Stocks look to bounce back after worst one-day point drop ever amid coronavirus fears
Former Reagan economist Art Laffer says President Trump's proposal for a payroll tax cut is a 'great idea.'
Dr. Art Laffer, a former economic adviser to President Reagan, reacted on Tuesday to the market volatility related to coronavirus fears, advising individual investors not to make any rash decisions.
Laffer made the comments on “America’s Newsroom” one day after the Dow Jones Industrial Average closed over 2,000 points lower, coming back from a point drop of more than 2,150 points, or 8.2 percent, while the S&P 500 and Nasdaq Composite were lower by 7.9 percent and 7.2 percent, respectively.
U.S. equity markets tumbled Monday after an oil price war broke out between Saudi Arabia and Russia and amid new cases of coronavirus, especially in the U.S.
When host Sandra Smith asked Laffer what he was thinking when he saw the Dow go down 2,000 points on Monday he said, “I was thinking make sure I put my hands in my pockets and do not do anything.”
“When markets are like that it’s like a falling knife,” he continued. “The last thing you want to do is reach in there and try to grab it, try to do a trade.”
DOW PLUNGES MORE THAN 2,000 POINTS, OIL COLLAPSES AMID PRICE WAR AND CORONAVIRUS
“What investors should do right now, unless they have special knowledge, and I mean very few have special knowledge, is just put your hands in your pockets and wait until all of this settles before you do anything,” he went on to advise.
On Tuesday morning, markets rallied following President Trump’s address to the nation the night before where he spoke of “major” and “very dramatic” economic plans as a result of the coronavirus outbreak.
Trump said he will ask Congress to approve a payroll tax cut and relief for hourly workers to combat the economic damage the disease has inflicted.
When Laffer was asked what he thinks about the president’s plans he said, “I think his proposal on a tax cut on payroll is great.”
He added, “Most politicians think spending is the way to solve the problem. It is not. Spending will only make the problem worse, but a tax cut will at least encourage people to want to continue working, want to continue to produce and that's what the problem is in the economy from the coronavirus.”
Laffer also noted on Tuesday that “more people's fortunes are ruined in panic-buying and selling."
CLICK HERE TO GET THE FOX NEWS APP
“Whenever people make decisions, when they are either panicked or drunk, the consequences are rarely attractive and that especially goes for politicians, so I thought Trump's proposal of a tax cut on payrolls was great, but that's about all I would suggest him doing,” he continued.
Fox News’ Jonathan Garber contributed to this report.
Fox News First
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox.
By entering your email and clicking the Subscribe button, you agree to the Fox News Privacy Policy and Terms of Use, and agree to receive content and promotional communications from Fox News. You understand that you can opt-out at any time.