WASHINGTON – President Donald Trump envisions economic stimulus designed to help businesses injured by the coronavirus, a senior White House economic official said on Friday, although the aid has lowered expectations about the scope of any plan.
“Some sectors may need temporary assistance,” Larry Kudlow, Trump’s chief economic adviser, told Fox Business on Friday. “I consider it targeted and timely and I think it would be the most effective response, but we don’t want to act prematurely because today’s figures show that the US economy is in very good shape. “
Talking about a stimulus package, however ambiguous, is a departure from the standard line that the White House has used in recent days: that the fundamentals of the U.S. economy are so strong that the coronavirus will only cause ” slower growth in the short term.
Growing concerns about the virus have prompted tech companies, musicians, sports teams and international institutions to cancel dozens of events around the world. Other companies are wondering whether to allow their employees to work from home. The University of Washington announced on Twitter Friday that it will cancel in-person classes until the end of the winter term.
Kudlow’s remarks came in the middle of another hectic day on Wall Street, where the Dow Jones Industrial Index lost nearly 500 points in midday trading.
Kudlow did not provide details on the plan, but said any stimulus would target the hardest hit industries such as travel and hospitality.
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White House officials have said they are trying to find ways to help businesses that may be most affected by the fear of the coronavirus, including possible tax breaks for airlines, cruises and travel. They spoke on condition of anonymity because, they said, no decision has been made and many options are being discussed.
But Kudlow and other White House officials said the talks were preliminary and that no plans had been made.
Kudlow spoke shortly after Trump signed $ 8.3 billion to help fight the coronavirus, including assistance to federal, state, and local health agencies, as well as money to help develop a vaccine and respond to the spread of the virus. . Trump initially asked for much less money.
Kudlow pointed out that they may eventually need Congress again to get the money.
“We may have to go back to Congress for additional credit requests – it’s“ may ”; we don’t know yet, “he said.
If necessary, a new plan would be devised to help businesses that have been affected by efforts to contain the spread of the virus. It would be “targeted and timely micro-forms of assistance, not a gargantuan generalization of the problem,” said Kudlow.
Large, untargeted programs have “never worked in the past,” he said, adding that the US economy remains in good shape and “we think we will be out of this situation in a few months” .
While the spread of the virus has helped the stock markets, Kudlow cited the positive job numbers announced on Friday.
“We think the economy is fundamentally healthy,” he said.
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Trump reflected these remarks earlier on Friday.
“The consumer is generating so much because of tax cuts, regulatory cuts and the things we have done,” he said. “So I think we are in great shape. I think we are in great shape.”
Jared Bernstein, economic adviser to then vice-president Joe Biden, said it would be a “political mistake” not to prepare for some sort of fiscal stimulus, given the economic threats from the coronavirus.
“They’re going to have to respond at best to a very likely economic downturn and recession at worst,” said Bernstein, senior researcher at the Center on Budget and Policy Priorities. “The question is whether it will contain useful ideas for its money, or whether they will just use it as an excuse for more unnecessary tax cuts.”
Some economists are recommending broader measures that Congress can take in the short term to help those immediately affected by the virus. Americans who are quarantined or unable to work due to supply disruptions can receive unemployment insurance that waives the demands of the job, says Jay Shambaugh, director of the Hamilton Project.
The government could also cover the costs of healthcare for those infected, said Mark Zandi, chief economist at Moody’s Analytics.
If the upsurge weighs more heavily on the economy and unemployment increases, the government could reduce the social charges of all workers from 6.2% to 4.2%, which is similar to the decrease observed under the administration Obama says Michael Gapen, chief US economist at Barclays. According to him, this would increase household income by $ 150 billion, generating more consumer spending and increasing gross domestic product from 0.4% to 0.6%.