Kudlow Opens Door to Limited Stimulus for Virus After Resistance
Pressed on details of any plan, Kudlow said such measures could include help for individuals forced to stay home and lose pay.
(Bloomberg) -- President Donald Trump’s top economic adviser Friday admitted that the White House may need to roll out a series of steps to protect the U.S. economy from coronavirus fallout after days of playing down the potential risks.
As financial markets plunged Friday morning, sending benchmark bond yields to record lows across the globe, Larry Kudlow said the administration was working on a limited policy response without giving many specifics.
“We are in the camp that wants timely and targeted micro-measures,” Kudlow said in a Bloomberg Television interview. He rejected a broad-based approach that some economists have urged, saying: “We don’t want to willy-nilly throw $300-$400 billion, with a thousand-dollar check to every American.”
The acknowledgment of a potential economic package broke with the hands-off tone from the Trump administration that has dismayed investors -- sending stocks reeling and bond yields to record lows below 1%.
Indeed, even as Kudlow was hinting at the possibility of action as soon as next week, Trump separately questioned whether fiscal stimulus is needed and again pounded on the Federal Reserve to cut interest rates further.
“The Fed should cut and the Fed should stimulate,” Trump said.
The central bank announced an emergency half-point reduction earlier this week that failed to assuage investor angst or mitigate the rout in markets and Fed Chair Jerome Powell stressed in a press conference after the move that monetary policy alone is limited in its ability to counter a public health crisis.
Defer Taxes
Pressed on details of any plan, Kudlow said such measures could include help for individuals forced to stay home and lose pay, small businesses, and certain industries such as airlines and agriculture hit by the virus.
One option under consideration is deferring taxes for the already-hit cruise, travel and airline industries, according to a person familiar with the plan who spoke on condition of anonymity. The Washington Post reported that possibility earlier Friday.
At the same time, Kudlow was resolute about the economy’s strength. “Let’s not assume the worst,” he said.
Kudlow stressed the administration’s preference for targeted and temporary measures to help the economy, deriding larger efforts as “budget busters.”
The White House was not yet considering removing tariffs to address the impact of the virus on supply chains, he said. The manufacturing sector is highly dependent on China, the epicenter of the crisis.
Kudlow said the executive branch would be able to “move very rapidly” if conditions worsen and the administration would be interested in deploying response measures via executive order but would not hesitate to go to Congress for more assistance.
Earlier Friday, Trump signed a $7.8 billion emergency coronavirus spending bill after the number of infections continued to rise and stocks tumbled. The package includes funding for state and local governments fighting the virus, and opens up an avenue for low-cost loans to small businesses.
--With assistance from Brendan Case and Justin Sink.
To contact the reporters on this story: Max Reyes in Washington at mreyes125@bloomberg.net;Rich Miller in Washington at rmiller28@bloomberg.net
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Scott Lanman, Jeff Kearns
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