After U.S. stocks fell more than 7.5 percent on Monday during what Bloomberg is calling the worst day on Wall Street since the financial crisis more than a decade ago, the U.S. government is taking steps to assuage a market made jittery by both the ongoing COVID-19 coronavirus outbreak and an oil price war. Both President Donald Trump and Democrats are working on plans to get the economy back on track.
Speaking in the White House Briefing Room on Monday night, Trump announced plans for a possible payroll tax cut or "substantial relief" for business owners, including hoteliers.
"We’re also going to be talking about hourly wage earners getting help so that they can be in a position where they’re not going to ever miss a paycheck," the President added. "We’re going to be working with companies and small companies, large companies—a lot of companies—so that they don’t get penalized for something that’s not their fault. It’s not their fault, it’s not our country’s fault."
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The government would look to the Small Business Administration to create loans for small businesses, he added, and would be working with the airline and cruise industries to keep people traveling, even in the face of a pandemic. "We want people to travel to certain locations and not to other locations at this moment," he said. "We’re also talking to the hotel industry. And some places, actually, will do well, and some places probably won’t do well at all. But we’re working also with the hotel industry."
Reducing the payroll tax by a single percentage point would cut between $55 billion and $75 billion in revenue, according to a recent projection from the Committee for a Responsible Federal Budget published in the Washington Post.
The Dow Jones industrial average jumped as much as 945 points early Tuesday in the wake of Monday's announcement, Investors Business Daily reported.
The announcement was met with some skepticism from both sides of the aisle. "The best solution to the economic challenge is to hope that we get through the coronavirus quickly and the summer weather does make a difference," Politico quoted Sen. Roy Blunt (R-Mo.) as saying, although he acknowledged "this may be the one virus where it won’t make a difference."
But the Washington Post reported that Democrats are working on their own plan to keep the economy afloat during turbulent times.
“I don’t think we think that the payroll tax cut is what we need right now,” House Majority Leader Steny H. Hoyer (D-Md.) told the paper. “What the economy needs right now is some stability and confidence that we are addressing the issue that is undermining the economy. And I mean, the president’s answer for almost everything is a tax cut. We think we need to make sure that people in health facilities and insurance companies and others have confidence that they’re not going to be bankrupted by this and they’ll have some support of the government.”
Later in the day, House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) said they would pursue legislation that provided free coronavirus testing for all Americans, paid leave for those affected by the epidemic, expanded food subsidies and an expansion of the federal unemployment insurance program.
The Industry Statement
A coalition of 150 travel-related organizations, including the American Hotel and Lodging Association, issued a statement on the latest coronavirus developments, noting that health and government officials have "continually assured the public that healthy Americans can 'confidently travel in this country.'"
"The decision to cancel travel and events has a trickle-down effect that threatens to harm the U.S. economy, from locally owned hotels, restaurants, travel advisors and tour operators to the service and frontline employees who make up the backbone of the travel industry and the American economy," the statement said. "The latest expert guidance indicates that for the overwhelming majority, it's OK to live, work, play and travel in the U.S."
Still, the statement noted, the travel industry cannot function without the safety and security of travelers. "The travel industry will maintain lines of contact with the Centers for Disease Control and Prevention, the U.S. Departments of Homeland Security and Health and Human Services and will remain vigilant for any changes. Collectively, we are taking enhanced steps to ensure both the safety of travelers, guests and our own employees."