Posted on 03/21/2020 7:25:06 AM PDT by Kaslin
As members of Congress debate the terms of the trillion-dollar-plus coronavirus relief package for businesses and individuals, they would do well to remember our recent history.
Most people in professional Washington hate the populist era we are going through. The populist period exists because Americans already feel like their elected officials are more responsive to large corporate interests than to the individuals who elected them. This played out big-time after the Wall Street bailouts fueled the tea party on the right and Occupy Wall Street on the left.
People on the left and right agree that some government assistance is needed to avoid an economic catastrophe. On the individual level, many people with little savings have already lost jobs. Many more will. The best policy is likely just direct payments from the government targeted as quickly as possible to those most in need. It's going to cost a ton and comes with a huge downside down the road, but it's also hard to argue that we don't need it. That's actually the easy part.
On the corporate side, things get more complicated. People see empty airports, empty restaurants and closed-down businesses. They know many industries are suffering. People also don't want to throw our economy into a crisis. They will support a bailout, but if they later learn that the corporate world got anything that looks like a sweetheart deal out of this crisis, the political retribution will be overwhelming. Go ask the many members of Congress who lost seats in the wake of the financial crisis bailout. That was before this populist era even started.
Right this minute, there are teams of lobbyists trying to get all they can for their industry clients. It's their job. They are good at it. They understand the complicated issues more than anyone else, and they know the members of Congress and their staffs.
Sitting across the table will be the members of Congress (or, more likely, their staffs), who are supposed to represent the American taxpayers during the ongoing negotiations. They share the same worldview. Together, they will define the terms of the bailout, and it will likely be so complicated that it may take weeks, or even months, for the rest of us to know exactly what they did. Too many taxpayers feel like their elected officials are not looking out for their interests first at moments like these. The deals often come out looking too sweet for politically connected companies. If that happens, we will be saying hello to our first socialist president sometime down the road.
There are also sound substantive economic reasons for Congress to responsibly structure the coronavirus relief. We enter this crisis already having a huge debt problem on our hands. There is a strong policy case to be made that our exploding debt is the greatest long-term challenge our country faces. We are most likely burdening our coming generations with a weaker country in a way no prior American generation ever has. Although we need relief now, we must structure that relief in a way that minimizes the long-term hit to our country's finances.
For these political and economic reasons, members of Congress from both parties should be able to agree on the following basic requirements for the coming bailout.
The money should come as a line of credit that can be drawn down as and when needed by eligible companies up to a certain maximum. The companies that take these loans should have to pay interest kicking in at some defined point and increasing over time as our economy recovers. The government credit needs to be senior to any other credit that the accepting company has issued. In other words, if things go bad, the American taxpayers are the first who should be paid back with whatever assets remain. The credit needs to be backed by equity in the borrowing companies. This may dilute the current shareholders, but that's only fair. The economic pain we may face going forward must be felt by shareholders first. They reap the profits during good times. If you believe at all in markets, then they have to be the first to feel the pain on the other side.
Finally, there has been a lot of debate about stock buybacks and executive compensation. Those who believe in free markets likely view these sorts of issues as best decided between shareholders and management of the companies themselves. It's annoying to see mediocre CEOs walk away with shocking compensation packages after mismanaging their companies. It's also annoying that these huge companies buy back their own stock to increase the stock price when they could be using those funds to invest for the future or prepare for a catastrophe like the one we are now facing. On both these matters, those of us on the free market side generally feel that it's the shareholders money, and if they want to waste it, that's their problem. If you don't like these strategies, don't buy the stock.
Once companies turn to the American taxpayers for a bailout, however, things start to change. Restrictions on compensation and stock buybacks are reasonable to the extent that they protect the taxpayer. Put another way, it's hard to plead for free market fundamentalism as you ask for a taxpayer bailout. More importantly for members of Congress, as a political matter, if they don't make it clear that they are putting taxpayers first at every moment during this crisis, they are likely to pay a huge price in future elections.
No different than the freepers who suggest anyone who dies of this ‘had it coming’ because they were overweight or had had childhood asthma.
It's not just who you think of as the poor either. My husband volunteers doing financial coaching at his church. It's not uncommon for these people to have less than a $1000 in the bank and 100k in debt, just credit card debt.
Maybe for a little while, but people like to go out and get different types of food.
My wife and I are suckers for Italian Food, no matter how hard we try we can’t make it like a good Italian Restaurant.....
That's also very bad.
Why can’t we rename this the “CHINESE VIRUS RECOVERY FUND”.
Those who Profit or Price Gouge are exempt from help, those young things partying on beaches etc are exempt. The Insider Traders have to give every cent they earned to the fund. The 4 congress critters forfeit half their salary for the year to the fund, the 3 elected ones get busted to Freshman status, Security clearance pulled. The 1 GOP female has been on the job 3 months is a Governor APPOINTEE who can recall her. Appoint someone better.
College loans deferred until a later date, Those who don’t go back still have to pay the loan up to the time the college shut down and offered no online courses. School closed left you hanging, refunds what is left of semester.
NO MORE CHINESE DRUGS. I’m tired of the crappy reactions and risk of cancer.
Bring all our Manufacturing and Pharmaceuticals back under US regulations, with some changes at FDA to make them safer. Remove all TV, & magazine ads. Remove the constant commercials running in doctor’s offices along with germ ridden magazines.
Midwife programs for rural areas. Want lower student loan debts, serve 5 yrs in rural areas NO D grade docs. Bring back In house testing for hospitals.
Why can’t we rename this the “CHINESE VIRUS RECOVERY FUND”.
Those who Profit or Price Gouge are exempt from help, those young things partying on beaches etc are exempt. The Insider Traders have to give every cent they earned to the fund. The 4 congress critters forfeit half their salary for the year to the fund, the 3 elected ones get busted to Freshman status, Security clearance pulled. The 1 GOP female has been on the job 3 months is a Governor APPOINTEE who can recall her. Appoint someone better.
College loans deferred until a later date, Those who don’t go back still have to pay the loan up to the time the college shut down and offered no online courses. School closed left you hanging, refunds what is left of semester.
NO MORE CHINESE DRUGS. I’m tired of the crappy reactions and risk of cancer.
Bring all our Manufacturing and Pharmaceuticals back under US regulations, with some changes at FDA to make them safer. Remove all TV, & magazine ads. Remove the constant commercials running in doctor’s offices along with germ ridden magazines.
Midwife programs for rural areas. Want lower student loan debts, serve 5 yrs in rural areas NO D grade docs. Bring back In house testing for hospitals.
Well Kusdlow says it’s closer to 2 Trillion or more so I guess it will change things for two forevers.
Plus a $700 trillion QE and $1 trillion Fed “vehicle.” So we’re knocking on the door of $4 trillion after one week of Kung Flu Panic. Not counting stock market and business losses of course.
If Obama was in charge our freedoms would be lost forever. “Never let a crisis go to waste “ would turn America into a third world dung heap.
In Britain the government is paying 80% of wages! Will it happen here? It’s close to that. Under sanders it would have happened.
It’s going to happen here. When 25%-30% unemployment is reported the people will demand it. We hit 25% unemployment in the Great Depress. It’s easy to see a service industry heavy economy of today getting worse than that.
At least the money was paid back by the banks over time. The flaw in that were the failed banks that had to be covered or whose assets were sold for way below market value to other banks.
At least the money was paid back by the banks over time. The flaw in that were the failed banks that had to be covered or whose assets were sold for way below market value to other banks.
I agree but much of the problem is these people with the debts also have zero money set aside and, many, now no or greatly reduced income.
It’s not just who you think of as the poor either. My husband volunteers doing financial coaching at his church. It’s not uncommon for these people to have less than a $1000 in the bank and 100k in debt, just credit card debt.
Look to the government for help or make some tough decisions?
“When exactly did Rome end?”
Which one?
L
Suddenly being a single mom aint so cool, or having a disjointed family, or eating yourself into a diabetic coma, or relying so heavily on medications or having the 4500 sq ft house and BMW but you can't miss a paycheck.
That said, a lot of these people will start running out of food and soon. I mean, seriously, many of our schools are still making lunch bags for these people to go and pick up to to feed their kids.
Well that what his plan was, and if he had been allowed to run for another 4 year term, he would have succeeded.
Exactly
I remember back in 9/11/2001 days when we’d joke about Helicopter Ben. That was a little helicopter.
The Kung Flu Panic is easily going to cost $10 trillion. Add in bailouts of bankrupt blue states and you are looking at many more trillions cost. Hard to see the economy recovering under the weight of those bills.
Bureaucracy Kills: A Lesson From Rome
Who needs WuFlu.
The Fall of Rome cannot be identified with any single battle or revolution. It was a slow process, extending to all fields of life, including literature and art; and it is intimately associated with the substitution of a centralized oppressive imperial bureaucracy for the former local autonomy and diversity, with its wider scope and opportunity for individual initiative and accomplishment.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.