Topline: U.S. Treasury Secretary Steven Mnuchin, who is leading the Trump administration’s economic response to the coronavirus, said on Wednesday that a large stimulus package is unlikely to get rolled out this week, though he confirmed that the government was taking steps to help small businesses and workers, as well as provide federal aid to industries hard hit by the outbreak.
- “The president very much wants to consider a stimulus bill, whether it is through a payroll tax or otherwise,” Mnuchin said during a House Appropriations subcommittee hearing on Wednesday. “We realize that may not get done this week, so we want to get done what we can do this week and we will come back.”
- With Congress set to go into week-long recess on Thursday, lawmakers are scrambling to implement some measures of economic relief—since a larger stimulus package will likely require more time to win bipartisan support.
- The Treasury Secretary, who has been meeting with top industry officials and lawmakers to coordinate a response, said that the government’s first priority is helping small businesses and employees to mitigate the economic pain inflicted by the coronavirus.
- Mnuchin also confirmed an earlier report that the administration will push back the April 15 tax filing deadline, which could add some $200 billion of liquidity to the economy—extending the deadline would effectively act as a short-term loan to consumers and businesses.
- “For small- and medium-size businesses, we think it’s appropriate for the government to pick up the costs,” he said, while also adding that the situation is “a little bit like a hurricane… we need to cover these outside-of-normal expenses.”
- The administration is also considering loan guarantees to different industries affected by the outbreak, including airlines, hotels, and cruise operators—as well as relief for U.S. shale companies hit hard by the ongoing oil price war between Saudi Arabia and Russia, though Mnuchin insisted that “these are not bailouts.”
- Meanwhile, House Democrats plan to introduce a bill today on paid sick leave, unemployment insurance, food stamps and free coronavirus testing—with plans to vote on the legislation Thursday, before Congress goes into recess, the Wall Street Journalreports.
Crucial quote: “As I’ve said before, this is not a multi-year issue,” Mnuchin told reporters on Wednesday. “This is an issue that certain industries are going to be significantly impacted by and the President is very committed to make sure that we have the economic response appropriate for this economy.”
Key background: Nervous investors have anxiously been awaiting further details on the administration’s economic response to the fallout from the coronavirus since Trump promised “major” stimulus measures earlier this week. The stock market has seen wild trading and volatility in recent sessions, as coronavirus starts to have a bigger impact on U.S. businesses and economic activity. On Monday, stocks underwent a historic sell-off—where the Dow and S&P fell almost 8% in their worst day since 2008. Both indexes rose almost 5% on Tuesday amid news of potential economic stimulus from the Trump administration, but fell again on Wednesday following a lack of specific details and unclear timeline for the government’s response. Stocks accelerated their losses later in the day after the WHO finally declared coronavirus a global “pandemic.” The Dow has now officially entered bear market territory, down 20% off its record highs, after falling almost 1,600 points—or 5.8%—on Wednesday. The S&P 500 and Nasdaq both lost 5.2% and 4.9%, respectively.
Tangent: “We expect to pass bipartisan legislation very quickly—that’s the President’s number one priority,” Mnuchin said on Wednesday. “He [Trump] is also focused on a larger stimulus package, looking at a payroll tax cut and other alternatives as well.” The Treasury Secretary also mentioned that he had a “productive meeting” with House Speaker Nancy Pelosi, as the two continue with ongoing “discussions about various different policies” to respond to the coronavirus.
What to watch for: Trump will be making a statement later today, after meeting with top industry executives.