It’s Time for Action: Resisting populist anger over corporate bailouts
At the risk of stating the obvious, the fallout from COVID-19 has proved more extreme than anticipated, both with respect to mortality rates and economic decline. In the midst of all the chaos, President Trump has approved the largest stimulus plan in American history. The plan has been met with mixed reactions, with a significant proportion of the opposition rooted in one brand of populism or another.
One need not oversimplify the opposition’s views a great deal to say such opposition boils down to the belief that the stimulus bill is being enacted by the President in order to benefit his billionaire friends at the expense of the average American.
This is false, demonstrably so.
Before delving into the specifics of the stimulus plan (officially titled the C.A.R.E.S bill), I want to make note of something for the record. I am not a supporter of the President, I did not vote for him in 2016, nor have any intention of voting for him in 2020.
However, observing much of the discussion surrounding the stimulus bill in the past week has worried me, seeing how populist falsehoods were so quickly held up as legitimate talking points. I hope writing this article helps combat such falsehoods, even if only on a local level.
So, who benefits the most from this bill? Although it is certainly tempting to answer with CEOs, the specifics of the stimulus plan tell a much different story. As an integral part of the bill, large swaths of lower-income Americans will receive a payment of $1200.
These payments entrust their recipients with a tremendous amount of discretion; Americans are permitted to spend the $1200 as they see fit. In other words, the government is not requiring that a certain percentage of the payment be spent on rent while a certain percentage be spent on groceries, for example.
In addition to said payments, the bill makes no cuts to unemployment benefits or programs that alleviate food insecurity, such as WIC. As a matter of fact, the bill expands eligibility for these programs, while also extending the period during which one can collect unemployment payments by over three months.
I could easily go on, mentioning the stimulus plan includes payment deferment for government-backed student loans, while also allocating enough additional healthcare funding to ensure COVID-19 testing be free, but the point would remain unchanged — this stimulus package is not fleecing the average American, not by a long shot.
What about big businesses? Are the executives running these companies really being handed untold billions of dollars in no strings attached money, as the likes of Rep. Alexandria Ocasio-Cortez have suggested?
Of course not.
The difference between the money being transferred to lower-income Americans and large corporations under this bill is the former being a payment, while the later is a loan.
This may sound like merely a difference in semantics, but the difference between the two is enormous; the payment does not require its recipient to pay back the amount to the government, while the loan does.
Moreover, such loans made to large corporations come with a great many strings attached. The bill mandates that half of the loan be used for the continuation of the salaries, benefits, etc. of the company’s employees, while the other half must go towards paying for pre-virus expenses such as leases and debt service payments.
The bill also places a number of new requirements on large corporations that wish to receive federal loans, including a year-long ban on executives using corporate profits to buy back their own company’s stock, something that hits the pockets of executives particularly hard for legislation that has been decried as “socialism for the rich.”
Is it my opinion that, as a general rule, company executives earn too much relative to their workers? Yes. I am not here to claim that most of these executives’ lives will be as affected by COVID-19 as the average American, however to claim the stimulus plan grants them unfettered access to money with no oversight while the average American is left with mere scraps is about as far removed from reality as one can get.
Now is not the time to contest or delay these loans over a tit-for-tat debate about issues like CEO compensation, as such a debate will almost certainly result in a long, and drawn-out fight between Congress and business executives. Without the immediate issuing of these government-backed loans, companies will be unable to pay their creditors, let alone their employees — an undoubtable recipe for mass bankruptcy.
Perhaps those more cynical than myself would argue these companies had it coming, but when the world finally begins to emerge from its quarantine, being stuck in a country without the corporations that provide air transportation, banking, and food may well prove to be more of a doomsday scenario than the disease itself.
Steven is a senior studying political science. Do you believe that corporate bailouts are necessary to keep the economy stable amid the COVID-19 pandemic? Send all comments to email@example.com.Subscribe to The Daily Cardinal Newsletter