With stock markets reeling, businesses scrambling, and the American public fearful as the coronavirus spreads, Washington, D.C., has rapidly come around to the idea that sweeping action—in the form of a government stimulus plan—is needed to mitigate the virus’ effects on the economy.
The question now is what that plan will look like and whether President Donald Trump, having spent weeks chastising congressional Democrats for supposedly trying to gin up the threat of the virus in order to hurt his presidency, has the political wherewithal to get it passed.
On Monday, as the stock market suffered its worst day since the 2008 financial crisis, Trump appeared before the press and floated a “major” plan, which he said could include a payroll tax cut for companies, hourly wage earners “getting help” in the event they miss work, small business loans, and relief to industries like travel and hospitality that have been especially hard-hit by the outbreak.
Early indications are that there may be a receptive audience for the proposal on the Hill.
Though Trump responded to Democrats’ criticism of his handling of the virus by slamming “incompetent” Speaker Nancy Pelosi and “Cryin’” Chuck Schumer—accusing both of them and the media of trying to gin up a crisis to hurt his political prospects—House Democratic sources told The Daily Beast on Monday that there was appetite within their ranks to work with the administration on a plan to ease the economic burden of the outbreak. Especially enticing is Trump’s apparent openness to work with them on paid sick leave for workers, which supporters believe will not just protect workers’ economic livelihoods but also counter the spread of the virus itself by keeping employees away from more crowded worksites if they feel ill.
But Democrats also say that the devil will be in the details of the proposals Trump endorses. And they recognized that they’ve been in this place before. In past crises, most notably the aftermath of mass shootings, Trump has moved toward positions unusual for a GOP president to embrace, only to retreat later. There is also fear that Trump will end up tilting any coronavirus relief package towards Wall Street. Democratic lawmakers pointed to an upcoming Tuesday meeting at the White House between Trump’s team and banking executives as a sign that the markets-obsessed president is at least mulling a 2008-style bailout that many Democrats still revile as a lifeline to corporations that left workers behind.
“What we know is that the Wall Street bailout from 2008 basically just ended up preserving the billionaire class,” said Sen. Chris Murphy (D-CT), who voted for the bailout. “I think it’d be a huge mistake if our focus is bailing out industries and banks. Our focus should be on helping the workers who are going to be harmed by this—we can’t rely on trickle down disaster relief.”
While they may still be apart on the specifics, the White House and Republicans and Democrats on the Hill are in agreement that any stimulus plan will have to come together very quickly—likely within the next two weeks. Democratic committee chairs emerged from a meeting with Pelosi on Monday night vowing to move this week on bills designed to bolster the economy, reported CNN, though it’s unclear what form those bills will take yet.
Congress has already shown an ability to move relatively fast to address the coronavirus outbreak. Last week, both chambers overwhelmingly approved legislation to inject over $8 billion into the country’s public health infrastructure, a sum that was far above what the administration initially requested.
But a more sweeping plan to deal with wide-ranging economic, health, and labor fallout from the virus figures to be far more complicated than emergency legislation. And the relationship these days between the president and Hill Democratic leaders is at an all-time low, with each side accusing the other of politicizing a deadly disease outbreak.
With talk about a possible stimulus gaining steam in the White House over the weekend, on Sunday night, Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-N.Y.) released a joint statement setting a benchmark for what Democrats will support in any future action to take on the coronavirus.
At the top of the list was paid sick leave. The leaders also pushed for improved unemployment insurance and expanding access to food stamps.
For some Democrats, the fear is that the White House’s final proposal—which Trump said he would release in full on Tuesday—may end up trying to solve economic concerns without addressing the underlying public health crisis.
“If it’s just tax relief for industries, which really translates to tax relief for stockholders, I'm going to be troubled by that,” said Rep. Dan Kildee (D-MI). “The combination of direct relief to people who are at most risk not only deals with the economic question, but also makes it easier to engage in practices to limit the spread.”
Some early optimism did prevail in the Democratic ranks, however, even among Trump’s most outspoken critics. On Monday, Rep. Alexandria Ocasio Cortez (D-N.Y.) told The Daily Beast she felt there were decent prospects for progress on paid sick leave, specifically, though she worried what might come with it.
“It'd be great if we could broker a deal,” said Ocasio Cortez. “This president does not waste a crisis, though, so I would not be surprised if that also came with a bunch of toxic stuff as well. Knowing what usually comes out of this White House is that it's a crumb of something good like paid sick leave, and then it'll just be attached to a truckload of systemic risk. … and things that you would either deregulate or cut taxes even further on those who need those cuts the least.”
As House Democrats grappled with the idea of working with Trump on a possibly fraught stimulus plan, congressional Republicans—historically wary of anything tagged with that word—grappled with reconciling the president’s desires and their own instincts.
“I don’t think there's a whole lot left that you can do,” said Sen. Mike Braun (R-IN). “Stimulus, when you're running trillion dollar deficits, is an issue, and monetary policy is about as good as it can be. I think we get through it—the real economy is holding up fine.”
GOP leadership is set to meet with Trump this week to discuss possible paths forward.
In recent days, as the Trump White House scrambled to assemble a legislative package in the hopes of averting economic disaster, senior administration officials consulted with top outside allies and conservative economics wonks on their planned proposals, including what should be done or spent if the coronavirus manages to truly tank the U.S. economy, according to two sources familiar with that outreach. And not all of these Trump allies agree with the White House officials pushing modest stimulus.
Stephen Moore, a conservative economist at the Heritage Foundation and an adviser to Trump’s 2016 presidential campaign, said in a brief interview that he had recently spoken to Trump administration officials about economic measures that could be taken during this crisis, and that he’d offered his advice on the matter.
"There’s not a lot the White House can do right now other than continue to instill confidence," Moore said late last week. "This really is a confidence game. And it’s a tricky thing because you don’t want to say, 'Oh, everything is fine,' but you need to let people know you’re in charge."
Moore added that he'd told Trump administration officials that he vehemently disagrees with some of the discussed proposals to counteract coronavirus panic and juice the economy. Among those ideas that Moore opposes is the one that seems to have the most support.
"A payroll tax cut,” Moore said, “would not have an observable effect on the economy."