With US and many other government bond yields at record lows, government budgets have nearly unlimited capacity to expand in response to the short-term economic shock caused by quarantines, travel restrictions, and business closings, David Goldman wrote in a commentary for Asia Times.
Published around mid-day Monday US time, that piece was well timed indeed. Just a few hours later, President Donald Trump said he would, on Tuesday afternoon, unveil “dramatic” measures to soften the economic impact of the novel coronavirus.
“I will be here tomorrow afternoon to let you know about some of the economic steps we’re taking, which will be major,” he told reporters.
He said his administration would be meeting with lawmakers to discuss economic relief measures to mitigate the impact of the coronavirus outbreak spreading through the United States.
“We’re going to be meeting with House Republicans, [Senate leader] Mitch McConnell, everybody, and discussing a possible payroll tax cut, or substantial relief,” he said.
“We’re also going to be talking about hourly wage earners getting help, so that they can be in a position where they’re not going to ever miss a paycheck,” he said, adding he would also be discussing relief measures for companies affected.
Trump praised his administration’s efforts at dealing with the novel coronavirus but said that the disease had “blindsided the world.” The US “has a great economy, but this blindsided the world and I think we’ve handled it very well,” he told reporters.
US Treasury Secretary Steven Mnuchin spoke in a similar vein about greatness. “The US has the most resilient economy in the world,” offsetting some of the financial impact of the coronavirus, he said. “We couldn’t be more pleased that the president’s economic programs of tax cuts, regulatory relief and trade have put the economy in a very good position,” he said.
US media give details
While there were no details available from the White House immediately, at least a couple of US news outlets had begun sniffing out the administration’s intentions.
The Washington Post, citing two unnamed sources, reported last week that hospitality industries such as airlines, travel agencies and cruise ship companies might get tax relief from White House to offset the financial damage caused by the virus epidemic.
White House economic adviser Larry Kudlow also confirmed this in a CNBC interview where he said the administration was considering “targeted and timely” measures and “not the gigantic macroeconomic fix.”
Airlines are under pressure with cutback on routes and declining ticket sales, hotels are grappling with vacancies and the business of travel has broadly suffered as trade shows, music festivals and conventions are being canceled across the world with the virus epidemic keeping people at home.
The sector accounted for 2.9% of the economy in 2018, according to the Bureau of Economic Affairs. Tourism related employment involved 9.2 million jobs, it said.
The support for the hospitality sector has raised questions about whether this will directly affect Trump’s businesses, the Washington Post said.
Trump’s company, which he still owns but is run by his sons, owns and operates hotels in Washington, Chicago and Las Vegas, plus the Mar-a-Lago Club in South Florida and a vineyard in Northern Virginia, it said.
The company also owns 11 golf courses in the United States and three golf resorts in Europe. The Trump Organization operates properties under the Trump brand for other owners in Hawaii, New York and Vancouver, the Washington Post said.
– With reporting by AFP