His administration is preparing to announce a package of aid for businesses and households most affected by the pandemic, in the range of $ 850-1000 billion.
The Federal Reserve having spent most of its ammunition to try to cushion the shock of the recession, it is now to the White House and Congress that American companies are turning. They expect significant direct and indirect aid.
Larry Kudlow, President Trump’s economic advisor, says the administration is working on a $ 850 billion stabilization plan. A large part would consist of aid to businesses and the other part of temporary tax breaks. $ 50 billion would go directly to the airline industry, which has been hit hard.
We know that the airline lobby pleads for $ 25 billion in direct aid and $ 25 billion in the form of loans and tax breaks. Without rapid assistance, airline giants like American, United, Delta and Southwest Airlines will have to lay off tens of thousands of employees. American airports have approached the White House for $ 10 billion in aid.
Other requesting sectors have received promises of assistance. These are in particular cruise operators. Boeing and its suppliers, already struggling to immobilize the most important aircraft in its range, the 737MAX, are also seeking short-term assistance. “We have to support the airlines. What happens is not their fault ”, explained Donald Trump. The comment aims to coax the Conservatives in Congress who are in principle hostile to the granting of public money to businesses.
Flooding the economy with cash
President Trump would like to flood the economy with liquidity. A quick and simple way to do this would be to suspend compulsory automatic deductions from wages for social security contributions. Another way would be, as in 2009, for the Treasury to send checks to the Americans to spend more. The Secretary of the Treasury, Steven Mnuchin, is at the helm on this hot and delicate issue during the election campaign. He maintains cordial relations with the Democratic leaders of Congress who can no longer bear to be in the same room as President Trump.
The United States Chamber of Commerce supports the idea of suspending compulsory payroll taxes for the months of March, April and May. In a letter to President Trump and the leaders of the Congress, the boss of the chamber specifies that these deductions which finance the general pension plan and the health insurance of the pensioners, represent on average 15% of the cost of an employee.
The organization, which represents more than 3 million companies of all sizes and sectors, also wants the adoption of a law authorizing emergency loans to companies. For the smallest of them who are eligible for loans from the Small Business Administration, the chamber requests a simplification of the application process. It also recommends that the Federal Reserve invoke article 13-3 of the law, which specifies its prerogatives. This would allow the Fed to make up for the shortcomings of its system announced on Sunday evening and make it guarantee with the Treasury, loans to firms with more than 500 employees.
A first law relating to $ 100 billion to finance, among other things, a temporary unemployment insurance system for employees victims of covid-19 is still under discussion in Congress. A first version adopted Friday by the House of Representatives had to be modified under pressure from companies who deemed it too expensive. The Senate is expected to deal with it this week.