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The Trump administration is scrambling to prop up industries crumbling under the weight of the novel coronavirus outbreak.
Just don’t call it a “bailout” around any White House officials or Republicans on Capitol Hill.
President Donald Trump’s top aides are racing to design a wide-ranging government rescue of major sectors of the economy — such as airlines, hospitality and other service industries — amid a collapsing stock market and cascading shutdowns of major sports events, Broadway shows, museums and amusement parks.
Behind the scenes, the Treasury Department and top economic officials are exploring ways to help out industries struggling financially from a rapid shutdown. They’re leaning toward some type of tax relief or deferring tax payments to provide an initial cushion — hoping to avoid a full-fledged bailout akin to the 2008 banking rescue that could prove difficult to clear past the Republican base.
“I don’t want to use the b-word,” said one senior administration official, who acknowledged the White House is looking at resources necessary — including tax relief or direct injections of funds — to offset the downturn in industries and businesses with thousands of affected employees.
“If what the airline industry says is true, then Congress really will have little choice to act or face a significant extinction moment for the airline industry,” the official added.
Trump hinted at such a move in his Oval Office address on Wednesday night, saying he had asked Treasury to defer tax payments for businesses and individuals hurt by the coronavirus, using emergency authority. “This action will provide more than $200 billion of additional liquidity to the economy,” he told Americans.
The discussions about saving U.S. businesses are separate from an ongoing debate among lawmakers and Trump officials about a stimulus program that would directly aid American workers.
In recent weeks, as the coronavirus spread across the globe, the White House has been holding calls with industry leaders to hear about their mounting challenges. Trump or Vice President Mike Pence have also met at the White House with banking and health insurance executives, representatives from pharmaceutical companies, and airline CEOs.
Allowing these industries to defer paying taxes would leave them additional cash reserves to hopefully make it through any economic downturn or prolonged lockdown due to coronavirus fears, said Stephen Moore, a distinguished visiting fellow at The Heritage Foundation and an informal economic adviser to the Trump campaign in 2016.
The quandary is who deserves the most help.
“The problem I have with this is every industry is negatively impacted,” Moore said. “Is it going to be hotels, movie theaters, airlines?”
“I have a problem with singling out certain industries at this point. I don’t like the idea of picking winners and losers,” Moore said, adding that White House aides shared the same concern. “If you do it for some, then how could you not do it for everyone?”
The hospitality and leisure industry, for example, accounts for about 11 percent of total employment over the past 20 years, according to economists at Wells Fargo Securities.
After 9/11, employment in that sector fell at a rate of roughly 13 percent, while the SARS scare in 2003 also contributed to a temporary hit to the sector, the Wells Fargo economists noted.
Analysts are closely watching employment in hospitality, transportation, food services and manufacturing — which may experience declines due to interruptions in the supply chain — for similarly large hits to business in the coming days.
Trump economic aides have been studying the way President George W. Bush propped up the airline industry after 9/11 for potential clues to how to respond.
Lobbyists for the airlines said last week it was too early for moves like an airline stabilization board. At the time they were just waiting for Congress to pass its roughly $8 billion package, which Trump signed last Friday, providing immediate support for the public health response.
Since then, coronavirus has spread rapidly over the past week in the U.S., upending local communities, large gatherings, schools and businesses. Major companies from coast to coast have asked their employees to work from home, and federal agencies have been testing out their own telework capabilities.
The White House has struggled to stay on top of the fast-moving nature of the coronavirus outbreak. The administration’s health officials have been criticized for their inability to ensure hospital and doctors have enough tests for all Americans who exhibit potential symptoms of the virus, while the president has been eager to contain the count of coronavirus cases as well as to support an economy and stock market in an increasingly precarious state — a key to Trump’s reelection prospects.
In addition to providing relief for affected businesses, Trump also wants Congress to pass paid leave for hourly workers and a suspension of payroll taxes. The latter idea is unlikely to be included in any near-term package, given the tepid reception it has received from Democratic and Republican senators. The Tax Foundation estimates that suspending the entire payroll tax for the duration of the year would cost $950 billion — adding to the federal debt.
Trump has told aides he wants to go “big” on providing the economy with fiscal stimulus measures.
“We’re also making sure that the companies which are good companies stay solvent, have the money necessary to keep functioning,” he told reporters in the Oval Office on Thursday. “We have a lot of things that we’re working on with the financial markets, and it’s going to work out fine.”
In the meantime, industries like the airlines and hotels are staying in close touch with the White House, aides say, as more and more of the country starts to stay home as much as possible.
“The worry is very straightforward: Anything that looks like a bailout will divide the Republican Party. Hardcore conservatives believe bailouts are antithetical to the way risk should be managed in the economy,” said one Republican close to the White House. “They want it to look like relief — but not a bailout.”
