White House seeks options to blunt economic fallout from coronavirus

White House officials continue to mull steps that would blunt the economic fallout of the coronavirus outbreak, according to people familiar with the deliberations, as President Donald Trump frets a weakened economy could spell doom come November’s election.

Even as officials insist their outlook for the economy is good — and that coronavirus will not present a serious threat — there have been continuing discussions of ways to protect against a slowdown.

Ideas being batted about inside the White House include finding a way for government to guarantee paid sick leave for workers or sending money to small businesses to avoid layoffs, people familiar with the early discussions said, cautioning the brainstorming was still loose and in its early phases.

After a rate cut by the Federal Reserve did little to calm markets, administration officials have appeared resistant to temporary fiscal steps such as a payroll tax cut, even as Trump publicly floats the idea.

Some economists and business leaders have said fiscal policy steps will be necessary on top of central bank action. But underlying concerns about supply chain interruptions and continued questions about the administration’s response to coronavirus — such as problems with testing — aren’t likely to be solved by either fiscal or monetary policy.

Though the administration says it’s not currently under consideration, the idea of a payroll tax holiday hasn’t been entirely ruled out, officials said, suggesting the full scope of the economic fallout needs to be ascertained before the President proposes steps to Congress.

“I’m focused on this. The country is in great shape. The market is in great shape. I’m focused on this. This is very important,” Trump said when questioned about another triple-digit loss in the Dow Industrial Average on Tuesday afternoon. He said he believed it would be a good time for middle-income tax cuts “if the Democrats would approve it.”

Even as Trump publicly downplays the volatile markets, and insists he remains focused on the health impact of the outbreak, he has tasked advisers with devising ways to protect the economy from lasting damage.

A White House official said the talks have included the possibility of including money for the Small Business Administration in a sweeping spending package that’s working its way through Congress now.

Officials also said there have been discussions about increasing unemployment benefits for people who might lose their jobs because of an economic slowdown and ensuring Americans have adequate sick leave so don’t feel obliged to come to work when they have potential symptoms of the disease.

Health authorities have said it is essential for sick people — or people who might have come into contact with the virus — to stay home from work to avoid spreading the disease further. Many low-wage workers and workers in service industries do not get paid if they take time off when sick.

The ideas being discussed among Trump’s advisers remain in the early stages and Trump himself hasn’t proposed new ideas to Congress meant to reinforce the economy. White House officials are skeptical that Democrats will go along with steps that would boost the economy before November’s election.

The chairman of the House Ways and Means Committee, Democratic Rep. Richard Neal, said during a hearing on Tuesday that temporary measures such as tax cuts should only come after stimulus measures that include new infrastructure funding, something Treasury Secretary Steven Mnuchin appeared to agree with.

“If there’s a need to stimulate the economy as a result of the coronavirus, I am sure that infrastructure is a priority for the President,” he said.

In the same hearing, Mnuchin said the White House was not considering suspending tariffs on Chinese or European goods, which have been a factor in global economic unease over the past year.

Trump has publicly goaded the Federal Reserve to further cut interest rates, even though a half-point cut on Tuesday did little to stabilize markets. On Twitter he called for “more easing and cutting” following the emergency rate cut.