It appears that every response offered by the Trump administration to contain the coronavirus pandemic, is wrong.
In a late Friday article, the WaPo reported that the Trump administration officials are holding preliminary conversations about economic responses to the coronavirus, and with stocks suffering their worst week since the collapse of AIG, "among the options considered are pursuing a targeted tax cut package". Additionally, Trump cronies are also discussing whether the White House should lean even harder on the Federal Reserve to cut interest rates, even though in a surprise announcement on Friday afternoon, Fed Chair Powell the central bank on Friday afternoon said it would step in if necessary.
While the explanation is hardly necessary, the WaPo also points out that "these ideas would not be designed to stop the spread of the coronavirus, but they would seek to arrest the economic fears spreading through the economy. And some of the ideas would need cooperation from Congress or the Fed, as the White House has limited powers to unilaterally rewrite tax policy or direct the central bank to act."
And yet the reason why the market barely even glanced at this report from WaPo, is that if a business revenue has collapsed as global supply chains implode and as consumer demand tumbles as Americans opt to stay locked up inside until the pandemic passes, there is no pre-tax income, and thus no taxes to pay, so cutting the tax rate has zero effect on anything.
What's worse, if this is the best the Trump admin can come up with, it means the president refuses to even acknowledge how serious the situation is, when instead by this point Trump should at least be grasping the catastrophic dilemma the entire world is now facing, one which BofA called "an impossible trade-off" facing authorities:
- Adopt the Draconian quarantine measures seen in China and trigger a global recession as worldwide economic activity grinds to a halt
- Risk a pandemic by failing to take more aggressive action on Covid-19, also resulting in a global recession
That Trump is unwilling to proceed with either one of these two options - and only two as there is nothing more Trump can do absent pulling a page from the Hong Kong playbook and handing out $10,000 to every US citizen - means that the Coronavirus pandemic in the US will only get worse... assuming the CDC ever starts running the right tests to find out just how many Americans are infected.