Paul Volcker rips Trump administration over tax reform, China trade dispute
Hudson Institute senior fellow Michael Pillsbury explains why he is worried by the Chinese lack of concessions in trade talks.
Former Federal Reserve Chairman Paul Volcker criticized the Trump administration and congressional leaders on Tuesday for ongoing discord in both domestic politics and America’s international dealings with China.
Volcker’s comments came during an hour-long interview with hedge fund magnate Ray Dalio, in which the Bridgewater Associates founder asked the former fed chairman to clarify his remark last October to the New York Times that the U.S. government was a “mess.”
“We have fake news. You don’t know what to believe, what not to believe. We have presidents that don’t seem to mind either personal behavior or making outrageous statements, true or not,” Volcker said. “You have a Congress that’s been unable to function effectively. Hopefully, maybe that’ll change a little bit – we’ll wait and see after this past election. But we have not been on a constructive track. I think that’s fair to say.”
Volcker, 91, served as Fed chairman under former Presidents Jimmy Carter and Ronald Reagan. He also acted as an economic advisor to former President Barack Obama during the Great Recession.
Volcker also took aim at the passage of a Trump-backed tax reform package in late 2017, noting that the changes occurred too quickly and without adequate debate in Congress. The reforms included major changes, including a cut of the corporate tax reform rate to 21 percent from 35 percent.
“We rammed through a massive tax bill,” Volcker said. “Whatever you think about that tax bill, it shouldn’t be rammed through the Congress without any debates at midnight on December 31 or whenever it was done, with almost nobody in the Congress having a very good idea of what was in the bill. … it wasn’t subject to the right kind of debate that we should have had.”
The former Fed chair was also critical of Trump’s handling on an ongoing trade dispute with China. The Trump administration is set to increase tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent if the two sides do not reach terms on a trade deal by March 1.
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“It sounds terrible but I respond more favorably to what the president of China is saying than the president of the United States,” Volcker said. “The president of China, at least, says he’s looking forward to a harmonious relationship over time. … But looking for peaceable outcomes, where we are all threats and demands, so it’s a different story being told.”