Since the Covid-19 crisis hit, government has pumped three huge economic stimulus packages into the U.S. economy as of this writing. These bailouts total over $8 trillion — that’s eight with 12 zeros after it! They transfer public funds to private corporations while offering only token relief for families, individuals, and truly small businesses.
In February, reacting to the virus, the stock market suffered its biggest drop since the Great Depression of the 1930s. So Congress passed legislation bailing out Wall Street with $1.5 trillion in loans. It followed this in mid-March with $1.5 trillion in the Families First Coronavirus Relief Act (FFCRA), designed mainly to provide paid sick leave for workers who lost jobs to the pandemic.
The third package was the CARES act (Coronavirus Aid, Relief and Economic Security), which pumped another $2.2 trillion into the economy, with only 30 percent going to individuals and families. The largest chunk of the money, 40 percent, was a gift of public money to big business.
Big business strikes gold. The half-trillion dollars that CARES gave to large corporations included special cash grants and loans to the airline and cruise industries, with very few strings attached. A sneaky tax cut measure gave 43,000 millionaires an average $1.6 million each!
Even without stimulus money, Zoom founder Eric Yuan’s net worth is now up $2.58 billion thanks to the pandemic. Amazon owner Jeff Bezos’s wealth is up $25 billion, and he won’t even provide personal protective equipment to all his workers. The super-rich in general are seeing their wealth increase by 10 percent during this calamity.
Who’s minding the store? The CARES act sets up five different committees to oversee the huge slush fund for corporations. They are meant to report back to Congress and the public on who is getting the handouts. These bodies today are allotted less funds than were the auditors of the 2009 bailout, even though CARES involves over twice the amount of money. Trump has already replaced some auditors with his toadies, and has proclaimed that he alone will decide which businesses get the loot.
Another part of this third bailout is $370 billion in loans to businesses defined as small, those with fewer than 500 employees. Called the Paycheck Protection Program (PPP), it is supposed to keep income flowing to workers. However, small businesses with few reserves, many of them owned by women, people of color, and immigrants, are seeing little help. Independent beauty salons, espresso stands, and local bookstores can’t compete with large chains or bigger companies who have accountants on staff to apply for these loans.
Just a few days after CARES passed, all those billions for small business were gone — snapped up by bigger “small” businesses. Hotel and restaurant chains used a loophole to claim individual sites with fewer than 500 employees as small businesses. Food chains like Shake Shack and Ruth’s Chris Steak House got loans of $10 million and $30 million. After huge public outcry those chains, the Los Angeles Lakers, and others gave back the loot or turned it down.
Along the way, the big banks who process these loans got to skim 5 percent off the top; for a $10 million loan, that’s half a million dollars. And if a smaller business does manage to get a loan, it won’t be forgiven unless burdensome conditions are met and documentation is submitted.
Only 25 percent of the total $2.2 trillion CARES funding went to state and local governments, education, healthcare, and safety-net public services — a drop in the bucket compared to people’s real needs at this time!
Crumbs give little relief. What was left for poor and working-class individuals and families? Only 30 percent, or $600 billion.
Those highly touted one-time checks — $1,200 for adults and $500 for children under 16 — accounted for most of that money. That might cover half of one month’s rent — not much relief!
Vast numbers of people were left out. No checks will go to people who are claimed as someone else’s dependent — youth over 16, disabled folks, or elders. And nothing for a whole family if even one of them is undocumented! This will prevent over three million immigrant children from receiving any emergency funds.
People who don’t have to file income tax returns and aren’t on Social Security have to apply for their checks. People without bank accounts will have to wait up to five months to receive their money by mail. And, abominably, private debt collectors can seize the relief checks unless state governments forbid it.
This section of CARES also boosts unemployment benefits by $600 more per week. And, theoretically, it expands coverage to many who would not normally qualify. Gig workers and the self-employed can now receive benefits, but only if they can thoroughly document their work history. Job search requirements have been temporarily waived for those whose employment was directly impacted by Covid-19.
With 30 million new applications for unemployment in five weeks, Employment Security offices are in chaos. Outdated computers must be reprogrammed and staff are swamped. All filing is online or by phone and the lines are jammed with hours of waiting. Six-week delays to receive the first check are common.
Only a minority of states have made special provisions to cover workers in the informal economy, most of them women, or undocumented immigrants.
After passing the CARES act initially, Congress legislated an add-on of half a trillion dollars. It includes more money for small businesses and some for virus testing, but doesn’t even throw any crumbs to individuals.
Bipartisan theft. Democrats joined Republicans to pass the three stimulus bills almost unanimously. CARES passed by 96-0 in the Senate and by a voice vote in the House. Democrats managed to improve the bill slightly, while still leaving huge loopholes and tax breaks for the rich.
Some legislators are pushing a bill to send families $2,000 a month through the end of 2020. But when it comes right down to it, after lots of tough-sounding talk, they will fold without fighting for what people really require.
The bipartisan idea of “the economy” is Wall Street. But that’s not the real-life economy of poor and working folks who need rent money, food, healthcare, education, and safe workplaces. The workers’ economy is where the unemployment rate approaches 28 percent and half of households live paycheck to paycheck.
The next few bailouts will no doubt include massive benefits to fossil fuel companies and more tax cuts for the wealthy. And the Federal Reserve will continue to give more trillions to big business behind the scenes.
Both major capitalist parties push the myth that anything good for the stock market and the economy of the rich is good for ordinary people — “We’re all in this together!” This fairy tale justifies the ongoing pattern of corporate handouts to prop up the increasingly diseased profit system.
Over past decades, bailouts and tax cuts for the rich have contributed mightily to the growing concentration of wealth at the top, paid for by safety-net cuts and attacks on workers’ standards of living. How long will this continue? Until workers take control and turn the whole damn system upside down!