Mar 30, 2020
In the middle of the national shutdown due to the coronavirus pandemic, the passage of Congress’s economic stimulus bill at the end of March was greeted with nearly unanimous praise from the news media and Congressional leaders alike. Supposedly the Democrats and Republicans in Congress, as well as the Trump White House, finally came together to save the economy and jobs.
That certainly is the most blatant lie told by a politician in a long time. Yes there are temporary extensions of meager benefit programs. Yes there is some money supposedly for states battling the coronavirus. But first of all, the bailout includes 500 billion dollars for the corporations.
Targeted for massive cash infusions by the government are airlines, big hospitals, cruise ship operators, retail stores, restaurant chains, hotel chains, big agricultural growers, ranching companies and distilleries, among others. Also included in the bill are further tax breaks and subsidies to many other companies. It’s obvious this 500 billion is a snow job.
Not mentioned in all the hoopla is all the aid to Wall Street. Buried in the bill, Congress gives the Federal Reserve the express authority to buy up trillions of dollars of toxic private debt from big banks and financial institutions. This includes corporate debt, as well as commercial and home mortgages. Congress also extends government guarantees to trillions of dollars of more bad loans as well as certain private investment funds.
Taken together, between the cash infusions, tax breaks, and enormous bailout of the financial sector, the cost to the government comes to at least six trillion dollars. But the news media didn’t bother to pick up on this small “detail.” And neither did any of the politicians. Only White House advisor Larry Kudlow let the cat out of the bag on the night the bill passed, bragging that the bailout is actually a six trillion dollar deal.
However, the big speculators sure knew it already. With trillions in government money set to pour into corporate coffers, the stock market suddenly did an enormous U-turn and skyrocketed upward, after a month-long historic collapse!
Of course, all the justifications for this latest massive giveaway to the biggest, wealthiest companies, banks and others are pure hogwash. No, the giveaways will not stimulate either economic or employment growth.
Recent history proves it. In 2008, when the collapse of the mortgage market led to a generalized financial crisis, the government carried out a massive bailout of the banks, under the guise that this would allow the banks to save homeowners. Instead, the bailout juiced bank profits, while the banks foreclosed on over two million households.
And in 2017, before Congress passed a massive corporate tax cut worth over 200 billion dollars per year, they all promised that there would soon be a boom in investment and jobs. But the exact opposite happened. Once the corporations got their tax breaks, corporate investment shrank, while the job market remained lousy. Instead, once the companies got all of their tax savings, they simply funneled them to their biggest investors through massive stock buybacks and increased dividends. And they went even further than that, taking on even more debt simply to give it all away to their capitalist owners.
Government handouts and bailouts to corporations and banks only profit the capitalist class, who use that money to carry out wild speculation, bringing about ever more destructive crises.