The novel coronavirus is redefining Donald Trump’s presidency eight months before he stands for reelection as he wagers that the potentially largest rescue package in U.S. history could protect the American people from the economic carnage brought by the pandemic.
The administration on Wednesday outlined a $1 trillion plan, which includes $500 billion in cash payments to individual Americans and $300 billion toward helping small businesses, as well as $50 billion for airlines and $150 billion for other affected sectors.
Trump’s hastily crafted stimulus, which has won early support from most Republican lawmakers, marks a sea change on the political right. The president and many of his conservative allies rose to power on the strength of a grass-roots movement forged in opposition to the bank bailouts during the 2008 financial crisis and President Obama’s subsequent economic stimulus package.
Scrutiny of Trump’s plan continues to grow as some Republicans express unease about its scope and leading Democrats warn against federal giveaways to corporations without accountability measures that would ensure taxpayer money does not fund stock buybacks or executive pay.
And there is some trepidation within the administration about the political risks associated with the perception that industries spend money as they wish — as well as uncertainty about how, exactly, all of the money would be spread around, according to officials involved in the discussions who spoke on the condition of anonymity to describe the private talks.
Trump’s ability to enact his plan and weather the turbulence could have an enormous impact on his political fate and determine whether he is remembered as this era’s Herbert Hoover, who was president at the onset of the Great Depression, or its Franklin Roosevelt, his successor who guided the nation out of economic and geopolitical turmoil.
“This is Trump’s World War II,” said Stephen Moore, a Heritage Foundation fellow and an informal Trump economic adviser. “It’s really critical to not only whether he is reelected but how he will be judged by history.”
Trump, keenly aware that the state of the economy could determine whether he gets reelected, has been fixated in recent weeks on stock market declines and sees the plan shepherded by Treasury Secretary Steven Mnuchin as crucial to providing confidence to investors and ensuring an eventual recovery.
“Everybody seems to want to go big and they want to get to the recovery, the big day,” Trump said at a news conference Wednesday. He added, “There’s going to be a comeback very, very quickly, as soon as this is solved.”
For now, Trump is benefiting from quick support from even some of the staunchest spending hawks inside the Republican Party, many of whom are hearing desperation from anxious business leaders and constituents as vast sectors of the economy are shutting down.
Sen. Patrick J. Toomey (R-Pa.) — who built a national profile years ago as the head of a hard-line small-government advocacy group — said this crisis “is not like an ordinary recession or even a severe recession. This more like an act of God or war footing.”
Toomey said comparing current proposed legislation with the financial industry bailout of 2008, which he opposed, is misguided because “those were caused by a bubble in real estate and financial institutions being overleveraged, all kinds of human error.”
“It’s a different thing when a lethal pathogen affects large numbers of Americans,” Toomey said.
Senate Majority Leader Mitch McConnell (R-Ky.) has vowed that the Senate will not recess before reaching bipartisan agreement on the stimulus legislation. And his advice to his conservative colleagues: Rally together even if bills are fiscally problematic.
“My counsel to them is to gag and vote for it anyway, even if they think it has some shortcomings, and to address those shortcomings in the bill that we’re in the process of crafting,” McConnell said Tuesday.
When Mnuchin visited with Republican senators at their Tuesday lunch, the secretary pleaded with them not to use the politically charged word “bailout” in describing the proposed relief for Boeing, one of many large corporations that stands to benefit from the administration’s plan. One senator raised a hand and asked if they should instead call them “freedom payments,” which prompted laughter, according to a person briefed on the closed-door meeting who spoke on the condition of anonymity to be candid about the discussion.
Trump, who has been fielding calls from business executives for days, has been focused on stopping the stock market from cratering and preventing the unemployment rate from spiking into the double digits. He has advocated for a sweeping stimulus plan — so much so that when aides presented him with a $850 billion proposal, he encouraged a $1 trillion price tag, according to several people familiar with his thinking.
Trump “doesn’t give a [expletive]” about how his rescue plan affects the federal debt, according to a White House official who spoke on the condition of anonymity to be frank. “It’s all about the markets and the economy for him. It’s all about the jobs numbers.”
Trump’s mind-set aligns with a broader GOP move away from the alarmism about federal deficits toward a more blasé view about government red ink, a shift that predates the coronavirus.
Trump contended during the 2016 campaign that he could eliminate the debt in eight years, but during his first three years in office the debt has surged from $20 trillion to $23 trillion. One adviser who has discussed the matter with Trump said the president does not believe voters will be concerned about adding to the debt.
Outgoing acting White House chief of staff Mick Mulvaney last month told an audience at Oxford University, “My party is very interested in deficits when there is a Democrat in the White House. The worst thing in the whole world is deficits when Barack Obama was the president. Then Donald Trump became president, and we’re a lot less interested as a party.”
In late 2008, Congress passed the Troubled Asset Relief Program, which allowed the Treasury Department to buy toxic assets from financial institutions as a means to keeping big banks from going under during the subprime mortgage crisis. A few months later, after President Obama took office, Congress passed a bailout of the automotive industry.
Both measures became controversial, leading to a populist backlash against government initiatives that appeared to pick winners and losers during a crisis.
On the right, the tea party movement formed preaching austerity and prioritizing the ballooning federal debt. The tea party powered the Republican wave election in 2010 that installed Toomey, Sen. Marco Rubio (R-Fla.) and other stars in the Senate and House.
One of the victims that year was Sen. Robert Bennett (R-Utah), whose vote for TARP became the top issue in his reelection campaign. Tea party activists besmirched him as “Bailout Bob,” and at the 2010 state Republican convention he lost the party’s nomination to Mike Lee, who went on to win the seat that fall.
Another victim was Rep. Bob Inglis (R-S.C.), who this week recalled the fierce backlash in his district in early 2009, after he had voted for both TARP and the bailout for auto manufacturers.
“I remember sitting in an office in downtown Greenville, facing the windows and watching throngs of people walking to a rally on Main Street carrying homemade signs: ‘Throw the bums out!’ ‘Socialism!’ ‘No bailouts!’ ” Inglis said. “Here we were discussing the start of my 2010 campaign and we were just whistling past the cemetery because here’s all these people, and you could hear the intensity in their voices.”
Inglis lost overwhelmingly in the Republican primary to Trey Gowdy, who ran to his right and went on to win the seat.
A similar movement formed on the left, as Occupy Wall Street took shape among liberals and powered a decade-long leftward shift in Democratic politics, which found expression in the presidential candidacies of Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.).
Former labor secretary Robert Reich, a leading voice among liberals on domestic policy, said, “Politically it’s fine and good to bail out individuals, to provide direct subsidies, extended unemployment insurance, paid sick leave, expanded Medicaid — all of that makes a great deal of sense. It is less acceptable to bail out particular industries.”
Even some of Trump’s top supporters are concerned that the rush for stimulus is mistaken and does not guarantee an economic turnaround.
Supply-side economist Arthur Laffer, whom Trump awarded the Presidential Medal of Freedom last year, warned that pumping federal dollars into the economy “sounds compassionate” but would not necessarily spark the market back into action.
“I’m very worried that this government — or any government — in a panic does stupid things,” Laffer said. “They need to breathe into a brown paper bag a bit, think it through clearly. This is no time to abandon the free market with government interference.”
Some Trump allies in the Senate are calling for adjustments to the stimulus proposal. Sen. Rick Scott (R-Fla.) wrote in a Fox Business op-ed article Wednesday that “large corporations that have enjoyed years of growth and prosperity” should not receive taxpayer dollars and that small businesses and gig-economy workers should be the main beneficiaries.
Sen. Josh Hawley (R-Mo.) similarly has said relief should be focused on working families so Americans see that taxpayer money is being handled well. “Let’s make sure we’re taking care of them first,” he said.
As for bailing out airlines or other industries, Hawley said “very strict conditions” must be set, such as a loan secured by collateral that would be paid back in full.
“If you’re coming to me and just saying, ‘We just want a bunch of taxpayer money, just give it to us,’ I’m not going to do that,” Hawley said.
Josh Dawsey, Paul Kane and Seung Min Kim contributed to this report.
