Oct 8, 2020 - Politics & Policy

Trump's stimulus whiplash and the age of cognitive disconnect

Trump with shadow

Photo illustration: Sarah Grillo/Axios. Photo: Chip Somodevilla/Getty Images

The paradoxes of Trumpism were on full display Tuesday. Over the course of the day, Trump agreed with Fed chair Jay Powell that the need for fiscal stimulus is urgent, requested that Congress fund a new round of stimulus checks — and, at the same time, instructed his Treasury secretary to cease all negotiations on Capitol Hill and put off any stimulus until after the election.

The latest: As Axios' Alayna Treene and Jonathan Swan reported Thursday, Trump phoned House Minority Leader Kevin McCarthy and indicated he was worried by the stock market reaction and wanted a "big deal" with Speaker Nancy Pelosi.

Why it matters: The pro-stimulus case is obvious; the anti-stimulus case is also relatively clear. What's impossible to conceptualize is any coherent ideology or strategy that can pursue both at the same time.

The big picture: Since even before his election, Trump has been a chaos agent — the kind of politician who appeals to a disillusioned "lol nothing matters" crowd.

  • Trump's ability to elicit incomprehension from East Coast elites is a large part of his attraction, and part of the reason why his consistent inconsistency has not damaged him electorally — until now.

The fideist slogan credo quia absurdum ("I believe because it is absurd") is similarly the best way to make sense of the Trump administration threatening legal action against Microsoft as a result of the software giant having a goal of increasing Black representation among its employees.

  • A standing executive order requires federal subcontractors like Microsoft to "engage in affirmative action efforts to increase the workforce representation of women and minorities," per workplace law firm Jackson Lewis.

Between the lines: Trump is falling in the polls. It's possible that the chaos of recent days, in combination with the seriousness of the issues at stake in this election, is testing the faith of Trump's fideist following.

The bottom line: Markets gyrated in response to Trump's tweets — falling on Tuesday when he called off stimulus negotiations, then rising on Wednesday after he signaled that he was still pro-stimulus.

  • If you're not a noise trader, the best way to deal with unpredictable chaos is normally just to ignore it. That's hard when the noise concerns the future of genuinely important fiscal policy.
  • After four years, markets should probably have learned that while Trump tweets certainly move markets, they rarely do so for very long.
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