President Donald Trump is launching an epic battle to inject hundreds of billions of dollars of stimulus across the U.S. economy. And he’s doing it before government officials can control the coronavirus outbreak, assess the damage or understand what’s needed to sustain an economic expansion that has proven resilient for years.
It’s an approach to stimulus unprecedented in modern times, far unlike the programs launched in the 2008-09 financial crisis and 2001 recession once economic damage had already become clear. It’s also colliding with a Republican Party that built its brand over the past decade in opposing debt-funded stimulus and other government intervention through federal spending.
On Tuesday, Trump personally traveled to Capitol Hill to sell GOP senators on the idea of a broad fiscal stimulus package that he hopes will revive the stock market and give Americans comfort amid mounting uncertainty.
With the senators, Trump and Vice President Mike Pence laid out several ideas including a far-ranging payroll tax cut, an infrastructure plan, paid sick leave for hourly employees and the potential delay of some Americans’ estimated tax payments.
The first idea — some type of temporary payroll tax cut through the end of the year, or a temporary suspension — has received a cool reception from both Republican lawmakers as well as the president’s own top economic aides who privately argue it’s too soon for such a measure.
“We just had a meeting on stimulus, and you’ll be hearing about it soon. But it was a great meeting. There’s great unity within the Republican Party,” Trump told reporters on the Hill following the lunch.
The president’s move to introduce a sweeping economic stimulus underscores rising worries among the president and his advisers about the state of the economy and his own record heading into his 2020 reelection battle.
It’s a tricky moment for Trump. If the coronavirus spreads quickly and morphs into a more devastating pandemic, the billions of dollars in stimulus money he’s discussing today likely will not be enough to provide relief to American workers, small businesses and major industries hit by an economic downturn.
Yet if the virus turns out to be less threatening in the U.S. than it’s been in China or Italy, Trump will have pushed a party once vocal about fiscal discipline into spending vast sums of money and adding to the already high deficit just before an election in which Trump will be under fire for broken promises.
Republican senators have warned it may be too early to commit to spending that type of cash, a view shared by top administration economic officials like Treasury Secretary Steven Mnuchin.
“A payroll tax cut might be the correct response to an economic downturn, but it is far too broad to have a significant impact on the source of this potential crisis. It might help the stock market in the short run, but it will be expensive,” said Paul Winfree, the former deputy director of the domestic policy council in the Trump administration. The Center on Budget and Policy Priorities estimated in 2009 that a two-month suspension of the payroll tax cut could cost roughly $120 billion.
A similar effort today, if fully implemented and stretched until the end of the year, could make a new stimulus program now even larger than the massive 2009 package.
Republicans argue it would do little to help workers who are laid off from industries hit hardest by the coronavirus; payroll tax cuts only apply if someone is collecting an actual paycheck.
Democrats on Capitol Hill also have been dismayed that Trump is focused on rescuing the economy right now rather than ensuring the health care systemor American workersare fully prepared to handle the coronavirus.
Democratic Sen. Debbie Stabenow of Michigan dismissed the president’s enthusiasm for a new round of tax cuts in response to the coronavirus outbreak. “He can push that,” she said, “but we’re not gonna support it.”
“We have to focus on people first,” she said, adding that the administration needs to prioritize consumer-focused measures like paid sick leave. “There’s just no excuse not to focus on what people need from a health standpoint.”
Trump has been eager to do what aides have called a “big” economic package in response to the coronavirus to shock the stock market back into health after weeks of extreme volatility.
When asked about the potential price tag of a package, White House National Economic Council Director Larry Kudlow told reporters at a White House briefing Tuesday evening: “We are working out details right now, so I don’t want to quote any numbers ahead of time,” he said.
“The payroll tax holiday is probably the most important, powerful piece of this, but on the other hand, I want to draw attention: We can use administrationand executive authority again to help unpaid sick leave people, which is very important,” he added.
Inside the West Wing, aides have also discussed deferring taxes for industries hurt by any economic downturn caused by the virus, government aid to certain geographic regions where the virus has hit and loans to small businesses.
Top Trump economic aides want to ensure the approach is targeted at first, whereas the president favors a much broader package enacted quickly, according to administration officials.
Several Republican senators said the president did not discuss a timeline for any potential legislative package, or even a price tag — nor has the president settled on deploying any specific tools or policy levers.
Administration aides stressed, leading up to the lunch, that the president wanted to present a range of options and work with the Republican-controlled Senate to develop plans.
“Whether the Congress and Trump can come to an agreement on a payroll tax cut is a huge question,” said one Republican close to the White House.
Trump first previewed a potential economic stimulus package from the White House briefing room podium on Monday just hours after the Dow Jones Industrial Average tumbled almost 8%.
A day later, as stimulus expectations rose, the Dow finished the day up about 5 percent — a boon to the president who aides say has viewed the health of a stock market as another form of polling.
On Wednesday, Trump is scheduled to meet with Wall Street executives to discuss whether banks can support struggling small businesses by extending loans and other measures.
Adam Cancryn, Andrew Desiderio and John Bresnahan contributed to this report.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
