Donald Trump has made an opening bid to Congress to cut payroll taxes until the end of the year, despite Democratic objections, as the administration launched talks with Congress on a stimulus package to shield the economy from the coronavirus outbreak.

Larry Kudlow, the director of the White House National Economic Council, said Mr Trump had raised the plan for a payroll tax cut, lasting beyond the November election, as the centrepiece of his economic response to the spreading disease, during a lunch with Republican senators on Tuesday.

At a White House briefing later in the day, Mr Kudlow said administration officials were still working out the details of the package, but payroll tax relief was “probably the most important, powerful piece of this” and would deliver “a big growth pay-off”.

Mr Trump himself did not appear at the press conference, despite having said on Monday that he would do so to personally announce a “very dramatic” package of emergency measures at the event.

White House proposals have run into immediate resistance from Democrats on Capitol Hill, casting doubt on Washington’s ability to rapidly coalesce around a big package to shield the US economy from the epidemic.

“The best way to prevent economic damage is to stop the spread of the virus. President Trump isn’t going to wriggle out of addressing this growing public health crisis with tax cuts,” said Ron Wyden, the top Democrat on the Senate finance committee, who added a payroll tax cut would not help workers without paid sick leave or who had lost shifts and tips. The tax is paid by employers and workers on their salaries to fund government pensions and healthcare and generates $1.2tn in revenue annually.

This crisis demands a much more complicated series of solutions, it’s not just a matter of tax cuts
Richard Neal, Democrat who heads the House ways and means committee

A payroll tax cut has been used for stimulus before, by the Obama administration following the financial crisis, but many Democrats say there are better ways to target economic relief.

One Republican lawmaker said a complication surrounding any negotiations was that Democrats were conscious that providing too large an economic stimulus package could help Mr Trump as he campaigns for re-election in November. He said one idea being discussed was to stagger any stimulus package — passing a first version soon and then looking at more measures if the coronavirus outbreak got much worse.

“This crisis demands a much more complicated series of solutions, it’s not just a matter of tax cuts,” Richard Neal, the Democrat who heads the House ways and means committee, which writes tax legislation, told the Financial Times.

He said the committee was “working on emergency paid leave and unemployment insurance legislation, and we want to ensure that coronavirus testing can be obtained for free”.

The chance of a compromise on aspects of the package could not be counted out, however. Steven Mnuchin, the Treasury secretary, was separately upbeat after a meeting with Nancy Pelosi, the Democratic speaker of the House. The pair last year negotiated a budget deal to fund the government and lift the US debt limit.

“We’re having discussions about various different policies,” Mr Mnuchin said. “There’s a lot of interest on a bipartisan basis to get something done.”

Mr Trump has faced scepticism from Democrats on another idea some officials have floated, namely targeted tax relief for certain industries affected by the outbreak, possibly including airlines, hospitality, cruise lines and energy.

One US administration official said Mr Trump was also “considering federal assistance” for the shale oil and gas production industry, but that it would not amount to a bailout.

Shale energy is an important element of the economy in several states, particularly Pennsylvania, that will be critical in the November presidential election. But any effort to help shale producers was likely to face tough question from Democrats, particularly those without shale production in their districts.

“Instead of lining the pockets of Big Oil, Democrats are working on legislation to protect the financial security of working families affected by the spread of the coronavirus,” said Evan Hollander, spokesperson for House appropriations committee.

While Mr Trump wants to help shale companies, it would likely spark jockeying among other energy industry players. John Berger, chief executive of Sunnova Energy, a Texas-based solar power company, said any assistance for the oil and gas industry had to be matched by help for renewable energy, such by preserving tax credits set to expire.

Mr Berger said Vladimir Putin, Russia’s president, and Mohammed bin Salman, the de facto ruler of Saudi Arabia, had conducted “state intervention” in the markets with their price war that warranted a US government response. “If they do that [however] they need to treat us the same because we are just as important national security-wise,” he said.

Although the US economy remained strong in February, the sharp rise in coronavirus cases across the country, to 959 according to Johns Hopkins University, has led to fears that growth will sharply dip, as events and travel are cancelled, people work from home and consumer and business confidence wanes. Anthony Fauci, an infectious disease specialist at the National Institutes of Health, told reporters that in order for the US to fight the outbreak, Americans’ way of life would have to change.

“We would like the country to realise that as a nation we can’t be doing the kinds of things we could do a few months ago,” Mr Fauci said.

Mr Trump is under pressure to contain the economic damage after facing criticism for downplaying the threat of the coronavirus.

“[Coronavirus] hit the world, and we’re prepared and we’re doing a great job with it,” Mr Trump said after his meeting with lawmakers. “It will go away, just stay calm.”

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