President Donald Trump called for House Democrats to approve a tax cut bill in response to the coronavirus.
“The Democrats in the House should propose a very simple one year Payroll Tax cut,” Trump tweeted on Monday. “Great for the middle class, great for the USA!”
The tweet came as Trump tries to mitigate the economic damage sparked by fears over the coronavirus.
The Dow Jones fell more than 12% last week, the biggest plunge since the 2008 recession, but bounced back by 1,300 points on Monday. The Dow fell again by nearly 400 points by noon the next day.
Fed cuts rates:
The Federal Reserve also issued a surprise announcement that it would cut rates by half a percentage point to combat a slowdown caused by the coronavirus.
“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate.”
“The magnitude and persistence of the overall effect on the U.S. economy remain highly uncertain and the situation remains a fluid one,” Fed Chairman Jerome Powell told reporters. “Against this background, the committee judged that the risks to the U.S. outlook have changed materially. In response, we have eased the stance of monetary policy to provide some more support to the economy.”
Trump says it’s not enough:
“The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,” he said. “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”
Treasury Secretary Steven Mnuchin disagreed, saying, “I applaud the Fed on this move.”
Powell hit out at criticism at his press conference.
“We do recognize the rate cut will not reduce the rate of infection. It won’t fix the broken supply chain. We get that...but we do believe our action will provide a meaningful boost to the economy,” he said.