Don't Let the Trump Administration Pick Coronavirus Winners and Losers
The bills in Congress need to do more to protect taxpayers and workers during bailouts.
|Pat Garofalo||Mar 24|| 2|
Before we get into this post, my book, The Billionaire Boondoggle, makes for good reading while practicing social distancing, so if you don’t have a copy, grab one here or at your local independent bookstore. My friends at East City Bookshop and Solid State Books in D.C. are doing curbside pickup during the coronavirus crisis, so those are great spots to buy one — or any other book — if you’re able.
A deal may be at hand. That’s the word out of Congress, which appears to be creeping closer to some sort of bargain over a coronavirus stimulus package.
As of right now, both Senate Republicans and House Democrats have released their own plans. There are tons of moving parts, as befits bills that will cost trillions of dollars, but of course my focus is on the corporate bailout, ahem, rescue section.
In my last newsletter, I noted three things to look for regarding coronavirus bailouts: Which corporations get them, what they have to do to receive the money, and whether there are other deregulatory efforts happening outside the glare of congressional negotiations.
The answer to the second part is going to be what we know first, as, aside from airlines, both bills lay out what companies getting bailout funds need to do, but not which ones they are. And that’s why I’m still worried.
As far as restrictions go, those in the House bill are undeniably better. The original Senate bill merely said that corporations receiving funds have to try to prevent layoffs, but not necessarily succeed, and not give executives any raises for two years. That was it.
The House bill, meanwhile, required zero layoffs or pay cuts for workers, no executive pay above $425,000, and included permanent requirements on paid leave and a $15 minimum wage, among other provisions. It also banned lobbying by bailed out companies. (On the plus side, both bills give taxpayers a financial stake in bailed out companies.)
Restrictions like these are the bare minimum that taxpayers should ask of companies rescued by the public during a crisis. And they don’t even get into what sort of criteria separates a bailout-worthy corporation from one that will be left out to dry.
To make it plain: Both bills give Treasury Secretary Steven Mnuchin broad discretion to set the terms by which corporations can ask for money, and discretion to change those terms should the need arise.
Now, Senate negotiators claim they’ve beefed up the oversight section of their bill. When there are details, I’ll give them a look — but the initial reports of some kind of inspector general are not promising, since that signals a post-hoc review, not real-time protection for taxpayer interests.
This is such an issue because nothing the administration has said regarding which companies will receive money has been reassuring. The main candidates mentioned have been airlines, cruise companies, and hotels. Trade associations for casinos, malls and restaurants are also asking for aid, as is the mega-manufacturer Boeing.
The point of bailouts is to either protect national priorities or prevent the collapse of one industry from rippling out and bringing down wider swathes of the economy. With the possible exception of airlines, all the sectors the Trump administration has talked about are firmly in that second bucket, and many are dominated by big companies that have stifled small business growth, dodged taxes, or committed labor abuses.
Take cruises. As I previously explained, while many major cruise companies have headquarters in Florida, they register their ships in other low- or no-tax countries, so their collective total tax rate here in the U.S. is just 0.8 percent. But they rely on taxpayer-funded services like the Coast Guard when they get in trouble.
Or hotels. Many cities and states subsidize hotel construction, with cities such as Chicago, Baltimore, Trenton, and Phoenix owning hotels outright and leasing them to major brands. Through 2014 cities had spent $8 billion subsidizing hotels. Scores of hotel brands are owned by just a few mega-corporations.
And obviously any hotel bailout gets tangled up with Trump’s personal finances. For the record, he has not ruled out the possibility that his companies will receive bailout funds. He also said on Monday that he will provide the oversight on the bailout program, personally, which is, uhhh, not good.
Casinos, too, consistently receive tax breaks and other state aid, even as their proliferation across the country has severely reduced their economic impact. The same goes for malls, even as they’ve been devastated by online shopping. New Jersey’s Mall of America, which received billions of dollars in support and has been under construction since 2004, had to close due to the virus just months after it only partially opened.
Boeing, meanwhile, received the largest state-level tax break in history in 2013, which was repealed last week because it likely violated World Trade Organization rules.
All of which is why the rush to pass a half a trillion dollar bailout package is so distressing. The big companies Trump and his team have mentioned have been chosen again and again as winners by elected officials — and they’re about to be chosen one more time.
So there needs to be an ironclad guarantee that, this time, workers come first. Companies that receive public aid need to serve the public; an independent third party should do the choosing and the enforcement. Letting the Trump administration pick winners and losers — including Trump companies — with minimal requirements for the protection of workers and with no criteria for separating a vital industry from one Trump just happens to like would be a total disaster.
One final nightmare is that the Senate bill, for reasons passing understanding, lumps general aid to state and local governments in with business bailout funds. State budgets are going to be hammered by coronavirus related expenses — and most state and cities can’t run a spending deficit — and yet they’re supposed to scrap with corporate lobbyists over money. It’s ridiculous.
I’ll keep you all updated once I know the exact details of the legislation.
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— Pat Garofalo