Congressional Republicans were right to be skeptical after President Donald Trump proposed a financial package this week to cut payroll taxes, guarantee quarantine pay for hourly workers and aid corporations suffering from the coronavirus crisis. The ideas have theoretical merit, but Trump has already blown a $1 trillion hole in the budget with his unnecessary 2017 tax cut. Another economic-stimulus package would be a weak substitute for a concrete plan of action to address the coronavirus.
Trump actually is on the right track with his vague proposal to guarantee wages for workers who face quarantine and lost work hours. There's a real fear that many hourly workers would ignore quarantine orders if it means no paycheck. The result would be an even wider spread of the virus in the U.S. So making sure those workers receive compensation for honoring a quarantine actually would be part of a concrete plan to fight the virus.
The rest of Trump's plan seems like it was concocted less with a virus-fighting strategy in mind and more with an eye toward the November election. Having repeatedly touted the soaring stock market as an investor vote of approval on his economic management, the market plunge of the past month would, therefore, signify a crisis of investor confidence in Trump's ability to manage this emergency.
Desperate to win back the market's confidence, Trump has offered a new tax-cut plan only lightly tethered to economic reality. A payroll tax cut wouldn't stimulate spending at a time when going to malls and stores means greater coronavirus exposure. A move designed to reinvigorate consumers' public activity runs exactly counter to the goal of reducing exposure risks.
The Committee for a Responsible Federal Budget estimates a payroll tax cut would cost $55 billion to $75 billion annually for each percentage point cut. Trump reportedly considered reducing the rate to zero for the rest of the year. Then there's the bill due on Trump's $28 billion payout to farmers hurt during his trade war with China. At some point, someone will have to pay for the financial toll he's ringing up.
Trump also is proposing billions of dollars in aid to companies that really need to weather this crisis without taxpayer help: airlines suffering from flight cancellations, and oil and gas companies hurt by the plunge in global petroleum prices. We suspect the ultimate beneficiaries of Trump's generous plans won't be coronavirus suffers or hourly wage workers but rather corporations and the already-rich — the same winners in the 2017 tax cut.
Trump is now reaping the consequences of his financial mismanagement. He has dug the nation deeper into deficit and debt, leaving himself no financial wiggle room to weather this new storm. More to the point is whether his plan adequately addresses the coronavirus crisis. It doesn't, which is why it doesn't deserve serious congressional consideration.
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