President Trump on Monday proposed emergency measures, including a temporary payroll tax cut and expanded sick leave, to prevent an economic slowdown and to blunt the spread of the coronavirus, as the stock market sustained a rout amid tumbling oil prices and rising concerns about a recession.
“We have a very strong economy, but this blindsided the world,” Mr. Trump said.
The three major U.S. stock markets each fell more than 7%, with the Dow Jones Industrial Average losing 2,014 points or 7.8% to close at 23,851 — the biggest one-day point drop in history. The S&P 500 had its worst day since 2011, and prices plummeted so quickly at the opening bell that trading was halted temporarily three minutes later when an automatic “circuit breaker” kicked in.
The White House invited Wall Street executives to a meeting with the president Wednesday to discuss ways to prevent the economy from faltering.
The president met Monday evening with Treasury Secretary Steven T. Mnuchin, Vice President Mike Pence, top economic advisers and coronavirus task force members to discuss options. Immediately after the meeting, Mr. Trump joined his top advisers in the White House press briefing room to outline the crisis-driven steps that he said would keep the economy from losing more momentum.
The president said his advisers will urge Congress on Tuesday to take action on a “possible payroll tax cut” or other substantial tax relief. He said he also will move ahead with no-interest loans for small businesses hurt by the outbreak and to help hourly wage earners who miss work because of extended illness or shutdown “so they don’t get penalized for something that’s not their fault.”
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“It’s not their fault, it’s not their country’s fault,” Mr. Trump said.
The president also outlined possible aid for the tourism industry, although he wasn’t specific. Mr. Trump said he will hold a press conference Tuesday to go into more detail.
“The main thing is that we’re taking care of the American public,” he said.
The president has been calling for months for a temporary payroll tax cut, and economist Stephen Moore said Monday that he now agrees with the need for such action. He is an outside economic adviser to the White House.
“I think Trump really needs to go big here,” Mr. Moore said. “When you have a 20% fall in the stock market, that’s a crisis. It’s not just the markets — the economy right now is paralyzed by this virus.”
He said Mr. Trump should “call for a suspension of the entire payroll tax until the crisis is over.”
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“Then that puts the onus on [House Speaker Nancy] Pelosi,” Mr. Moore said.
House Democratic leaders quickly shot down the president’s suggestion of cutting payroll taxes. House Majority Leader Steny H. Hoyer of Maryland said the proposal wouldn’t help stabilize the economy.
Payroll taxes are deducted from workers’ paychecks to fund Social Security and Medicare. A 12.4% tax paid equally by employees and employers funds Social Security, and a 2.9% tax funds Medicare.
In fiscal 2018, federal payroll taxes generated more than $1.1 trillion. A suspension of part or all of those taxes could provide billions of dollars for consumers quickly to pay bills or make purchases that would help spur the economy. About two-thirds of taxpayers pay more in payroll taxes than they do in income taxes.
Mr. Mnuchin and National Economic Council Director Larry Kudlow are scheduled to attend Senate Republicans’ weekly lunch Tuesday to discuss the economy and possible congressional action to deal with fallout from the coronavirus outbreak.
“There are certain authorities that the president has that we can do on our own,” Mr. Mnuchin said. “We are also working with bipartisan leadership on a whole range of alternatives that we’ll be discussing tomorrow.”
On Capitol Hill, a spokesman for the Senate Finance Committee said Chairman Charles E. Grassley, Iowa Republican, “is exploring the possibility of targeted tax relief measures that could provide a timely and effective response to the coronavirus.”
“Several options within the committee’s jurisdiction are being considered as we learn more about the effects on specific industries and the overall economy,” said committee spokesman Michael Zona.
Mr. Grassley said last week that he wasn’t ready to consider a payroll tax cut.
The National Association of Manufacturers, which is aligned with the White House, called on the administration and Congress to adopt a series of legislative and regulatory steps to deal with the crisis. The proposals include tax credits for employers that pay workers who are quarantined or when a business is forced to close temporarily; greater tax deductions for employers that invest in safety equipment, including hand-washing stations, respiratory equipment and cleaning products; protections for employers under medical privacy laws to allow companies to inquire about “employee health information relating to COVID-19 to ensure a safe workplace”; and liability protection against frivolous lawsuits when employers require workers “to engage in proper hygiene procedures.”
“Neither government nor industry can solve this challenge alone,” said NAM President and CEO Jay Timmons. “This is a path forward to ensure Americans’ health, our business stability and our economic resilience.”
The flurry of activity on the first day on the job for White House Chief of Staff Mark Meadows reflected a growing sense in Washington that more action is needed to stimulate the economy quickly and prevent an election-year recession. Many analysts said the sharp downturn of global stock markets, plus collapsing oil prices and bond yields, were warning signs of a looming worldwide recession.
Former Sen. Judd Gregg, New Hampshire Republican and no fan of Mr. Trump, said the president “is headed into a political storm of dramatic proportions.”
“Recession is definitely in the wind,” the former Senate Budget Committee chairman wrote in an op-ed in The Hill. “This significant economic slowdown will mostly like be occurring with full force by this fall, during the election season. This is not good for the president’s reelection hopes.”
Mr. Trump, and many traders, blamed Monday’s stock market plunge on Saudi Arabia and Russia’s fight over the price and flow of oil.
“That, and the Fake News, is the reason for the market drop!” he tweeted.
He said the plunging oil prices are “good for the consumer, gasoline prices coming down!”
Mr. Mnuchin said the oil price drop “was a major component” in Monday’s stock market dive.
The price war between Saudi Arabia and Russia sent shock waves through energy markets, with oil prices falling the most in one day since the 1991 Persian Gulf War. The price of U.S. crude fell as much as 34% to $27.34 a barrel, a stunning drop for one day and the lowest price since early 2016.
The drop followed Russia’s refusal last week to join the OPEC oil cartel in proposed production cuts aimed at supporting prices. Crude oil was trading above $45 on Thursday, the day before the meeting.
Thwarted in its search for cuts, Saudi Arabia, the leading OPEC member, sharply changed course by cutting prices and signaling it will ramp up production.
Those moves came after the coronavirus outbreak reduced travel and transport, lowering the demand for fuel.
Saudi Arabia and Russia have seen U.S. producers take a chunk of their market, and falling prices help keep customers on board.
“The Russians are doing this out of long-term strategic considerations,” said Tom Adshead, research director for the Macro-Advisory consulting firm in Moscow. “Their view is that by doing this they can damage the financial health of U.S. shale-oil producers and that by doing this they can take a lot of U.S. capacity offline and thereby remove U.S. producers as a source of competition. The other thing that is on their mind in all this is that if they cut then that will also primarily benefit U.S. producers. So they’ve decided they’re going to take some short-term pain in order to inflict damage on one of their major competitors.”
Mr. Trump suggested that financial markets were overreacting to the coronavirus, which has killed 25 people in the U.S. and infected more than 600. Three more deaths were reported in Washington state Monday.
“Last year 37,000 Americans died from the common Flu,” Mr. Trump tweeted before the three deaths were announced. “It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!”
The rate of 25 deaths of 607 confirmed cases is a death rate of 4%, although some of those who died were elderly with underlying health problems. The president last week said he had a “hunch” that the rate of 3.4% cited by the World Health Organization was too high and that the true mortality rate was about 1%.
• Gabriella Muñoz contributed to this article, which is based in part on wire service reports.