The Trump administration is looking at the potential need for targeted economic stimulus in response to the COVID-19 epidemic, a top administration official said Friday.
National Economic Council Director Larry Kudlow told CNBC that his team as well as Treasury Secretary Steven Mnuchin's were looking at options that could assist individuals who lose out on pay as well as industries hard-hit by the virus' spread, such as airlines suffering from travel reductions.
"NEC and Treasury, Steve Mnuchin and I, and staffs have been talking about this, and we would prefer a targeted approach, a rather micro approach if you understand," Kudlow said. "Let's think about individuals who might lose paychecks because they had to stay home if they get the virus. Let's think about small businesses that might get hurt by this. Perhaps we would look at some sectors."
Kudlow appeared to rule out broader relief measures, such as the payroll tax cut President Donald Trump floated in a tweet earlier this week as well as a proposal from a former top Obama administration official to distribute $1,000 rebate checks to all Americans.
"We would like to be targeted and timely ... not the gigantic macroeconomic fix," Kudlow said.
In a Wall Street Journal opinion piece published Thursday, Jason Furman, who was Council of Economic Advisers chairman under Obama, wrote that rebate checks would be preferable to an across-the-board payroll tax cut. He proposed pairing $1,000 checks to all U.S. adult citizens with $500 per child, at a one-time cost of about $350 billion that could be renewed next year if the contagion persists.
Furman wrote that such rebates would be more equitable than a payroll tax cut, which would benefit higher-income households disproportionately. Payroll tax cuts also show up in workers' paychecks a little bit at a time, while a rebate would provide a lump sum that individuals might notice more and increase their spending.
Mnuchin told reporters Wednesday after a House Appropriations subcommittee hearing that Brent McIntosh, under secretary for international affairs, is heading Treasury’s coronavirus sub-task force. The group is looking at, among other things, what might help small- and medium-sized businesses weather the virus’ economic effects.
Unlike the Great Recession, where government efforts were targeted toward the entire economy, Mnuchin said he expects the coronavirus effort will be “targeted.” Asked if that meant the effort could be geographic, industry-specific or geared toward business size, he said, it could be “all of the above.”
"This virus is liable to have a targeted impact, unlike the financial crisis which impacted everybody. My initial reaction is that we should have a much more targeted approach if there are businesses that are impacted by this," Mnuchin said.
Richard F. Moody, chief economist at Region’s Financial, a regional bank holding company based in Birmingham, Ala., told CQ Roll Call that stimulus measures likely would not help underlying supply chain problems that may slow the economy.
“There’s really not a policy response that’s going to get the supply chain back up and running, particularly since its Chinese manufacturing that’s the bottleneck,” Moody said.
“I’m not sure what the premise behind that would be,” Moody said, other than to "help overall confidence."
Meanwhile on Capitol Hill, two key Democratic lawmakers said they were focused on ensuring that workers are paid in the event they have to stay home.
Sen. Patty Murray, the ranking Democrat on the Health, Education, Labor and Pensions Committee, and House Labor-HHS-Education Appropriations Chairwoman Rosa DeLauro, D-Conn., said they drafted legislation that would mandate employers provide 14 days of paid sick leave during declared public health emergencies. It also would require employers to let employees earn at least seven days of paid sick leave for other circumstances.
DeLauro said not having universal sick leave could complicate efforts to contain the illness. “No one should face the impossible choice of caring for their health or keeping their paycheck or job, especially when a sudden public health crisis occurs," DeLauro said in a statement.
Murray and DeLauro also want to clarify that paid sick leave can be used during public health emergencies in some cases where the actual worker isn't showing signs of illness. That includes instances where schools or workplaces are closed due to the health emergency or quarantine mandates.