The Essential Imbalance of the 2020 Bailout. Plus, it may be time for a general strike.The New York State Department of Labor is one of many creaky systems that will be employed to deliver vital relief. (ANTHONY BEHAR/SIPA USA VIA AP IMAGES) First ResponseLast night, the Senate approved the $2.2 trillion coronavirus economic response package, an hour after the final text was released, in a remarkable 96-0 vote. This morning, we learned that 3.283 million Americans filed first-time jobless claims in the week ending March 21. The latter explains the former. We're in at least a temporary pandemic depression, and the relief that the Senate bill will provide was such that no Senator would have dared vote against it. The House will vote on Friday, and without remote voting in place, no House member will be the one to deny unanimous consent and force their colleagues back to Washington, risking their own health, on a bill that will get overwhelming support. That was the whole point of the foot-dragging on remote voting, to make dissent impossible. Congress should at least consider what it bought, however. I made some of these points last night on Chris Hayes' show, but let's take a look at how this package treats the various players who will get help: Direct Payments: This is touted as that every American will get a $1,200 check in the mail to deal with the economic collapse. But it's means tested, so it's really every American earning $75,000 or less, phasing out at $100,000. But it's also means tested in the worst possible way, based on IRS data from 2018. As I just mentioned, 3.283 million Americans filed jobless claims last week. Did some of them make $100,000 a year in 2018? It's certainly possible. Well, they'll get nothing from this provision. Means testing is stupid under normal conditions, means testing based on two year-old data is insane. The easy fix was to give the check to everyone, and claw it back next year if you must means test based on 2020 tax data. That method was in Nancy Pelosi's aid package, but that bill was for show. Meanwhile, we'll be lucky if the people who need this money the most will still be at the address where the check will be mailed. If you have direct deposit on file with the IRS, about 70 million Americans, you will get that money within a few weeks. If you don't, the check will be mailed and it will take up to four months. The unbanked don't have direct deposit, these are the most vulnerable people in society, and they may not be able to hold out for four months. (They're also transient, so the address on file may not match.) If we had postal banking or a Federal Reserve-linked bank account for all, this transmission would be direct and simple. We don't. Unemployment boost: I think most liberals agree this is the highlight of the bill: a $600/week increase in unemployment insurance. Combined with the normal state-based benefit, this means that everyone out of work making up to $75,000 a year will have their salary replaced at 100 percent. It includes gig workers, freelancers, independent contractors, and furloughed workers, many of whom were ineligible for the system previously. But this benefit will be run through state unemployment insurance systems, a creaky patchwork of varying quality that is mostly unprepared for the crush of claims. Systems in 22 states aren't ready for a recession level of unemployment claims, the Wall Street Journal reports, which is astounding since we've had a decade of job growth. Many states never replenished the trust funds after the Great Recession. That can be handled with federal dollars; the bigger problem is the throughput of these underfunded systems. Check out any local news site and you'll find stories about systems being overwhelmed, people getting kicked off the online portal, on hold with the call center, having to fill out online applications 15 times. There are also all sorts of conditions on state unemployment, many of which are being waived, but that depends heavily on the state. It's great to increase unemployment, but people must suffer with the mechanism of delivery, and that's bound to create people slipping through the cracks. Small business grants: Small businesses get $350 billion in what are being called "forgivable loans," which will be forgiven if they maintain payroll. That's a lifeline for millions of businesses. It will also be run through the Small Business Administration, universally recognized as one of the worst agencies in the federal government. Stacy Mitchell of the Institute for Local Self-Reliance explains to me that the SBA typically does about $25-$30 billion a year in 7(a) loans, for operating capital. This would be a 12-fold scale-up of a normal year, and would have to be done in weeks to actually succeed in saving businesses. Small businesses routinely complain of the slowness of the SBA process. Mitchell heard that the website is already crashing. We're also all going to learn that the definition of "small" business isn't that small. Not only to businesses with up to 499 workers make the cut, and that includes those with multiple locations, as long as those locations have less than 500 employees. That could open up the grants to chain restaurants and chain hotels. Donald Trump's hotel chain, though banned from the big business provisions of the bill, could grab this small business cash. So the actual small businesses on a knife's edge must compete with these larger concerns for the attention of a broken SBA. Hospital industry: This is also good, over $100 billion for hospitals struggling under the weight of new COVID-19 cases. Some of that money will go toward procuring needed equipment. Yet by giving it to hospitals directly instead of nationalizing the supply chain, the money will necessarily buy less. Hospitals will remain pitted against one another amid a small chain of producers, subject to monopsony price-gouging. If this money were put into a Defense Production Act fund, the government would balance the scales, controlling supply and coordinating it to who needs it most. State and local governments: They get $150 billion, which is great since states can't print money and stand to lose lots of tax revenue. But governors are already warning that this won't be enough, and they'll have to get in line for a future appropriation. $4.5 trillion corporate money cannon: There are a whole bunch of goodies for specific industries in the bill, but this is the most instructive one. While individuals and small busineses must survive through creaky, inadequate systems not equipped to handle such extreme reliance, corporate America gets the velvet rope service of the Federal Reserve, which can hit a keystroke and fund a company to its heart's content in seconds. The conditions on the lending are vaporware and can be reversed by the Treasury Secretary at his discretion. The collateral is theoretical. It's a rerun of the "mother of all carry trades" from the financial crisis, where corporations can more than easily make money on the mounds of cash they'll be given. The "oversight" is all after the fact, making reports after the money is out the door. So we know the money is disproportionate, as is the power dynamic; but it's also the service. This is a symbol of who matters in America and who matters in this bill. Congress will have to be relentless in making sure that the relief for the most vulnerable doesn't arrive too late or break under the pressure, while relief for executives and elites will float on a cloud. Limited Time! A Matching Gift From a Generous Donor Doubles Your Contribution. Please Donate Today, Thank You! Vital StatsNew York Times: As of this morning, 68,534 U.S. cases (53,934), 990 deaths (728). An incredible 33,000 of those cases, almost half, are in New York state. Johns Hopkins University: 69,197 cases (55,238), 869 deaths (802). The COVID-19 Tracker shows 65,512 cases (53,192) and 936 deaths (709), and 484,286 tests completed (367,710). This is a real breakthrough on testing, which has leapt up to a South Korea-like level. But deaths continue to rise exponentially. The worst is yet to come. There's Talk of a General StrikeThat was said to me and labor reporter Mike Elk in 2011, in Madison, Wisconsin, during the worker uprising there against Scott Walker, by a guy wearing an International Workers of the World hat. And if Donald Trump tries to prematurely send people back to work amid a pandemic, that talk will grow. In fact, it's already happening. There's a history here; a general strike occurred in 1919, during the influenza pandemic. You cannot credibly send workers into a meat grinder without pushback; Chinese factory workers were slow to return as well. The only way to return America to normal is to beat the pandemic, with social distancing and lockdown measures. There are no shortcuts, and attempts to create one will be met with massive unrest. Limited Time! A Matching Gift From a Generous Donor Doubles Your Contribution. Please Donate Today, Thank You! Check This OutI was on Rising on Hill.tv with Krystal Ball and Sagaar Enjeti. Watch it at this link. I will post the Chris Hayes link as soon as I can find it. The darkly amusing part of all of this is that this president has used the Defense Production Act once in his term in office, in a letter in June 2017, to "rectify a shortfall in the space industrial base." That's right, the same guy who said invoking this law would turn America into Venezuela did once use it to bolster supplies for… the Space Force. Today I Learned |
|
No comments:
Post a Comment