Trump open to US taking equity stakes in bailed-out companies
Donald Trump says he is open to the government taking equity stakes in companies that receive some of the $1.3tn stimulus package his team is negotiating with Congress to help the economy weather the coronavirus crisis.
Mr Trump was speaking during the White House coronavirus task force press conference as Steven Mnuchin, his Treasury secretary, and the rest of his economic team were in discussions with Congress to move quickly to pass a massive stimulus package as the US economy grinds to a halt because of the growing pandemic.
Asked whether he supports the idea of the government taking stakes in companies, Mr Trump replied: “I do. I really do.”
The US is rapidly shedding jobs, as companies lay off workers and cities shut down in an effort to implement strict social distancing measures designed to curb the spread of the virus.
The US labour department said claims for unemployment insurance lept to 281,000 last week, up from 211,000 the previous week. States from Ohio to Pennsylvania that have more recent data have shown even starker increases in the number of jobless claims.
Mr Mnuchin told Congress in a private session earlier this week that unemployment could rise to 20 per cent without the recent interventions by the Federal Reserve and unless Congress passed the stimulus package. Mr Trump on Thursday downplayed the unemployment situation, saying things would bounce back strongly.
“I think the economy is going to be fantastic. When he [Mr Mnuchin] said that, he was using that as the ultimate bad outcome,” Mr Trump said. “I don’t think that anyone thinks that that is going to happen.”
Asked whether a roughly $1tn package would be enough given the dramatic downturn in economic activity, Mr Trump said it depended on how quickly the US could bring the pandemic under control.
“We’ll see what happens,” Mr Trump said. “So much depends on what’s going on . . . in terms of medical. If we can stop it in its tracks, the virus, its plenty. If we can’t, we’ll have to go back and talk.”
He was speaking as the number of confirmed cases in the US soared to 11,274, according to Johns Hopkins University.
Mr Trump also said he was open to the stimulus package legislation including language that barred companies that receive money from the federal government from buying back their own shares. He said he was unhappy when some corporations did that with the money they saved following his administration’s tax cuts in 2017.
“Some companies as you know, did stock buybacks and I was never happy with it,” Mr Trump said, adding that conditions preventing future buybacks for companies that received federal help would be “OK with me”.
Coronavirus business update
How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter.
US blue-chips have spent $1.5tn on their own stock since the corporate tax cuts came into effect. This includes $806bn in 2018, a record year for buybacks for companies in the S&P 500.
Mitch McConnell, the Senate majority leader, is expected to publish a stimulus proposal — based on discussions with the Trump administration — as soon as Thursday. The House of Representatives is in recess, but Nancy Pelosi, the Democratic speaker of the House, has been in connect with her members.
Ms Pelosi, who last week led negotiations on a previous coronavirus-related measure with Mr Mnuchin, spoke to the Treasury secretary twice on Wednesday. Democrats expect her to maintain a central role in discussions for the big stimulus package, even as Democrats use Mr McConnell’s proposals as a starting point for negotiations.
Democrats and Republicans on Capitol Hill have both emphasised that further legislation will probably be needed, even after passage of the $1.3tn package, which would be the third congressional measure to tackle the crisis.
Follow Demetri Sevastopulo on Twitter: @dimi