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Aboard the Air Force One flight that shook Trump into action on the coronavirus

As Air Force One sped toward Washington on Monday, the historic impact of the coronavirus outbreak became inescapable for President Donald Trump.

Televisions on his plane were tuned to Fox News, which broadcast dire graphics illustrating the single worst day for stock markets since the 2008 financial crisis. Matt Gaetz, a Florida GOP congressman who had accompanied Trump to a series of fundraising events in Orlando, had isolated himself in an empty cabin on the jet after learning he’d had contact with someone infected by the virus at a political conference.

By the time Trump touched down, he had decided he should take action, according to three people familiar with the matter. He would abandon the cautious, business-as-usual approach he had hoped would calm Wall Street jitters and instead pursue a broader economic stimulus to reassure investors, aiming to avert an election-year recession that could doom his presidency.

The coronavirus has presented the most severe threat to the U.S. economy since Trump entered office, endangering his single best argument for a second term: that he has made Americans more prosperous. But the president and his top economic advisers were slow to acknowledge the risk, instead assuring the public for weeks that the outbreak was contained. As the virus spread throughout America last week and financial markets shuddered, that message became unsustainable.

Traders are still waiting to hear Trump’s plan. After promising to reveal details on Tuesday, he didn’t show up at a White House coronavirus briefing, leading to a sell-off in U.S. equity futures heading into Wednesday. Aides insisted that Trump is committed to rolling out a plan, even if its substance and timing are unclear.

Payroll Tax Cut

Back at the White House on Monday, Trump found aides prepared to sketch out ways to accommodate his desire for an economic plan in a meeting scheduled for shortly after his arrival. Peter Navarro, the fierce China critic who directs the White House’s trade and manufacturing policy, pushed for aggressive action: a payroll tax cut that could provide near-immediate relief to American workers and businesses.

Trump was particularly intrigued by a payroll tax cut, regarding it as a political win that would boost middle-class workers, according to three people familiar with the matter. Like others who spoke for this story, they asked not to be identified discussing internal White House deliberations.

Trump had become convinced Federal Reserve Chairman Jerome Powell wouldn’t be coming to the rescue, and unloaded on the central bank leader during the White House meeting, the people said. Trump has complained in tweets that Powell was slow to respond to the crisis and should have done more, sooner to lower interest rates and inject money into the economy — even after the Fed issued an emergency half-point rate cut last week.

The Treasury secretary, Steven Mnuchin, and director of the National Economic Council, Larry Kudlow, both opposed a payroll tax cut out of concern it would be expensive and ineffective. The day of the Fed’s rate cut, Kudlow said in an interview with Bloomberg News that he didn’t see an economic crisis from the coronavirus outbreak. Mnuchin called Kudlow shortly after the Fed’s announcement.

“I just wanted to tell you, ‘Well done’,” Kudlow told Mnuchin on the phone as a Bloomberg reporter looked on. “You deserve a kudos.”

Mnuchin told Kudlow he had been stressing to reporters after congressional testimony that morning that any economic impact would not last long. “So you know, look, the other thing I just said — I did press after the thing — is this is not like the financial crisis,” Mnuchin told Kudlow. “A year from that you had companies that had issues for a year. And they’ll be fine a year from now.”

“That’s good,” Kudlow answered.

But the two men also traded questions about what by then had become another turn south in the markets following the Fed’s move. By the end of the week, it was clear that the rate cut had failed to calm markets by itself, and Kudlow had come around to supporting targeted economic relief measures, such as helping hourly workers without paid sick leave. He and Mnuchin also backed tax deferrals for travel-related companies battered by cancellations and skittish consumers who were avoiding new bookings.

Trump’s Promise

On Monday, the steep market declines weighed heavily with the advisers meeting with Trump. Some of them had also taken note of top health officials’ warnings a day earlier that the nation had moved past containing the virus and should prepare for its spread.

Mnuchin offered preliminary analysis his department had completed on a payroll tax holiday, and he organized a Tuesday call of the President’s Working Group on Financial Markets — an interagency group that includes the Fed chief, the chairman of the Securities and Exchange Commission, and the chairman of the Commodity Futures Trading Commission. The group is intended to stabilize market operations.

Trump signaled which ideas he liked, and attendees — who included the president’s senior adviser and son-in-law Jared Kushner, budget director Russ Vought and legislative affairs director Eric Ueland — were told to figure out what the president could do through executive action and what would require Congress.

But Trump intended to announce a plan that evening, whether the legwork was ready or not.

Shortly after the meeting concluded, Trump walked to the podium in the White House briefing room and told reporters that he would pursue “very substantial relief” that would total “a big number.” He promised loans for small businesses, assistance to the cruise, airline, and hotel industries, and assistance to small businesses and hourly wage workers, as well as “a possible payroll tax cut.”

His aides didn’t expect the payroll tax announcement, according to a person familiar with the meeting.

“I will be here tomorrow afternoon to let you know about some of the economic steps we’re taking, which will be major,” Trump said. “They will be very, very dramatic.”

No-Show President

The announcement dismayed some of Trump’s aides, who knew that the administration had neither figured out how key elements of the president’s plan would work nor built the bipartisan support that it would need on Capitol Hill.

The president’s optimism collided with expectations on Tuesday. Stock markets seesawed as Trump and his aides were asked by lawmakers and the public to define the contours of his assistance package. Many House Democrats and some Senate Republicans expressed misgivings about cutting payroll taxes, which help fund Social Security and Medicare, the health program for the elderly and disabled. Some lawmakers noted such a cut wouldn’t help anyone who was out of work.

But stocks rallied after the president emerged from a lunch with Senate Republicans on Capitol Hill to declare there was “a great feeling about doing a lot of things,” including a payroll tax holiday. Administration officials said that the president wanted the cut to be long-lasting or even permanent, boosting paychecks for workers and cutting the tax burdens of businesses through the November election.

Trump again promised more details of his stimulus. “You’ll be hearing about it soon,” he said.

It was not to be. The president didn’t show up at an evening news conference at the White House by his coronavirus task force, leaving Kudlow and Vice President Mike Pence to field questions about how the plan would work, how they’d win support for it in Congress and how much it would cost.

“Let us put the proposal out in concrete details and flesh that out and we’ll have much better answers,” Kudlow finally said.

The White House will have another chance to explain itself on Wednesday, when Trump will meet with executives from major American banks at the White House. Goldman Sachs Group Inc. Chief Executive Officer David Solomon, Wells Fargo & Co. CEO Charles Scharf, Citigroup Inc. CEO Michael Corbat, Bank of America Corp. CEO Brian Moynihan and JPMorgan Chase & Co. Co-President Gordon Smith will be among the corporate leaders attending, according to people familiar with their plans.

More coronavirus coverage from Fortune:

—How coronavirus is affecting the global concert industry
Politicians around the world are going into quarantine
—Some of the most extreme ways companies are combating coronavirus
—How Europe is adapting to the coronavirus outbreak
—What Xi Jinping’s visit to Wuhan says about China’s coronavirus recovery
Conferences go online amid coronavirus fears—minus the hallway schmoozing
—Coronavirus may not be all bad for tech. Consider the “stay at home” stocks

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