Trump to hear ideas on coronavirus economic response as markets tumble
This bull market run has survived a government shutdown and fiscal cliff, but fears of a global pandemic are signaling major volatility may lie ahead.
President Donald Trump will huddle with aides Monday to weigh options for possible economic stimulus meant to blunt the economic fallout of coronavirus, White House officials said, as stocks plunged and concerns continued to grow over the administration’s handling of the crisis.
The agenda for the meeting, which will convene at the White House after Trump returns from a political fundraising event in Florida, wasn’t immediately clear. While some members of Congress have publicly floated ideas to spur the US economy and help affected industries, the President has not yet endorsed any specific action and officials have offered differing views of how sweeping a stimulus plan could be.
Some ideas under consideration include steps to defer taxes on the airline, cruise and hospitality industries, all battered by the virus. The White House has also weighed an expansion of paid sick leave — a major focus for some White House officials, who fear the virus could spread further if service workers go to work sick.
Some of Trump’s Republican allies have also lobbied him on a payroll tax holiday, though Democrats in Congress and top administration officials have downplayed the prospect for such a move.
A senior administration official told CNN on Monday the White House is reconsidering the possibility of major economic stimulus legislation, though Trump and his top economic adviser Larry Kudlow both indicated Friday the White House wasn’t interested in such a move.
“Congress is sharing a lot of ideas,” the official said. “Up to the President.”
On Friday, Kudlow told reporters the White House was eyeing “timely and targeted” measures to help industries affected by the virus, but “we’re not looking at these massive, federal, throw-money-at-people plans.”
Financial markets plummeted Monday as investors confronted an oil price crisis and new fears over the spread of coronavirus in the United States. More than 600 cases of coronavirus have been identified in the US and 22 people have died.
The President has been privately downplaying the seriousness of the coronavirus epidemic, insisting that it will be short-lived and over within a couple of months.
But he has been most angered by the economic impact of the coronavirus. The President told people in Florida this weekend that he believes the markets are overreacting to coronavirus. As has been true throughout the disease’s spread, Trump is most concerned that he will be unfairly blamed for an economic downturn before his reelection.
The President has matched those private feelings with public messaging, downplaying the seriousness of the virus by comparing it to flu death tolls and blaming the market losses on the news media as well as Russia and Saudi Arabia.
“Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!,” the President tweeted on Monday.
He also called it “good for the consumer” that gas prices are falling and
Some of Trump’s allies, including those who once worked for him at the White House, say Trump’s intent focus on the Federal Reserve won’t help him through this particular crisis.
Kudlow’s predecessor at the National Economic Council, Gary Cohn, told CNN on Monday that the government will likely need to bail out airlines if the coronavirus crisis persists and that monetary stimulus will not help ease the economic pain.
“If this crisis lasts another week or two, we should bail out the airlines,” said Cohn, who added that government assistance would help prevent major layoffs.
Cohn called the Fed’s surprise emergency rate cut last week ineffective. The move did little to calm markets, and Trump later said the half-point cut wasn’t sufficient.
“You can’t fight an emotional and psychological war with financial easing,” Cohn said. “People aren’t going to spend more — go out to restaurants, book vacations — because the Federal Reserve cut interest rates.”
Instead, Cohn argued that the administration should be working on getting people their tax refunds faster. That might help the “gig economy” workers who are hurting because consumers are staying home and avoiding public places.