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In crisis, Trump team sees a chance to achieve long-sought goals

Pushing favored policies in a crisis would put Trump in line with his predecessors.

After 9/11, President George W. Bush pushed for counterterrorism measures and regime change in Iraq — long-sought goals of his aides — based on faulty evidence of weapons of mass destruction, an argument that seemed far more potent after the Twin Towers fell.

After the 2008 global financial crisis, President Barack Obama spent his first year in office trying to stabilize the economy, deploying a massive stimulus program that included long-sought programs around the environment and infrastructure. Obama’s team also used the crisis moment to push a progressive agenda on health care, reducing auto emissions and climate change.

“It was still a pretty bold year and not all directly related to Wall Street collapsing,” said Julian Zelizer, a Princeton University professor who studies American political history.

A century ago, President Woodrow Wilson used the 1918 Spanish flu to exert more control over the economy, said Max Skidmore, a professor of political science at the University of Missouri-Kansas City who has studied presidents and pandemics. Wilson’s efforts included leaning on emergency powers and executive orders to control the distribution of food and fuel as well as the railroad.

This strategy of using crisis as a moment of opportunity comes with political risk.

“It only works to take a lot of action in crisis if you are first dealing with basic needs,” Zelizer said. “Otherwise, you look like President George W. Bush did following Hurricane Katrina, when he looked distracted and not dealing with basic problems.”

“Right now, you need to get people hand sanitizer,” he said.

The coronavirus outbreak has given the Trump administration’s China hawks the chance to highlight the a core trade concern — how the U.S. leans so heavily on China for drugs, medical equipment and key elements of the supply chain.

Former House Speaker Newt Gingrich, a close Trump ally, is calling for the White House to enact a one-time tax credit for companies that move manufacturing from China back into the U.S., one of many stimulus ideas that Trump advisers and allies are floating amid concerns about an economic downturn related to the spread of the virus.

“How many medicines are only available from China?” Gingrich asked. The tax credit “would be an economic stimulus but also national security issue.”

Similarly, Trump spent time last week promoting the need for middle-class tax cuts amid severe volatility in the stock market and fears of a coronavirus-induced recession. Trump tweeted out support for a temporary payroll tax cut as well as broad tax cuts for the middle class, moves he said he would push if the Democrats went along with them.

“I think it would be a good time,” he told reporters.

But behind the scenes, his economic aides have been working on a tax cut 2.0 package that they tentatively plan to release this fall — a concept the National Economic Council Director Larry Kudlow previewed long before the coronavirus landed in the U.S. The details remain fluid, but the package could involve additional cuts to marginal rates for individuals, or efforts to make permanent the middle-class tax cuts from the 2017 Republican tax bill.

On the economic front, Trump has also employed the coronavirus as a means to call for the Federal Reserve to further cut interest rates. “I think what happens is the Fed should cut and the Fed should stimulate,” Trump told reporters on Friday. “And they should do that because other countries are doing it, and it puts us at a competitive disadvantage.”

Trump has long criticized Fed Chair Jerome Powell for not cutting interest rates to the degree he would like, although the central bank did cut rates last week in an emergency, surprise move. The last time central bank took such action was during the 2008 global financial crisis.

“This is an excuse for him to beat up the Fed,” said one Republican close to the White House. “He is using another event to beat the Fed up, but it will not fix the problem.”

Senior administration officials have commended the president for his early action in shutting down flights between the U.S. and China, requesting additional funding from Congress and pushing for a vaccine as quickly as possible. The White House has also tried to be responsive to the business communities’ concerns, hosting calls and meetings with various sectors like the airlines and drug makers that have come under unexpected business pressure due to the virus.

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