WASHINGTON (AFP) – As nearly three-quarters of US firms suffer supply disruptions due to the coronavirus epidemic, President Donald Trump s treasury secretary said the administration is “working full time” on a stimulus package to aid the economy.
However, a key senator shot down giving an immediate payroll tax cut to American workers, the plan s main pillar, while Democrats are moving ahead with their own plan.
The outbreak has prompted US airlines to cancel flights, the Federal Reserve to make its first emergency rate cut in 12 years and the stock exchange to experience its worst session since 2008.
This spells trouble for the US economy but also threatens Trump s re-election campaign, which is based heavily on his touting of booming stock prices and low unemployment.
Treasury Secretary Steven Mnuchin said Trump is “very much focused” on the package that could include a payroll tax cut, among other options, including delaying the tax filing deadline.
“That s the president s number one priority,” he said.
However, Senate Finance Committee Chairman Chuck Grassley — a Republican like Trump — said there is no bipartisan support for cutting the taxes automatically taken out of Americans paychecks.
“We re in the process of analyzing the economic impact of the virus so right now I wouldn t say it s necessary,” he told Bloomberg.
Grassley s spokesman later said on Twitter that the comment was “widely misinterpreted” and that a payroll tax cut remains an option.
Meanwhile, House Speaker Nancy Pelosi is reportedly planning to present a stimulus package supported by Democrats later Wednesday.
No consensus on stimulus
But the obvious lack of a consensus among Democrats and Republicans will cause delays that economists say the country can ill afford.
Trump promised to announce measures on Tuesday, but the day ended with no details, leaving the United States lagging governments of other major economies.
The European Union, Italy, Canada and Britain already announced massive spending packages to provide economic support to offset the damage done by the epidemic, and even Germany, long Europe s custodian of fiscal rectitude, says it is open to more spending.
Mnuchin, who was at the US Capitol for meetings with Pelosi and Senate Majority Leader Mitch McConnell, acknowledged that “certain industries are going to be significantly impacted and the president is very committed to make sure we have the economic response appropriately for this economy.”
“This is something we re going to do quickly,” he said, but later acknowledged the measures may come in stages.
Mnuchin said the administration could extend the April 15 tax filing deadline without congressional approval, and that would inject $200 billion into the economy, according to media reports.
The Institute for Supply Management released a survey showing nearly 75 percent of US manufacturing and services firms report supply chain disruptions, and 80 percent believe they will experience some impact from the COVID-19 outbreak.
Travel restrictions, especially from China, are a major factor, and one in six of the companies reporting problems have lowered their revenue targets, according to the survey conducted February 22 to March 5.
“The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” ISM Chief Executive Thomas W. Derry said in a statement.
“For a majority of US businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled.”
Mnuchin said he will meet with cruise line executives later Wednesday and Trump will meet with bank CEOs to discuss how they can help businesses. However, he denied that any aid to businesses, including possible loan guarantees, would be a bailout.