Trump Wants a $1 Trillion Coronavirus Stimulus

Trump Wants a $1 Trillion Coronavirus Stimulus

Printer-friendly version
Plus - 1 million jobs lost?
Tuesday, March 17, 2020

Trump Wants a $1 Trillion Stimulus

As U.S. economic activity screeches to a halt due to the coronavirus pandemic, the Trump administration is asking Congress for a massive, rapidly evolving stimulus package that will likely top $1 trillion.

“We’re going big,” Trump told reporters Tuesday at a White House briefing. “We want to go big.”

‘Americans need cash now’: At the heart of the plan is a push to send many Americans cash payments, and quickly.

“Americans need cash now, and the president wants to give cash now. And I mean now, in the next two weeks,” Treasury Secretary Steven Mnuchin said at Tuesday’s briefing.

The administration reportedly has not decided how large the checks would be but wants them to top $1,000. Mnuchin indicated that high-income households may not be eligible. “I think it’s clear we don’t need to send people who make a million dollars a year checks,” he said. The threshold is likely to be far lower than that, around $75,000 to $85,000, CNN reports.

The first wave of checks would cost the government $250 billion, according to CNN. But cost considerations are being set aside as the administration looks to mitigate the economic damage from the pandemic. Mnuchin reportedly said Tuesday the Congress could worry about deficits at a later date.

“Cobbling together a stimulus package worth more than $1 trillion would mark a major ideological shift for Republicans, who spent years decrying debt and government bailouts following the 2008 global financial crisis,” Politico’s Nancy Cook and Ben White noted. “But with uncertainty surrounding the spread of the coronavirus and the volatility in the stock market, the White House does not seem concerned about the price tag — only stopping the financial freefall.”

The administration proposal reportedly also includes $200 billion for expanded loans to small businesses plus $50 billion in aid to the airline industry.

Tax day payments are getting delayed: Mnuchin also announced Tuesday that the tax payment deadline will be pushed back 90 days after April 15, with individual taxpayers who owe up to $1 million able to defer payments without incurring penalties or interest. Taxpayers will still have to file by April 15, however.

Multiple phases of coronavirus relief: Cash payments would be part of a third phase of coronavirus relief being negotiated now by Mnuchin and congressional leadership.

President Trump had been pressing for a temporary payroll tax cut, but lawmakers were cool to the idea, and the president on Tuesday indicated that he would prioritize the cash payments as he seeks faster action. “Payroll tax is one way, but it does come over a period of months, many months,” he told reporters. "And we want to do something much faster than that. So I think we have ways of getting money out pretty quickly and very accurately.”

The White House wants the next phase of stimulus to also include support for businesses and aid for the airline industry, which on Monday asked the government for as much as $60 billion in grants and loans.

Mnuchin reportedly has discussed the idea of combining the new stimulus measures with the revised relief package now being considered by the Senate after passing the House on Monday night. That legislation provides for paid sick and family leave and free virus testing as well as enhanced unemployment benefits, increased food aid and higher funding for Medicaid benefits. But Senate Majority Leader Mitch McConnell said Tuesday he would bring the House bill up for a separate vote before proceeding with the larger stimulus package.

"A number of my members think there were considerable shortcomings in the House bill. My counsel to them is to gag and vote for it anyway," he said.

McConnell also said he would keep the Senate in session until the next phase is completed.

It’s not clear yet whether the White House’s proposal will be able to speed through Congress, though, as Democrats have expressed concern that the administration’s plans thus far have centered on tax cuts and industry bailouts. Senate Minority Leader Chuck Schumer is pitching a stimulus of at least $750 billion that would provide more money for health care and schools, expand unemployment insurance and provide loan assistance, among other things.

“There is emerging tension between the White House’s approach and the bills Democrats are trying to advance,” The Washington Post reported. “White House officials are leaning hard into the idea of tax cuts and industry assistance, while Democrats have said their proposals are focused more on helping workers, health care providers, schools, and senior citizens.” 

Quote of the Day

“We really could see the worst jobs reports we’ve ever seen in our history.”

— Kevin Hassett, former White House Council of Economic Advisers chairman in the Trump administration, telling Politico’s Ben White that the employment reports for March and April could show job losses of more than 1 million.

Republican Tax Law Could Hinder a Recovery

The Tax Cuts and Jobs Act of 2017 – President Trump’s main legislative accomplishment and pride of the Republican-controlled 115th U.S. Congress – could make the current economic slowdown worse, says Politico’s Brian Faler.

As part of the effort to cover the cost of the legislation, which will add roughly $2 trillion to the deficit over 10 years, lawmakers reduced the ability of struggling businesses to get quick cash refunds from the IRS by refiling previous tax returns to reflect current losses. The elimination of so-called carrybacks, estimated to save about $200 billion, means that many businesses that might have turned to the IRS to boost their liquidity in the midst of a recession are unable to do so.

“It is a big problem,” Alan Viard of the conservative American Enterprise Institute told Faler. “It’s a bad feature of the TCJA. All of a sudden, it’s become more salient and important.”

John Buckley, a former head of the Joint Committee on Taxation, said that things looked different three years ago: “It was enacted when things were flush, and there was little prospect of recession, but these things have perverse effects when there’s a downturn.” Buckley also said that the eliminated tax rule would come in handy today: “Liquidity is going to be a big deal for a lot of these companies. If the goal is to give liquidity to troubled companies, the quickest and easiest thing to do is give a carryback.”

Some groups, including the U.S. Chamber of Commerce, are pushing to bring the provision back, but it won’t be as easy to reintroduce as it was to eliminate. A new carryback rule would likely be seen as a corporate tax cut and as a major revision to the 2017 tax law, which could be problematic for both parties in Congress.

Wow, working from home is kinda hard. How are you handling the pandemic? Send your comments and feedback to Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.

Warren: Here’s What I Want Companies to Do to Get a Bailout

Sen. Elizabeth Warren (D-MA) on Tuesday released a set of requirements she would like to impose on U.S. corporations that receive assistance from the federal government in the wake of the coronavirus pandemic.

“When the 2008 financial crisis hit, the federal government responded with a bankers' bailout. The rich and powerful got richer and more powerful,” Warren said in an op-ed on CNN Monday. “Any stimulus package must ... pass an important test: federal money that goes to big corporations or specific industries must be used to help their employees. Funds must come with strings attached to ensure that the money goes to maintain payroll, not to enrich shareholders or pay executive bonuses.”

Here’s the list of “progressive priorities and requirements” Warren wants to see in any stimulus package:  

  1. Companies must maintain their payrolls and use funds to keep people working or on payroll.
  2. Companies must provide a $15 minimum wage as quickly as practicable but no later than one year of the national emergency declaration ending.
  3. Companies are permanently prohibited from engaging in share repurchases.
  4. Companies are prohibited from paying out dividends or executive bonuses while they are receiving any relief and for three years thereafter.
  5. Companies must set aside at least one seat -- but potentially two or more, as the amount of relief increases -- on the board of directors for representatives elected by workers.
  6. Collective bargaining agreements should remain in place and should not be reopened or renegotiated pursuant to this relief program.
  7. Corporations must obtain shareholder and board approval for all political expenditures.
  8. CEOs must be required to personally certify a company is compliance and face criminal penalties for violating these certifications.

Warren hasn’t said how she plans to enact her proposals, or whether they are a necessary condition for her support of the stimulus packages currently being debated in Congress.


Views and Analysis