After a week of intense negotiations and political playacting for the media, Congress passed a massive $2.2 trillion COVID-19 economic rescue bill, signed by President Trump on March 27. Predictably, it’s laden with extraneous pork demanded by the Democrat majority in the House, but its most important and expensive elements are justified. In the process, the demagoguery and downright idiotic statements by some politicians, pundits and tweeters have ranged from preposterous to disgraceful.
Rep. Alexandria Ocasio-Cortez (AOC), perhaps the biggest show-boating goofball in Congress, accused Senate Republicans of “shamefully” engineering a massive “corporate bailout” and shortchanging “average people.”
This is nonsense and the word “bailout” is out of place. That term was appropriate to describe the federal government’s rescue of General Motors and Chrysler from bankruptcy in 2008, with $25 billion under President George W. Bush and another $55 billion under President Obama. (The US Treasury later recovered all but $9 billion of that from stock sales, interest, dividends and loan repayments.) GM and Chrysler were mismanaged. Ford Motor Co. wasn’t and didn’t take any government money.
By contrast, the businesses ravaged during the COVID-19 crisis — from airlines to restaurants to hairdressers — aren’t at fault. They’re victims. They’re not being “bailed out” for mismanagement, they’re getting public assistance for the loss of revenue resulting from the virus and government-forced closures, necessary as those closures may be. The workers they’ve had to lay off are also victims. But don’t expect AOC to label the public assistance they’ll get as a bailout.
The pandemic’s temporary economic choke-hold is bad enough. Imagine the longer-term damage if we stood by and allowed not just individual companies but entire sectors and industries to collapse, costing millions of workers their jobs. Doctrinaire libertarian purists might call for just that, but real world political economy and public policy wouldn’t allow it. Besides, you can’t just flip a switch and instantly recreate all of this when the virus passes.
The money going to businesses will mostly be liquidity loans to avoid credit defaults and mass layoffs. When the economy recovers, many of those loans will be paid back. AOC’s ranting aside, businesses will get considerably less money than will workers, families and other “average people” on the receiving end of extended and increased unemployment benefits, direct payments to households and other payouts, subsidies and deferrals.
Economically illiterate progressives, like AOC, driven by their emotions at the expense of reason, have weaponized the word “corporation” as a slur, much like a four-year old uses “doo-doo head” as a childish profanity for kids he doesn’t like. In progressive jargon, their hate-word “corporations,” is a shrewd substitute for their unspoken real target: private enterprise.
Individual companies might be formed as sole proprietorships, partnerships or corporations. Incorporating is just another way of organizing a business to limit liability, file tax returns and issue stock to raise capital. There’s nothing corrupt about it, Bernie. Successful small businesses grow into big businesses. Mom and pop stores are fine, but you need big businesses and the millions of people they employ to manufacture cars, planes, trains, aircraft carriers and Apple I-phones.
Capitalism is the economic dimension of liberty. And our mixed economy is already heavily regulated. Would you really want a socialist President Bernie Sanders controlling our economy — with AOC as his Treasury Secretary?
Leftists similarly malign “Wall Street.” One such Trump-hating commentator accused him of wanting to “sacrifice the elderly to keep Wall Street happy” during the COVID-19 crisis. There’s actually a #NotDying4WallStreet chatter group, no doubt a gathering spot for economic simpletons. Wall Street isn’t an evil force. It’s just shorthand for an essential financial intermediary in ours or any market economy as a conduit of capital and investments (like government-worker pension plans using Wall Street as a vehicle for their portfolios).
When we ultimately overcome this pandemic, it’ll be capitalism and the private sector that come charging back to revitalize our economy (and restore the value of your 401-k). Government performs many essential functions and provides millions of jobs but it does so at great expense. This is “overhead” on the economy that must be funded by the private sector’s businesses and workers.
Public health is, of course, the first priority in this crisis. But the longer our economic lockdown continues, the deeper the hole we’ll have to climb out of and the attendant dangers to public health and welfare associated with that. At some point, hopefully soon, we’ll need to prudently reassess the risks vs. the benefits of reopening America for business.
Longtime KOA radio talk host and columnist for the Denver Post and Rocky Mountain News Mike Rosen now writes for CompleteColorado.com.