Payroll tax cut and help for beleaguered travel industry are among the steps to be offered. Treasury Secretary Steve Mnuchin says the administration can deal with the situation and predicts the ‘economy will be in very good shape a year from now’
US President Donald Trump said on Monday that he was set to propose emergency economic measures including a payroll tax cut to help Americans deal with the impact of the coronavirus outbreak as infections surge.
At a White House press conference, Trump said he would announce the proposed measures on Tuesday after a meeting with Senate leaders. The policies will be “very, very dramatic”, he said at a briefing of the administration’s Covid-19 task force led by Vice-President Mike Pence.
Trump said the measures would also address concerns among hourly wage earners, who may not be paid if they self-quarantine because they feel ill. “We will be working with … small companies, large companies, a lot of companies, so they don’t get penalised for something that's not their fault,” Trump said. “It's not their fault, it’s not our country's fault.”
He also said he hoped to provide assistance to the airline and cruise ship industry and hotels, sectors that have been hit hard by the outbreak.
Trump did not take questions and left the briefing room as journalists shouted out questions on whether he had been tested for the virus. Two US lawmakers he came in contact with in recent days earlier on Monday said they were self-quarantining after being exposed to an infected person at a conservative conference late last month.
The president also did not address Monday’s stock market rout.
Treasury Secretary Steve Mnuchin, speaking after Trump left the news conference, acknowledged the steep losses but said that the administration had ample tools to deal with the situation and that the “economy will be in very good shape a year from now”.
“This is not like the financial crisis, where we don't know the end in sight. This is about providing proper tools and liquidity to get through the next few months,” Mnuchin said.
He said the administration’s primary focus for now were on parts of the economy that are likely to be impacted by the outbreak, “especially workers that need to be at home, hardworking people who are at home, under quarantine or taking care of their family.”
“We'll be working on a programme to address that,” he said.
US markets suffered losses not seen since 2008. The S&P 500 fell more than 7 per cent after declining some 12 per cent in recent weeks. The Dow Industrial Average fell by 7.79 per cent or 2,013 points – the biggest single-day point drop ever. Oil prices were also plummeting after major producers Saudi Arabia and Russia appeared to hunker down for a price war to win market share from each other.
In trade soon after the opening bell on Monday, US stocks fell so sharply that the losses triggered a 15-minute circuit breaker for the first time in 23 years.
Soon after that, Trump wrote on Twitter: “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 collapse of equity markets in the US follows a similar sea of red in Japan and the rest of Asia on Monday.
Concerns that the coronavirus will have a significant impact on consumer demand is a key driver for the bearish market sentiment, analysts said. The World Health Organisation said on Monday that there was a “real risk” of a full blown global pandemic, while leading US health official Nancy Messonnier said in a separate briefing that “many people” in the United States would likely be exposed to the virus over the next two years.
Trump administration officials previously floated a payroll tax cut in mid-February, when the US remained relatively unaffected by the Covid-19 contagion. In a February 14 interview with Fox Business Network, the National Economic Council Director Larry Kudlow said “we’d love to have a 10% middle-class tax cut, and we would love to strengthen and make permanent some of the other tax cuts”.
Changes to tax policies may prove to be an uphill task for the administration as it would require the approval of the Democrat-controlled House of Representatives. In his remarks, Trump said his meetings on Tuesday would involve House Republicans as well as Senate Majority Leader Mitch McConnell. He did not mention meetings with Democrats.
There have been 423 confirmed infections in the US, according to data published by the Centres for Disease Control and Prevention (CDC) at noon on Monday. The actual number is higher – more than 600 – as the agency’s data does not include cases confirmed by states on Monday.
Nineteen people have died, the CDC said.
The number of infections worldwide stands at more than 110,000, with 3,871 fatalities.
