capitol Hill. Actually, Trump probably would support more spending — he never really cared about deficits — but the fiscal hawks in the House would block him.
MEMBERS OF CONGRESS ARE GETTING AN EARFUL as they meet with constituents as a long Easter break begins. Constituents want economic stimulus, and Trump is eager to comply. He frequently turns on a dime, and he could stun the political world by hiking taxes on wealthy firms and individuals.
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