President Donald Trump said Monday he will seek a payroll tax cut and “very substantial relief” for industries that have been hit by the virus, reversing course on the need for economic stimulus hours after markets posted their worst losses in more than a decade.
Trump, speaking at a White House news conference, said that he plans to announce “very dramatic” actions to support the economy at a press conference on Tuesday following discussions with lawmakers. “I will be here tomorrow afternoon to let you know about some of the economic steps, which will be major,” Trump said.
Trump said he wants to help hourly wage earners who could lose pay by staying home “so they don’t get penalized for something that’s not their fault.”
Pressure has been growing on Trump to take more decisive action in response to the coronavirus, as the number of cases in the U.S. and worldwide continues to grow. U.S. stocks plunged more than 7.5% on Monday — the worst day on Wall Street since the financial crisis — as a full-blown oil price war rattled financial markets already on edge over the outbreak.
Trump’s statement marks a reversal from his administration’s recent position on the need for economic stimulus.
Last week, Treasury Secretary Steven Mnuchin said the administration isn’t considering a payroll tax cut as part of its response to the coronavirus. He added that the virus sell-off isn’t comparable to the financial crisis a decade ago. “We will get through this,” he told reporters on Mar. 3. Market swings are happening because “the markets struggle to assess new risks.”
It’s unclear whether the plans being discussed at the White House will be enough to stem the sell-off as the private sector, particularly airlines and cruise companies, clamor for more relief.
Mnuchin, speaking Monday at the White House news conference, reiterated that the recent turmoil in markets “is not like the financial crisis” and pointed to “an unprecedented move in the oil market” as the source of gyrations in the U.S. stock market. Mnuchin added that he has daily conversations with Federal Reserve Chairman Jerome Powell, and that the president is committed to using “all our tools” to help the economy.
Bank chief executives will be coming to the White House later this week, Mnuchin said, adding that the administration is focused on workers who need to be at home and small businesses that need liquidity.
Republicans in Congress have begun floating their own ideas but had been waiting to hear from Trump before making specific proposals. The idea of cutting payroll taxes has been gaining traction in Congress among some GOP lawmakers. But it’s drawn objections from Democrats, including House Majority Leader Steny Hoyer.
“The president’s answer for almost everything is a tax cut,” Hoyer said after emerging from a meeting of Democratic congressional leaders. “I think we need to make sure that people and health facilities and health insurance companies and others can have confidence that they’re not gonna be bankrupt by this and they will have some support from the government”