Trump launches an urgent fight to save his economic record
If the coronavirus keeps up its path throughout the U.S., sectors like airlines, cruise ships and large conferences and events are likely to see business plunge and will seek federal bailouts, similar to the billions of dollars that farmers received last year to offset the aftermath of the trade war, Bruce Mehlman, a longtime Republican lobbyist said in his quarterly analysis on Washington politics.
Eight months from a general election, President Donald Trump and Republican lawmakers are considering an urgent effort to rescue the U.S. economy from a coronavirus panic.Trump advisers and GOP lawmakers have spent the last few days pushing the White House to develop a package of economic stimulus measures, designed to prop up the economy amid growing fears about the spread of the coronavirus in the U.S.
And they’re watching a flood of announcements from multinational U.S. companies signaling trouble that could strangle the American economy for months to come.
The frenzied push to boost the economy is colliding with Republican orthodoxy opposing short-term stimulus during the last recession. But it’s a reflection of what some Republicans recognize as an existential threat to Trump’s reelection: a potential downturn in the economy and financial markets in the run-up to a close and heated presidential election.
“I don’t think it’s good policy,” one senior administration official said. “The whole litany of temporary measures to stimulate the economy ... I don’t think it works.”
During a meeting with lawmakers last week, Republican Sen. Steve Daines of Montana suggested to Trump the idea of a temporary payroll tax cut to give employed consumers additional cash — an idea that Daines said Trump liked enough to then champion on Twitter .
Meanwhile, former House Speaker Newt Gingrich is pushing the idea of a one-time tax credit for companies that bring manufacturing back to the U.S. from China.
And Treasury Secretary Steven Mnuchin said his agency would talk to independent bank regulators about easing rules for lenders. Mnuchin also said Treasury had set up a sub-task force to examine how coronavirus is hitting small businesses.
The flurry of discussion comes as the White House struggles to settle on the best public health and economic response to the fast-traveling coronavirus — of which there are now 77 cases in the U.S. throughout 14 states and cities and nine deaths.
The spread of the virus inside Italy, Iran, South Korea and the U.S. last week spooked investors and triggered the stock market’s worst weekly decline since 2008. Now it threatens to disrupt a wide range of U.S. businesses such as manufacturers, airlines, automakers and the hospitality industry that either rely on China for materials or labor, or that are dependent on consumer confidence to maintain a robust bottom line.
The White House plans to meet with airline executives on Wednesday amid growing concerns about international air travel.
The widening worries across the U.S. are already spurring flight cancellations, school closures and unusual moves to corporate headquarters to encourage employees to work from home.
“If we have rational behavior, we don’t need a stimulus,” said one Republican close to the administration. “If you can’t leave your house, or if kids can’t go to school and the parents can’t go to work, what good is a payroll tax cut? It’s not like you can go out and buy stuff.”
Several White House officials have expressed skepticism about the effectiveness of short-term stimulus measures – even as outside allies and lawmakers push their own specific ideas.
“I would say this is no different than any other severe situation. This is going to have an impact in the short term on the economy,” Mnuchin told the House Ways & Means Committee on Tuesday.
“It's very different than the financial crisis,” he added. “The good news here is there will be an end in sight. This will have an impact on the economy but I have confidence in our health professionals that they will develop both viral medical treatments and vaccines, so this will have a time period."