By Greg Robb, MarketWatch
President Donald Trump on Tuesday began his push for fiscal stimulus measures to fight the expected economic fallout from the coronavirus epidemic by meeting with Senate Republicans on Capitol Hill.
Emerging from the closed-door meeting with Senators, Trump said there was “tremendous unity in the Republican party.”
The president didn’t give any specifics.
“You’ll be hearing about it soon,” he said.
Democrats are skeptical about Trump’s proposal for a payroll tax cut. They think it will harm the Social Security program and not help workers who are unemployed or losing shifts.
Sen. Mark Warner, a Democrat from Virginia, said he thought the Trump plan might be an election-year gimmick.
“My feeling is this payroll tax cut seems to be a quickie traditional response and not something that has been thought through,” Warner said, in an interview on MSNBC.
These concerns might magnify after reports surfaced from the meeting that Trump wants the payroll tax cut to last through the November election.
Senate Minority Leader Charles Schumer said Democrats were ready to work with the administration on a coordinated plan. But he and his leadership team criticized Trump for a report the White House was planning to aid the fracking industry, hit hard by the recent collapse in the price of oil.
“President Trump is focused on helping corporations. Corporations are not the ones who stay home when your child has a spiked fever,” said Sen. Kirsten Gillibrand, Democrat from New York.
Analysts said Wall Street should temper its high hopes for any U.S. fiscal package, saying it faces “major hurdles” and final action may not come until April.
“Do not look for fast action from Congress, even on small ball options in play at the moment,” said Beacon Policy Advisors, in a note to clients.
“The markets are viewing a stimulus bill as a panacea and that’s unrealistic,” agreed Greg Valliere, chief U.S. strategist for AGF Investments.
On Monday night, President Donald Trump said he is seeking “very substantial relief” to the payroll tax. The announcement, which was said to surprise even the president’s closest advisers , led to a rebound in financial markets. The president said he wanted to aid the airline, cruise ship and hotel industries.
Analysts noted right away that Trump’s proposal seemed paper thin.
“The measures are still in flux or else Trump would have announced them at last night’s briefing when he had the opportunity,” Beacon’s analysts noted.
The idea of a payroll tax is not popular even among Republicans, analysts noted.
Democrats said any new tax cuts for major corporations would have to be matched by assistance to workers.
While Democratic opposition doesn’t make a payroll tax cut impossible, analysts said the president would have to accept a long list of spending proposals favored by Democrats in order to assure its passage.
These include funding for paid sick leave, more generous unemployment benefits, additional food stamp spending and other aid to victims.
The negotiations would likely be tough, with distrust evident on both sides, analysts said. Trump and House Speaker Nancy Pelosi have not met since a contentious meeting in the Oval Office last October.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.84% was up 277 points in volatile trading on reports of a fiscal stimulus.