The Coronavirus Aid, Relief, and Economic Security Act (CARES) was passed in late March, giving relief to individuals, corporations, small businesses, state and local governments, and public health. The $500 billion for corporations has a Pandemic Response Accountability Committee attached to it, but watchdogs, media, and legislators are paying attention.
A Huffington Post commentary cautioned: “Nobody has placed meaningful restrictions on how the largest corporations can use their bailout money. They can funnel it to shareholders in the form of stock buybacks or dividends. They can raise executive pay, approve massive bonuses for Wall Street traders, buy up smaller competitors — all while laying off workers, slashing salaries, offshoring jobs, or otherwise running amok as corporate citizens.”
During the 2007-09 recession, as one example, AIG Insurance was given a taxpayer-funded bailout, then paid $450 million in bonuses to its “top performers.” Tellers, processors, and other employees were fired.
A commentary in Yes! magazine put it this way: “If there’s ever been a sign that we need a national health care program, to provide paid sick leave for all working people, and to implement countless other protections, this is it. The shutdown of the economy has demonstrated — again — that working people, not bankers, keep the economy running.”
Show Me the Money
The Washington Post, The New York Times, Bloomberg, ProPublica and Dow Jones — which publishes The Wall Street Journal are suing the Small Business Administration (SBA) after it refused to release which businesses received money through the $660 billion Paycheck Protection Program (PPP).
According to NPR, more than 200 publicly traded companies were part of a wave that used up the program’s first round of money within two weeks.
The Associated Press found dozens of publicly listed companies — some with market values over $100 million — collectively received money from the program’s first round.
An SBA regional director told the Star Tribune, “Less than 5 percent of the loans that were approved were over $1 million and 74 percent were under $150,000.”
The SBA eventually approved access to loans to more small lenders and community financial institutions that disproportionately loan to small female- and minority-headed businesses.
Senate Majority Leader Mitch McConnell suggested in April that states get no more help from the federal government, and should instead be forced to declare bankruptcy. The idea was that assistance to states would be a “Blue State Bailout” since it is McConnell’s belief that states run by Democrat governors are in most need of assistance.
Similarly, President Trump recently said increased federal funding to help states recover from coronavirus is unfair to Republicans, “because all the states that need help — they’re run by Democrats in every case.” He also suggested aid to states should be conditioned on adopting his policy priorities.
The Washington Post, an analysis from the Tax Foundation, and a report published by the Rockefeller Institute of Government show a different story. As New York governor Andrew Cuomo pointed out, his “blue” state sends more in taxes to the federal government than it gets back in federal spending, while McConnell’s state of Kentucky is the opposite.
Forbes magazine reported that 19 of the 25 states with the highest average stimulus payouts have voted Republican in every election since 2000. The top five are all red states — Utah, Idaho, South Dakota, Nebraska, and Wyoming.
In Wyoming, for example, there were fewer than 600 positive cases at the time, yet it received $1.25 billion from the congressional package, equal to 80 percent of its annual general state budget, according to an Associated Press analysis. By contrast, the hardest-hit state, New York, received approximately $24,000 per positive test.
Health Insurance Burden
David Wichmann, CEO of the Minnetonka-based insurance giant United Health Group, made upwards of $52 million last year. Wichmann has been known for his vocal disapproval of Medicare for All, which he claimed would “destabilize the nation’s health system and the inherent cost burden would surely have a severe impact on the economy and jobs — all without fundamentally increasing access to care.” People in the U.S. spend one of every five dollars on health care, the highest ratio in the world. According to Reuters, we currently pay three times what the British do for the world’s 20 most popular drugs.
Drug Price Hike Response
Two U.S. Congresswomen urged drugmaker Jaguar Health to reverse recent price hikes on its drug Mytesi, which could be used to alleviate side effects in patients being treated for COVID-19. The letter, signed by House Oversight Committee Chairwoman Carolyn Maloney and U.S. Representative Jackie Speier, criticized Jaguar for what it said was a nearly threefold price increase on the drug, from $688.52 to $2,206.52 per bottle of pills, earlier this month. The drug is currently approved for use in addressing diarrhea and other gastrointestinal symptoms in patients being treated for HIV or AIDs with antiretroviral drugs.
New Zealand, Germany, and Finland have had striking success in fighting the coronavirus. Iceland, Taiwan, and Denmark also have done well. All of them have women leaders.
Plenty of countries with male leaders — Vietnam, the Czech Republic, Greece, Australia – have also done well. But few with female leaders have done badly.
New Zealand’s premier, Jacinda Ardern, has delivered empathetic “stay home, save lives” video messages from her couch and communicated daily through Facebook Live videos. She has urged New Zealanders to look after their neighbors and take care of the vulnerable. Her emphasis on shared responsibility has united the country.
“We do need to be careful about lumping men and women into homogenous categories and keep in mind that the percentage of female national and global leaders is much smaller,” says Kathleen Gersen, a professor of sociology at New York University. “But with that being said, among the countries which have done a better job of handling this pandemic and the spillover effects that it has had, women are disproportionately represented to a rather startling degree.”
The Job Gap
Annie Lowrey, an economics writer for The Atlantic, has written about how COVID-19 shutdowns and the 2008 recession has made the Millennial generation (born 1981-1996) a “lost generation” without economic security — “the first generation in modern American history to end up poorer than their parents.”
Student loan debt, a weakened job market, and lack of security to buy homes and raise families had already created a wide gap. This generation was the first to be wounded by the pandemic shutdown, with jobs largely in restaurants, fitness centers, retail, and other service industries.
In other demographics, as the Washington Post reported on May 9, women have been hit with unemployment at higher rates than men. In February, before the shutdown, 5.8 percent of Blacks, 4.4 percent of Hispanics, 3.1 percent of whites, and 2.5 percent of Asians were unemployed in the U.S. As of April, the unemployment rate for Hispanics was 18.9 percent, 16.7 percent for Blacks, 14.5 percent for Asians, and 14.2 percent for whites. Typically, the Black unemployment rate is double that of whites. Heidi Shierholz, policy director at the Economic Policy Institute, points out that many of the job losses are to undocumented immigrants — often paid under the table — who generally do not have access to food stamps, health care, and subsidized housing; nor are they eligible to receive the $1,200 stimulus checks.
In an interview with Vox, Lowrey said: “We choose these rates of inequality, this racial wealth gap. We elected it. We could have chosen another system, another world, like other countries have.” Lowrey says programs like universal pre-K for all Americans is popular, but our system of government allows popular vote to be ignored. “There have been people pushing back against this for decades. The key point is that this isn’t merely a market outcome. The world we have has been shaped by policies our government has chosen. That’s so important to remember.”
Proposals included additional stimulus checks and payroll grants, better access to federal loans by small businesses, and a federal jobs guarantee to help citizens get back to work in an equitable way.
Ezra Klein, the founder of Vox and a former columnist for the Washington Post, wrote a lengthy commentary about why our country does not have strong infrastructure.
“I’ve covered Congress for almost 20 years. The place is littered with proposals to construct universal pre-K and reimagine the health system, to decarbonize the U.S. economy and incentivize drug development through prizes and solve the housing crisis. They just don’t pass. It’s become a running joke in Washington that every week is infrastructure week. But we’re not rebuilding American infrastructure.”
To the question, why, he writes: “The institutions through which Americans build have become biased against action rather than toward it. Too many actors have veto rights over what gets built. … This is representative democracy at its worst: A democracy that only represents those who know to show up at meetings most people never hear about, and so ends up handing power to special interests.”
The Time Is Right to Prioritize Green
The founder of Green Biz wrote that this is the right time to talk about climate change, because we will spend the next several years rebooting our economic capabilities. “Isn’t this the time to talk about how to create a robust, resilient and regenerative economy? And shouldn’t we be aligning our investments — and our tax dollars — in those directions?”
- If we bail out the airline industry, require net-zero emissions by mid-century
- If we prop up agribusinesses, help them adopt climate-friendly technologies
- Support an orderly transition away from fossil fuels while building the next generation of clean energy companies and skilled workers
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