Senator Chuck Grassley wanted to create targeted fiscal policies to combat the coronavirus, aiming money at travel-related businesses. President Trump has other ideas.
Trump said he’ll ask Congress for a payroll tax cut and other “very major” stimulus moves, but left out details. Still, a payroll tax cut can only mean one thing, that working Americans pay less in taxes, therefore they have more cash.
That might sound good, but it’s not likely to goose the economy very much, and certainly won’t replace the spending lost on airline travel, hotels, movie theaters, theme parks, concerts, sporting events, etc.
To do that, Congress would need to shovel cash to consumers and businesses as fast as possible, not drawn out over months of paychecks, $20 at a time.
The president favors a broad payroll tax cut but others inside the White House want a targeted response that benefits industries and areas hardest hit by the virus, advisers say.
Neil Bradley, chief policy officer for the U.S. Chamber of Commerce, said:
“This isn’t a situation where we need to flood the economy. What we need to do is help anyone who’s adversely impacted navigate and get to the other side of this.”
Bradley thinks that means income support for workers laid off and aid for the travel, tourism and other sectors impacted by the virus.
Small business owners, already squeezed by high debt, rising wages and Trump’s tariffs on Chinese goods, are likely to be among the most affected if customers stay home.
“The way we think about it is, if you have a business that was an otherwise profitable ongoing concern that is impacted by this, you shouldn’t have to go out of business because of this temporary shock. Individuals that were otherwise employed should not have to go into default.”
Any move such as a payroll tax cut or rebate would likely need the approval of Congress and action may not be imminent, as lawmakers are scheduled for a recess next week.
House of Representatives Speaker Nancy Pelosi on Monday issued coronavirus spending priorities for Democrats, including paid sick leave for quarantined workers, enhancements to unemployment insurance, food stamps and other nutrition programs, and reimbursements for coronavirus medical treatments.
The BlackRock Investment Institute said:
“The key vulnerabilities that need to be addressed: cash challenges faced by companies, especially small- and medium-sized enterprises, and households.”
It called for generous government support to expand sick pay, adjustments to welfare and unemployment insurance programs to temporarily enhance benefits and, if necessary, direct payments to households.
For businesses, it called for tax deferrals to boost cash flow. Disaster relief mechanisms could be used to push cash to firms deeply affected.