Happy Tuesday. A reminder to retailers and other companies: It’s not fall yet, and we’re nowhere near Halloween, so cool it with the pumpkin spice and candy displays. Let us enjoy these last days of summer, please.
Here’s what’s happening.
Trump Backs Elon Musk Idea for a Committee to Cut Government Spending
Donald Trump made a much-ballyhooed return last night to the social media platform formerly known as Twitter, spending a couple of hours in a wide-ranging, often rambling and glitch-plagued livestreamed conversation with the service’s owner, Elon Musk, who is backing the former president’s bid for another term.
The discussion, delayed for some 40 minutes by technical difficulties reminiscent of those during Florida Gov. Ron DeSantis’ troubled Twitter launch of his presidential campaign last year, started with Trump recounting the assassination attempt he survived last month before turning to immigration, inflation, and Trump’s relationships with world leaders including Russian president Vladimir Putin and North Korea’s Kim Jong Un, among other topics.
Trump had been banned from Twitter after the attack on the Capitol on January 6, 2021, but Musk reinstated the former president after he bought the company in 2022. The two men spoke at length on Monday but made little news as Musk mostly lobbed softball questions and praise toward Trump. The Republican presidential nominee sounded very much like he does at his rallies. He attacked President Joe Biden and Vice President Kamala Harris, promised the largest mass deportation in the country’s history, and discussed energy policy and nuclear threats. CNN reports that he made at least 20 false claims.
A ‘government efficiency commission’? On fiscal matters, Musk blamed inflation on government overspending and repeatedly raised the idea of a special commission to study the issue. “So really, we need to reduce our government spending, and we need to re-examine,” Musk said. “I think we need, like, a government efficiency commission to say, like, hey, where are we spending money that's sensible, where is it not sensible?”
When Musk raised the issue again, asking if Trump would agree to the idea, the former president responded by essentially talking past him: “The waste is incredible, and nobody negotiates prices,” Trump said. “You used to have a lot of people making jets, and you end up with two companies, and they'll probably try and merge at some point. I mean, I went through it.” Trump went on to boast that he had saved $1.6 billion on a deal to have Boeing develop two new Air Force One planes, though the final cost of the program is projected to be significantly higher than the figures that the Trump White House had initially touted in 2018.
Musk returned yet again to the idea of a government efficiency commission and volunteered to help on such a commission.
“I'd love it,” Trump responded before going on to praise Musk’s willingness to fire workers: “Well, you, you're the greatest cutter. I mean, I look at what you do. You walk in and you just say, you want to quit? They go on strike. I won't mention the name of the company, but they go on strike and you say, that's okay. You're all gone. You're all gone.”
Trump then praised chainsaw-wielding, cost-cutting Argentinian President Javier Milei as “a big MAGA fan,” promised to eliminate the Department of Education and criticized high-tax states, while Musk added a call for deregulation to his push to “solve government overspending.”
Musk closed out the conversation by making explicit his endorsement of Trump. “I think we're at a fork in the road of destiny of civilization,” he said. “And I think we need to take the right path. And I think you're the right path.”
The Harris campaign hits back: The Harris campaign said the interview put Trump’s agenda on full display: “Trump’s entire campaign is in service of people like Elon Musk and himself — self-obsessed rich guys who will sell out the middle class and who cannot run a livestream in the year 2024.”
Harris’ team followed up by posting audio clips of Trump praising Musk for firing workers when they went on strike, saying he’d close the Department of Education and downplaying the threat from climate change and rising sea levels, which he said would just produce “more oceanfront property.”
Why it matters: Trump has often talked about cutting waste, fraud and abuse across federal programs, including Social Security and Medicare, but experts say that wouldn’t go very far to fix the finances of those programs. Still, the conversation makes clear that Musk and Trump would focus on the spending side of the federal budget, not on revenues.
Beyond that, the interview is an indication of how the two men could use Musk’s social media platform to boost Trump’s candidacy (and Musk’s politics). Trump has not been on X regularly for years, relying instead on his own social media site, Truth Social. But he posted on X more than 10 times over the past day.
“We don't have a precedent for the owner of a social media platform aggressively advocating on behalf of one candidate, especially when that person is himself widely spreading misinformation and extremism,” Brendan Nyhan, a political science professor at Dartmouth College, told NPR.
Quote of the Day
“I wish we were in a situation where they were trying to one-up each other on serious tax proposals. But instead the entire discussion is on the silly side of things.”
− Erica York, an economist at the nonpartisan, business-friendly Tax Foundation, quoted in a Bloomberg article detailing the dueling tax policies playing out in the presidential race as Republican vice presidential nominee has raised the idea of a $5,000-per-child tax credit and Kamala Harris embraced a modified version of Donald Trump’s pitch to end income taxes on tips.
“The scope of the tax changes being floated by the candidates could be budget-busting,” Bloomberg’s Gregory Korte writes. “While the Trump campaign has not released key details of its proposals, increasing the child tax credit could cost $2 trillion over the next decade. If the tax credits are refundable — meaning taxpayers would get money back even if they don’t owe taxes — it could be closer to $3 trillion.”
Meanwhile, the big tax policy question looming next year has to do with the expiration of portions of Republicans’ 2017 tax law. “We’re not dealing with the elephant in the room, which is the expiration of the Tax Cuts and Jobs Act,” York told Bloomberg.
Number of the Day: 2.2%
The Producer Price Index, which measures wholesale prices seen by manufacturers and other producers of economic goods, rose 0.1% in July on a monthly basis, the Bureau of Labor Statistics reported Tuesday. The results beat expectations of 0.2%. On an annual basis, the PPI inflation rate was 2.2%, down from the 2.6% rate recorded in June.
Core PPI, a measure of wholesale inflation that excludes volatile food and energy prices, was unchanged on a monthly basis in July, the lowest reading in four months. On an annual basis, core PPI rose 2.4%.
RSM Chief Economist Joseph Brusuelas said the July PPI report provided “further evidence of inflation easing.” Noting that the three-month moving average of PPI is now 2%, Brusuelas offered some advice to policymakers at the Federal Reserve: “It’s time to cut rates.”
Chart of the Day: Food Inflation
Even though inflation has eased considerably in recent months, high prices remain a top concern for millions of Americans, and perhaps nothing is more vexing for them than the cost of food. The chart below shows that price inflation for groceries has dropped sharply, falling to 1.1% on an annual basis in June, well below the peak rate of 13.5% recorded in August 2022. But that doesn’t change the fact that food prices are about 20% higher than they were before the pandemic, and continue to rise, even if at a slower pace.
Some voters are hoping that the next president can bring prices back down, but experts say that’s unlikely. David Ortega, a food economist at Michigan State University, told The New York Times’ Madeleine Ngo that while pandemic-era supply bottlenecks in the food industry have faded, easing inflationary pressure, the cost of processing, packaging and transporting food has risen, and there’s no reversing that increase. “We’re not going to go back to prices that we were used to before Covid,” Ortega said.
Fiscal News Roundup
- Trump, Harris Duel for Voters With Budget-Busting Tax Proposals – Bloomberg
- Harris Cautiously Rolls out Policy, Aiming to Outmaneuver Trump and Address 2020 Liabilities – Associated Press
- Trump’s Interview With Musk Devolves Into Yet Another X Catastrophe – Politico
- UAW Hits Musk, Trump With Federal Labor Charges Over Union-Busting Comments – CNBC
- This Oil Tycoon Brings in Millions for Trump, and May Set His Agenda – Washington Post
- Trump and Vance Want More Control Over the Federal Reserve. Economists Are Worried – Time
- Biden Targets Tumors With $150 Million in Funding for 'Cancer Moonshot' Program – Reuters
- New Lines of Attack Form Against the Affordable Care Act – KFF Health News
- Schumer Says He Will Work to Block Any Effort in the Senate to Significantly Cut the CDC’s Budget – Associated Press
- Fed’s Bostic Downplays Recession Fears, Says Interest-Rate Cut ‘Is Coming’ – MarketWatch
- US Approves $20 Billion in Weapons Sales to Israel Amid Threat of Wider Middle East War – Associated Press
- TRICARE Becomes Part of Fight Over Pharmacy Benefit Managers – Roll Call
- This Olympic Medalist Hurried to Get All Her Healthcare Needs Done at the Games Because It’s Too Costly in the US – Reckon
Views and Analysis
- Trump and Harris Agree on “No Tax on Tips.” They’re Both Wrong – Abdallah Fayyad, Vox
- Why Trump and Harris’s ‘No Tax on Tips’ Plans May Not Help Tipped Workers – Jacob Bogage, Julie Zauzmer Weil and Lauren Kaori Gurley, Washington Post
- Hot Tip: Both Parties Should Stop Bribing Voters With Tax Cuts – Catherine Rampell, Washington Post
- How Tax Reform Can Bolster Americans’ Shrinking Saving – Claire Rock, Tax Foundation
- What Harris Could Get Done in Her First Year – Jennifer Rubin, Washington Post
- Fact Check: Trump Made at Least 20 False Claims in His Conversation With Elon Musk – Daniel Dale, CNN
- Trump Is Looking Like a Loser Again – Gerard Baker, Wall Street Journal
- Why Presidents Should Keep Their Hands Off the Fed – Paul Krugman, New York Times
- Trump as De Facto Fed Chair Is a Dangerous Idea – Jonthan Levin, Bloomberg
- Reminder: Inflation Still Matters More Than Anything – John Authers, Bloomberg
- The US Navy’s Warship Production Is in Its Worst State in 25 Years. What’s Behind It? – David Sharp, Associated Press
- The Navy Is Breaking Down. We Need Our Allies’ Help to Fix Our Ships – Rahm Emanuel, Washington Post
- Doctors Accused of Spreading Misinformation Lose Certifications – Lauren Weber and McKenzie Beard, Washington Post
- News Outlets Were Leaked Insider Material From the Trump Campaign. They Chose Not to Print It – Associated Press