On The Money: Trump steps up effort to blame China for coronavirus | Half of new small-business loan funds allotted in first week | Small businesses face big decisions on reopening
Happy Monday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL — Trump steps up effort to blame China for coronavirus: The Trump administration is escalating an effort to blame China for the novel coronavirus pandemic as global pressure grows on Beijing to cooperate with an investigation into the origins of the outbreak.
President TrumpDonald John TrumpTrump predicts virus death toll could reach 100,000 in the US Pence says he should have worn mask during Mayo Clinic visit Trump says next coronavirus relief bill has to include payroll tax cut MORE, facing criticism for his own lagged response to the virus, has accused China of covering up the outbreak and suggested that the virus wouldn’t have spread globally if Beijing had been more transparent to begin with.
Now, the Trump administration is weighing steps to punish Beijing, including leveling new tariffs on imports from China. The Hill’s Morgan Chalfant and Niv Elis explain here.
- The administration is considering stripping Beijing of its sovereign immunity or withholding U.S. debt to China, according to the Washington Post. Trump first suggested last week that he could slap new tariffs on China, but was noncommittal when asked about his plans on Sunday.
- The vast majority of tariffs Trump imposed on China over the last few years have remained in effect through the pandemic, though the administration allowed some exceptions for materials related to masks and ventilators.
- Matthew Funaiole, a senior fellow at the Center for Strategic International Studies’ China Power Project, said the use of tariffs could conflate the current dust up with Trump’s ongoing trade war with China.
LEADING THE DAY
Trump says next coronavirus relief bill has to include payroll tax cut: President Trump on Sunday said he won’t support another round of coronavirus stimulus legislation unless it includes a payroll tax cut, a measure that has limited support among lawmakers in Congress.
- Trump said during a Fox News virtual town hall that he would like to see a sizable infrastructure bill pass to help revive the economy, which has cratered amid the coronavirus pandemic.
- But he indicated his long-desired payroll tax cut would have to be part of any talks.
“But we will be doing infrastructure,” Trump said, seated next to Vice President Pence and Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump says next coronavirus relief bill has to include payroll tax cut Major hotel group to return millions in PPP funding WH official says Trump believes K-12 private schools should give back PPP funds MORE. “And I told Steve just today, we’re not doing anything unless we get a payroll tax cut. That is so important to the success of our country.”
The Hill’s Brett Samuels has more here.
Payroll tax cut—Trump vs. economists:
- Trump has repeatedly called for Congress to pass a payroll tax cut to combat the economic downturn induced by the coronavirus pandemic. He first proposed the idea in early March, but Congress quickly poured cold water on the idea, saying it would be insufficient to help most in need.
- Economists have warned that a payroll tax cut would do little to help the millions of Americans who’ve lost their jobs and are no longer receiving paychecks, calling for greater direct aid to a wider swath of the populace.
President Trump has also sparked concerns about politicizing the IRS by putting his name on the coronavirus relief checks and letters sent to Americans informing them of their payments.
- The moves are seen as a way for Trump to take credit for the pandemic aid that households are receiving just months before an election where his handling of the outbreak and the economic damage it has caused will play a prominent role.
- While presidents regularly tout their economic policies, critics say Trump’s actions unnecessarily inject partisanship into a government agency that should be viewed as nonpartisan. And they argue his move could backfire politically. The Hill’s Naomi Jagoda tells us why here.
Treasury to borrow record $3 trillion in a single quarter: The Treasury Department will borrow a record-breaking $3 trillion between April and June as it moves to dispense emergency relief for the coronavirus pandemic.
Congress has passed roughly $3 trillion worth of spending to help prevent an economic collapse during the pandemic, including stimulus checks, expanded unemployment insurance, forgivable loans to small businesses and other financing options for larger businesses.
“The increase in privately-held net marketable borrowing is primarily driven by the impact of the COVID-19 outbreak, including expenditures from new legislation to assist individuals and businesses, changes to tax receipts including the deferral of individual and business taxes from April – June until July, and an increase in the assumed end-of-June Treasury cash balance,” the Treasury Department said in a statement.
- The borrowing will continue later in the year, with another $677 billion in debt expected in the third quarter.
- Those figures, on top of the $477 billion borrowed in the first quarter, are filling in the gaps for what is expected to be the largest annual deficit in the country’s history, which will likely top $4 trillion.
Niv has more here.
GOOD TO KNOW:
- Small businesses are facing tough choices about reopening as governors across the country ease social distancing restrictions even as coronavirus cases continue to rise.
- Ohio will allow companies to report employees who don’t return to work when their jobs become available as the state reopens, officials announced Friday.
- Treasury Secretary Steven Mnuchin on Monday defended IRS guidance that expenses associated with forgivable loans under the Paycheck Protection Program (PPP) are ineligible for tax deductions.
- General Electric Co. plans to cut up to 25 percent of its aviation unit’s workers due to the coronavirus pandemic’s effects on the travel industry, the company announced Monday.
- The Small Business Administration (SBA) said it has allotted over half of the $310 billion in a key coronavirus relief fund in less than a week, setting expectations that it will run dry this week.
- Billionaire Warren Buffett on Saturday expressed optimism that the U.S. economy will be able to recover from the turmoil caused by the coronavirus pandemic.
ODDS AND ENDS
- J.Crew Group Inc., a specialty clothing company that includes the J.Crew and Madewell brands, on Monday filed for bankruptcy protection, making it the first major U.S. retailer to do so since the coronavirus reached the country.
- Wholesale chain Costco will temporarily limit some fresh meat purchases for customers during the coronavirus outbreak, the company said Monday.