Top economic policymakers from both sides of the aisle batted around options to stanch the bleeding Monday amid the worst one-day rout in two major U.S. stock market indexes since 2008 and increased chatter about a potential recession later this year.
President Donald Trump said he'd be asking Congress to pass payroll tax cuts or other tax relief with a price tag involving a "big number," as well as assistance for hourly workers with missed paychecks because they got sick, faced quarantines or otherwise were "penalized for something that is not their fault."
The president's tax cut announcement was at odds with recent comments from National Economic Council Director Larry Kudlow, who on Friday cautioned against broad-based macroeconomic measures in favor of "targeted" relief. But as stock markets swooned and fear of the COVID-19 illness grew, pressure was clearly mounting to do something big.
"We will be taking care of the American public," Trump said, adding that he'd discuss more details Tuesday after a briefing for Senate Republicans by administration economic officials.
Treasury Secretary Steven Mnuchin said the "primary focus is parts of the economy that are going to be impacted, especially workers who need to be at home under quarantine or taking care of their family."
Trump also raised the possibility of expanded small business loans and aid to the airline, hotel and cruise industries suffering from canceled travel plans.
Democrats panned the idea of industry-specific relief. But there is bipartisan momentum behind some sort of expanded leave benefit for individuals forced to stay home from work without pay due to coronavirus-related quarantines, forced school closures or company policies. Finding a way to get school meals into the hands of low-income children forced to stay home due to school closures also has some support on both sides.
Speaker Nancy Pelosi, D-Calif., said late Monday that Democrats could release an economic aid package this week. If the measure is ready, it could go to the House floor as soon as this week, but otherwise would wait until lawmakers return from next week's scheduled recess.
As of Monday, Pelosi said, she hadn't been informed of any medical reason not to reconvene in Washington after the one-week recess.
Ways and Means Chairman Richard E. Neal, D-Mass., said paid leave as well as expanded unemployment insurance and funding to cover medical tests for individuals without appropriate insurance coverage were at the top of his list.
“We hope, perhaps, to have a plan this week on those three fronts," Neal said after leaving a meeting in Pelosi's office, with Pelosi later adding that school lunch provisions would also be included. She added there was interest among some members in language ensuring local utilities couldn't shut off water to homes with unpaid bills.
Some Democrats have advocated tax rebate checks akin to the ones backed by GOP President George W. Bush during the Great Recession, which they said would help the middle class more than payroll tax cuts. But it wasn't clear how much support within the Democratic ranks on Capitol Hill there was for such a move at this time.
How big, how fast?
The question on Monday quickly turned to how fast lawmakers could get a bill to the president's desk. "I'm hoping we can put it all together, and at least make some important … decisions with legislation before we leave," said House Appropriations Chairwoman Nita M. Lowey, D-N.Y.
Pelosi and Senate Minority Leader Charles E. Schumer, D-N.Y., put paid leave at the top of their list of economic measures in a weekend statement. Some Democrats demanded to at least take up paid leave before heading home.
"While I'm glad some of my colleagues are responsibly under self-quarantine, the fact is far too many Americans don't have that luxury due to insufficient paid sick leave," Rep. Max Rose, D-N.Y., tweeted Monday, an apparent reference to certain lawmakers who've already decided to say home. "I'll be damned if we cancel votes without first taking action to ensure all Americans are able to follow public health guidance."
Rose, a freshman who flipped a GOP-held seat in the 2018 midterms in a district Trump won by nearly 10 points two years earlier, is considered one of the most vulnerable Democratic incumbents, according to Inside Elections with Nathan L. Gonzales.
Mnuchin and other officials were set to brief Senate Republicans at their weekly policy lunch on Tuesday. Senate Finance Chairman Charles E. Grassley, R-Iowa, is looking at options for a relief package with his panel members. He declined to get into specifics Monday.
"Everything is on the table. We’re just taking one step at a time. I wouldn’t want anybody to panic over what we’re talking about, because I don’t think at this point there’s any reason to panic," Grassley told reporters. "But I think the feeling is we need to be a step ahead of what could be a problem, but is not a problem today."
Food stamps, medical expenses
Before propping up specific industries, Pelosi and Schumer said other measures needed to be addressed, on top of paid leave, free medical testing and unemployment benefits:
- Expanded availability of food stamps; nutrition assistance to low-income women, infants and children; and free and reduced-price school lunches.
- Funding for protective equipment for hospital workers, cleaning crews and others potentially exposed to the virus.
- Unspecified "anti-price gouging" protections, possibly similar to cost controls for vaccines and other treatments Democrats unsuccessfully sought during supplemental talks.
- Expanded medical system capacity to handle possible surges in demand.
"The proper economic response at this point is to put more money into the hands of working families because that's the key to them being able to protect themselves and their communities," Senate Finance ranking Democrat Ron Wyden of Oregon said Monday, mentioning paid leave specifically.
One area of potential common ground is on expanding the school lunch program so children could still get their meals if schools end up closed, added Senate Agriculture Chairman Pat Roberts, R-Kan., noting that nearly 50 percent of students are eligible for free or reduced-price lunches.
Other Democrats, including top Obama administration economic officials Jason Furman and Jared Bernstein, in recent days have advocated rebate checks similar to an early 2008 stimulus package, arguing they'd particularly benefit low- and middle-income workers who'd be more likely to spend the money. Payroll tax cuts, on the other hand, provide larger dollar benefits for higher-income earners.
"Right now, somebody whose job is a dishwasher, I'm not sure the payroll tax cut will help them," Lowey said Monday night.
Speaking on CNBC Monday, Moody's Analytics Chief Economist Mark Zandi said he saw potentially a 60 percent to 65 percent chance of recession this year.
The economic picture had been looking fairly strong before the COVID-19 outbreak upended the outlook. Last week the Bureau of Labor Statistics reported robust growth of 273,000 jobs in February as well as January after those figures were revised. Those are the biggest monthly jobs numbers since May 2018.
Trump took to Twitter earlier Monday to try to downplay the latest stock market gyrations, blaming it on the oil price war between Saudi Arabia and Russia while adding that lower gasoline prices are good for consumers. He also tweeted that thus far the health risks and the death toll from COVID-19 appear to be far less severe than the "common Flu."
The number of cases worldwide climbed above 113,500 with nearly 4,000 deaths by Monday evening, according to data compiled by Johns Hopkins University. There were 605 confirmed cases and 22 deaths in the U.S., according to Johns Hopkins data.
The Dow Jones Industrial Average and S&P 500 each closed down nearly 8 percent Monday, their worst showing since the depths of the Great Recession in 2008.
"I think there is an appetite … obviously to do whatever we can to help mitigate the economic impact of the virus," Senate Majority Whip John Thune, R-S.D., said Monday.
Thune didn't commit to passing legislation before leaving town at the end of the week, but didn't rule it out: “You know how it works around here. If there’s a will there’s a way.”
Chris Marquette, David Lerman, Andrew Siddons and Katherine Tully-McManus contributed to this report.