A Coronavirus National Emergency?

A Coronavirus National Emergency?

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Plus: Pushing back the April 15 tax deadline.
Wednesday, March 11, 2020

Trump, Congress Scramble for Coronavirus Stimulus Plan

President Trump is set to address the nation on the coronavirus Wednesday night at 9 p.m. ET as his administration scrambles to coordinate a public health and economic response to what the World Health Organization now calls a pandemic.

After days of trying to downplay the threat, Trump is facing calls to declare the outbreak a national emergency, which would enable the Federal Emergency Management Agency to use more than $40 billion from the Disaster Relief Fund to help local and state governments in their coronavirus efforts.

Senate Minority Leader Chuck Schumer and other senators are pressing for such a declaration, CNN reports. But Trump is reluctant to declare the outbreak an emergency.

“Trump’s concern at this point is that going further could hamper his narrative that the coronavirus is similar to the seasonal flu,” Politico’s Anita Kumar reports, citing three people familiar with the discussions. Kumar adds that the president is instead expected to approve a more limited designation that would allow the federal government to backstop small business loans, provide assistance to hourly workers and delay the April 15 tax filing deadline.

Democrats unveil their own proposals: As the administration pulls together its response and negotiates economic stimulus legislation with Congress, House and Senate Democrats on Wednesday assembled their own plans for a more immediate relief package focused on providing paid sick leave, unemployment benefits, free testing, food assistance and other help to people affected by the outbreak.

“In moving hastily to unveil their own plans, Democrats hope to set the terms of the debate and get ahead of the Trump administration, which is divided internally over what to do,” The New York Times reports. “The quick action carries risk for House Democrats, who do not want to be seen as trying to politicize a deadly epidemic. But it also puts pressure on Republicans to support a measure to provide aid for people who are sick or out of work amid a public health crisis.”

The House is expected to vote on its plan Thursday in hopes of sending it to Trump before the end of the week, when lawmakers are set to leave town for a scheduled week-long recess. House Majority Leader Steny Hoyer reportedly said that there won’t be enough time for the Congressional Budget Office to put together a cost estimate for the legislation, but that the tab would probably run into the billions of dollars.

“Right now we’re trying to deal with the direct impact of the virus on individual citizens,” House Budget Committee Chairman John Yarmuth (D-KY) said Wednesday, according to the Associated Press. “So paid family leave, making sure the tests are free to everybody, boosting unemployment insurance and so forth. That’s immediate. That’s tomorrow.”

Lawmakers would then revisit a broader stimulus package when they return. Treasury Secretary Steven Mnuchin reportedly backed that approach. Testifying before Congress, Mnuchin said he hoped to reach a deal within 48 hours and that the administration would seek a larger package in the future. “We want to get done what we can do this week, and we will come back,” he said.

Talks with the White House: Pelosi is also engaged in talks with Mnuchin over a relief package, though the White House and House Democrats reportedly remain divided over the specific elements to be included in that plan.

Lawmakers have largely panned President Trump’s proposal to zero out the payroll tax for employers and employees through the rest of the year, as have many economists. That tax cut would cost an estimated $700 billion, according to The New York Times, putting it on the order of the 2008 Wall Street bailout and the economic stimulus package that followed.

“A payroll tax cut would do little to help workers without paid sick days or those who have lost shifts and tips,” Senate Finance Committee Ranking Member Ron Wyden (D-OR), said in a statement. And Hoyer told The New York Times that the tax cut idea is a “non-starter.”

Quote of the Day

"I can say we will see more cases, and things will get worse than they are right now. How much worse we'll get will depend on our ability to do two things: to contain the influx of people who are infected coming from the outside, and the ability to contain and mitigate within our own country. Bottom line: It’s going to get worse."

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, in testimony before the House Oversight and Reform Committee on Wednesday at a hearing on the nation’s preparedness for the virus outbreak.

Treasury Wants to Delay April 15 Tax Deadline for Most Filers

The Trump administration plans to push the April 15 tax filing deadline to a later date in response to the coronavirus outbreak, Treasury Secretary Steven Mnuchin said Wednesday.

The delay will apply “to virtually all Americans, other than the superrich,” including most individuals as well as many small and medium-sized businesses, Mnuchin said.

Under the plan, tax payments could be deferred to an as-yet undefined date without penalty or interest, with the goal of keeping billions of dollars in the hands of consumers and business owners. Mnuchin said the filing delay “will have the impact of putting over $200 billion back into the economy, and that will create a very big stimulus.”

Treasury officials say they have the authority to waive penalties, The Wall Street Journal reported, and are looking into the possibility that the declaration of a national emergency would enable them to waive interest.

The delay could affect federal borrowing, since April is the biggest month for revenues as taxpayers send their payments to the IRS, with $333 billion coming in last year. The Treasury may have to borrow more to pay its bills on time, though Mnuchin said issuing more Treasury bills “shouldn’t be an issue.”

Bailout or Not a Bailout?

In his appearance before Congress, Mnuchin also defended a plan being considered by the Trump administration to help specific industries hurt by the spread of the novel coronavirus by providing low-interest or no-interest loans and possibly allowing companies to defer tax payments. Mnuchin denied that those proposals would be a “bailout.”

“I want to be clear: This is not bailouts,” Mnuchin said. “We are not looking for bailouts. But there may be specific industries that are highly impacted by travel that have issues with lending. And just like after September 11, the government authorized certain loan guarantees, we may consider that. I would just say the loan guarantees are a very effective way of making sure that the government is paid back without putting the government at risk.”

Mnuchin’s comments reportedly drew criticism from both conservatives and liberals, who said that the plan does indeed sound like a bailout.

“We are going to have to see specifics, but when you are dealing with special treatment given to one industry or sector of the economy, that is, almost by definition, a bailout,” an economic policy expert at the Heritage Foundation, a conservative think tank, told The Washington Post’s Jeff Stein.

And Bob Hockett, a public policy expert at Cornell University, questioned the administration’s emphasis on helping certain industries. “If they’re going to do bailouts — even if they don’t call it that — why not do it for line workers and retail workers who don’t have a lot of savings or paid leave time?” he told the Post.

The bottom line: “The White House’s plan may be a difficult sell politically,” Stein says. “The Trump administration has already faced criticism for approving close to $30 billion in direct cash payments to farmers hurt by its trade war with China.”

The 11-year-old bull market ended Wednesday as stocks fell into bear market territory, more than 20% off their highs.

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