Government saved corporations, rich; workers come next
Trillions of dollars in stimulus funds have stabilized the financial markets, leaving middle and working-class Americans to ask why most of the money is going to help corporations and millionaires.
The White House, Congress and Federal Reserve have spent 95 cents out of every dollar in COVID-19 stimulus money on businesses. They hoped the cash eventually would reach workers, but as with most trickle-down theories, it is not working.
More than 30 million people are out of work, and the number is growing every day. The prognosis for the average American is not good, according to researchers at the University of Chicago’s Becker Friedman Institute.
“We find three new hires for every 10 layoffs caused by the shock and estimate that 42 percent of recent layoffs will result in permanent job loss,” one team found after analyzing the Federal Reserve Bank of Atlanta’s latest Survey of Business
Uncertainty.
Almost two-thirds of Americans hold jobs that cannot be performed from home, researchers concluded from Bureau of Labor Statistics data. Most of those people make less than the median income and do not get benefits like health insurance.
“These jobs also tend to rank highly in terms of the amount of close physical interaction that occurs at work (e.g., a nail salon worker),” the researchers found. “Combined, these results imply that workers that have been hurt most by the crisis economically, are also at the highest health risk as they go back to work.”
Senate Majority Leader Mitch McConnell believes the federal government has done enough for the average American. The Treasury Department sent out $1,200 checks, and the feds have added a $600-aweek supplement to unemployment benefits.
This aid seems increasingly piddly, though, as the virus persists. The stimulus checks barely pay for two months of rent, and the $600 a week will run out July 31. Meanwhile, the number of infections keeps climbing, and few businesses can fully reopen.
The federal government has spent more than $764 billion on the Paycheck Protection Program. But as we are beginning to discover, lobbyists made sure the money is not going where Congress intended.
“We do not find evidence that funds flowed to areas more adversely affected by the economic effects of the pandemic, as measured by declines in hours worked or business shutdowns,” the Friedman Institute professors determined. “If anything, funds flowed to areas less hard hit.”
More than 300 publicly traded companies received $1 billion in funds meant for small businesses, the Washington Post found. Some are handing it back, while others are quietly depositing their checks. Many will choose to repay the loans at 1 percent interest rather than keep workers on the payroll.
While Republicans and Democrats initially cooperated, partisanship is back with a vengeance. Progressive Democrats are calling for radical intervention, while conservative Republicans suddenly are worried about the deficit again.
Rents and mortgages, meanwhile, are due in a few weeks. Millions of unemployed who never had health insurance now have little income. Those who had employer-funded insurance are losing it in the middle of a deadly pandemic.
The solution, of course, is jobs. But the retail, tourism, travel, retail, energy and personal services industries will not rehire all their workers for months or years. Government must stimulate hiring in other fields. That’s Economics 101.
Our first step must be to stop the hemorrhaging, which means protecting existing jobs. State and local governments need cash immediately to avoid laying off workers due to collapsing tax revenues.
The federal government should take this opportunity to rebuild America’s failing infrastructure, including roads and bridges. Congress can also focus on supporting the industries of the future, investing in new jobs and boosting U.S. competitiveness.
We need updated roads that not only repair lanes but also to add new technologies to monitor and direct traffic. Federal contacts should require private companies to train, employ, and offer full benefits to people so they can design and build the transportation networks of the future.
If we’re going to take on debt, we at least should demand investments that will commercialize and deploy clean energy technologies and artificial intelligence. Just as NASA’s space program gave rise to new businesses, so can COVID-19 stimulus dollars create new technologies and fight climate change.
The ultimate focus, though, must be on helping Americans achieve their full potential and build long-lasting careers. Bailing out billionaires who overinvested in the stock market cannot be our sole response to this crisis. We also must help 20-year-olds build a better nation for them and us.