President Donald Trump is “very close” to reaching a stimulus agreement with US lawmakers to fight the coronavirus outbreak’s economic damage, Treasury Secretary Steven Mnuchin said Friday, as Democrats prepared to pass their own proposal.
Democratic House leader Nancy Pelosi said her party would pass a bill “focused directly on providing support for America’s families” that includes expansions of paid sick leave and unemployment insurance, among other measures.
However, it was unclear if Trump or the Republican leadership in the Senate were behind the proposal, though a Pelosi aide said the House speaker had spoken to Mnuchin repeatedly over the past days.
The fear surrounding the pandemic has pushed Wall Street indices into a bear market, which efforts to contain its spread shut down Disneyland and Broadway, and led major sports leagues to cancel or postpone their seasons, but Mnuchin called the slowdown a “short-term issue.”
The president is committed to getting a “major stimulus package” through Congress, Mnuchin told CNBC early Friday, but he did not provide specifics. Options include a payroll tax cut and other ways to provide funds for people who cannot work because of the virus.
“There’s no question there’s a short-term economic issue, but we will get through this.”
Pelosi said the Democratic bill will focus on “testing, testing, testing” in addition to paid sick leave and expanding unemployment benefits.
The announcements came one day after the Dow had its worst session since 1987, diving 10 percent in Thursday trading even as the US Federal Reserve moved to inject $1.5 trillion of cash into markets this week and broadened its purchases of US Treasury debt — both moves reminiscent of the global financial crisis in 2008.
Uncertainty over the stimulus package and sharp partisan rhetoric were exacerbating factors in Thursday’s declines, where selling was also spurred by Trump’s shock travel ban on Europe and the near-constant stream of event cancelations.
Mnuchin vowed said once the virus is overcome “the economy will be stronger than ever.” He also encouraged people to buy stocks, rejected the need to close markets and said he would be willing to fly commercial airlines.
“Not everybody who has sniffles will have the coronavirus,” Mnuchin said.
The Dow had regained about 2.5 percent in afternoon trading Friday, retreating from the surge seen at the open.
The Fed made an emergency interest rate cut last week, and on Wednesday is expected to lower the benchmark borrowing rate again, possible cutting all the way to zero.
The University of Michigan’s monthly consumer sentiment survey showed Americans are worried by the impact of COVID-19 on the economy.
The report’s chief economist Richard Curtin said while “the pandemic is widely regarded as a temporary event,” the economy needs immediate relief in the form of “multiple sources of cash transfers and debt forbearance.”
“To avoid a recession, speed is more essential than targeting.”
Since breaking out in China, the COVID-19 virus has killed more than 5,000 people as of Friday and spread globally with cases topping 134,000, according to an AFP tally.
Health authorities have warned that the outbreak is already well-entrenched in the US: the state of Ohio likely has more than 100,000 people carrying the virus, its health department said Friday.
Meanwhile at least six US states have ordered schools to close as confirmed infections in the country climbed to more than 1,660 people.