On Wednesday, Politico reported that President Donald Trump and his inner circle are growing alarmed by the downward direction of the economy as the coronavirus spreads and investors pull back — and are considering various methods of Keynesian stimulus to try to keep markets afloat.
"During a meeting with lawmakers last week, Republican Sen. Steve Daines of Montana suggested to Trump the idea of a temporary payroll tax cut to give employed consumers additional cash — an idea that Daines said Trump liked enough to then champion on Twitter," wrote Nancy Cook and Victoria Guida. "Meanwhile, former House Speaker Newt Gingrich is pushing the idea of a one-time tax credit for companies that bring manufacturing back to the U.S. from China. And Treasury Secretary Steven Mnuchin said his agency would talk to independent bank regulators about easing rules for lenders."
But some members of the administration are unhappy about this development.
"I don’t think it’s good policy,” said an unnamed senior official. “The whole litany of temporary measures to stimulate the economy ... I don’t think it works.”
Many of these stimulus proposals are generally the sort proposed by Democrats. But there is often bipartisan consensus on action in economic downturns, as demonstrated by the Troubled Asset Relief Program (TARP) to bail out financial institutions in 2008, supported both by then-President George W. Bush and Democrats in Congress.
Trump has long been leaning heavily on monetary policy to prevent a crisis, but that has had mixed success. This week, Federal Reserve Chairman Jerome Powell announced an emergency rate cut — the largest of its kind since 2008 — only for markets to fall even more as investors speculated about the implications for national economic health.
