This time, worker protections should be part of any deal
J. Patrick Coolican, the editor of the Minnesota Reformer did a nice job in his daily newsletter yesterday of summarizing some of the inconvenient truths that should be pointed out as the Trump administration and Republicans in Congress quickly advance plans for massive injections of debt-financed government spending to aid the flagging economy.
As Coolican also notes, Sen. Elizabeth Warren and others are absolutely right when they argue that impending corporate bailouts should come with major conditions:
With all the talk of bailouts of airlines etc., here’s a must read from Tim Wu of the New York Times on American Airlines, which enters this crisis after a period of massive profitability:
“There are plenty of things American could have done with all that money. It could have stored up its cash reserves for a future crisis, knowing that airlines regularly cycle through booms and busts. It might have tried to decisively settle its continuing contract disputes with pilots, flight attendants and mechanics. It might have invested heavily in better service quality to try to repair its longstanding reputation as the worst of the major carriers. Instead, American blew most of its cash on a stock buyback spree.”
And here’s what we should demand in return:
“We cannot permit American and other airlines to use federal assistance, whether labeled a bailout or not, to weather the coronavirus crisis and then return to business as usual. Before providing any loan relief, tax breaks or cash transfers, we must demand that the airlines change how they treat their customers and employees and make basic changes in industry ownership structure.”
Sen. Elizabeth Warren says bailouts should come with these conditions:
1. Maintain payroll;
2. enact $15/hr minimum wage by one year after emergency ends;
3. no buybacks, dividends, executive bonuses for minimum three years;
4. must turn over a board seat to workers.
This is not a time for cheap partisan points, but the public needs to be aware of how far Republicans have come on bailouts. I remember the memoir of David Stockman, who was President Ronald Reagan’s first budget director, and his frustration that Reagan caved on the Chrysler bailout even though the consistent free market position is to let firms fail.
Many Republicans were willing to let the economy crash into a depression during the financial crisis rather than bailout Wall Street and the auto companies, especially beginning Jan. 20, 2009. It was a principled position, if shortsighted and callous.
But we should remember that now as they keep upping the ante on a larger and larger deficit financed aid package that will go directly to Americans and also bail out certain industries.
The $1,000 checks proposed by leading Republicans and supported by the White House is an especially galling case. With unemployment skyrocketing as the result of a financial crisis he inherited, President Barack Obama put forth a stimulus package that was 40% tax cuts. It garnered just three Republican votes in the Senate. Imagine what the GOP response would have been if Obama said we should send every American $1,000 per month for three months?
Oh the wails of socialism that would cry out on Fox News. After refusing to support any stimulus, Republicans continued to push austerity fiscal policy for years. And it wasn’t just fiscal policy. Here’s then-Texas Gov. Rick Perry, who was once a frontrunner for the GOP nomination in 2011, on then Fed Chair Ben Bernanke, whose academic specialty is the Great Depression and it’s fair to say knew what he was doing:
“If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous in my opinion.”
Where are these monetary hawks now, with the Fed slashing the rate to zero? Why the change of heart? Have they realized the error of their ways? Was it motivated reasoning that led them to the wrong conclusions? Or were they trying to sabotage Obama’s presidency?