Jeremy Siegel Calls for Fiscal Stimulus, Fed Cut, 'Leadership at the Top'

Wharton’s Jeremy Siegel said the U.S. needs help from fiscal and monetary policy to support the economy.

“We need leadership at the top. We need a plan. It seems scattershot,” Siegel said on CNBC.

Siegel criticized President Donald Trump’s response to the coronavirus outbreak, saying the U.S. needs stronger leadership and stimulus from the government and Federal Reserve to backstop the economy.

“The president has not started this well. We need leadership at the top,” Siegel said.

“Kits, testing, unemployment compensation, people who stay home to be tested should not ... lose their income. This requires emergency action,” Siegel said.

Siegel said that help from the Fed would have a “marginal” impact overall but could bring relief to small businesses.

“There’s trillions of dollars of loans of these small businesses, based on the prime rate, based on the Libor, and they’ll all go down. It’ll help the cash flow. The cash flow is going to be critical,” Siegel said.

The Trump administration scrambled to assure Americans it was responding to a growing coronavirus outbreak as stock markets plunged and top health officials urged some people to avoid cruise ships, air travel and big public gatherings.

Trump, who has repeatedly played down the threat posed by the flu-like virus sweeping the globe, was planning to meet with Treasury Secretary Steven Mnuchin and other members of his economic team to weigh possible action, an administration official told Reuters.

Paid sick leave is among policy steps being considered, the official said on condition of anonymity.

One camp in the White House, which includes Trump, backs an across-the-board payroll tax cut, said an economist advising the administration, while top White House economic adviser Larry Kudlow and others advocate specific tax credits, loans or direct subsidies to certain industries or hard-hit areas.

A payroll tax cut could encourage consumer spending and help households that might otherwise struggle to make rent and mortgage payments on time or pay medical bills if family members' work hours are reduced during a coronavirus outbreak.

The number of confirmed U.S. cases reached 566, including 22 deaths, according to state public health authorities and a running national tally kept by the Johns Hopkins University.

Thirty-four U.S. states and the District of Columbia have reported to the U.S. Centers for Disease Control and Prevention (CDC) infections of the respiratory illness COVID-19 that can lead to pneumonia. Louisiana had the state's first presumed coronavirus case, Governor John Bel Edwards announced on Monday.

As worries over the virus deepened, the Dow fell a record 2,000 points when trading opened and the S&P 500 posted its largest single-day percentage drop since December 2008, the depths of the financial crisis. A plunge in oil prices contributed to fears of a looming recession.

Trump, who often points to the stock market as a gauge of his economic record, criticized news media organizations' coverage of the outbreak in a tweet and accused Democrats of hyping the situation "far beyond what the facts would warrant."