Tuesday, March 24, 2020
The Coronavirus Bailout Stalled. And It’s Mitch McConnell’s Fault. By The Editorial Board
This article has been updated.
Senator Mitch McConnell of Kentucky failed to do his job this weekend. As the economy spiraled downward, Mr. McConnell, the Senate majority leader, said he would produce a bipartisan bailout bill authorizing an infusion of desperately needed aid.
Instead, Mr. McConnell emerged on Sunday evening with a bill that would provide a lot of help for corporate executives and shareholders, and not nearly enough for American workers. It would let the Treasury Department hand out hundreds of billions of dollars to corporations — potentially including businesses owned by President Trump — without requiring a binding commitment to preserve jobs and wages. And the bailouts could remain secret for six months.
Senate Democrats, refusing to play along, blocked the bill in a procedural vote on Sunday night and again on Monday afternoon. But responsibility for the deadlock rests squarely on Mr. McConnell’s shoulders.
The Federal Reserve unveiled a new set of needed programs to support the economyon Monday morning, expanding its “whatever it takes” crisis response. The operational independence of the central bank is once again proving its value, but Congress must resist the inclination to treat the Fed’s actions as an alternative to fiscal policy. Instead, senators must emulate the Fed’s urgency and authorize a set of supersize economic rescue programs.
There is a clear path forward. The proposal backed by Senate Republicans includes a number of critical elements that enjoy broad support, including a $350 billion rescue fund for small business and a plan to send cash, totaling $250 billion, to most households.
But the urgency of the moment does not justify the egregious misuse of public resources.
The basic formula for helping businesses is straightforward. The federal government needs to provide the money that companies are unable to earn or borrow because of the pandemic. In exchange, companies need to maintain employment and wage payments. That’s the necessary grand bargain — the standard any bailout package should be required to meet.
The Republican bill would let small businesses borrow up to $10 million, and those loans would then be forgiven for any business that avoided cuts in jobs or wages. That’s a fair deal.
But Republicans are proposing different rules for big businesses. Recipients of government bailouts would be required to avoid job or wage cuts only “to the extent practicable” — a loophole so large it amounts to a lack of any meaningful obligation.
The bill would create a $500 billion bailout fund for corporations. Most of the money would backstop the Federal Reserve’s broad-based emergency lending programs, but the Treasury would also get $75 billion for targeted bailouts. The Treasury undoubtedly needs resources and flexibility to confront the crisis. But it would be unpardonable folly for Congress to grant too much latitude to an administration that has repeatedly proved itself to be a careless steward of public resources. To take just one example, the bill would let the Treasury bail out hotels owned by Mr. Trump on whatever terms his administration might care to dictate — and Mr. Trump refused on Sunday night to pledge that he would refrain from taking any federal aid.
Senate Democrats want more from Republicans in other areas, too. They are pushing to deliver more funding for health care, and for state and local governments, and to expand unemployment benefits. These are worthy goals that deserve bipartisan support. Bringing the spread of the coronavirus under control remains the single best way to limit damage to the economy, and health care providers and local governments are on the front lines and running low on money. The need extends beyond public health: The crisis threatens the viability of critical public services, including mass transportation systems. And expanding benefits for unemployed workers would provide aid to those who need it most.
In each of these areas, however, the path to a compromise is straightforward, and something is clearly better than nothing. This is the third coronavirus bailout bill. There will be a fourth.
But what is the point of passing a bailout that does not protect jobs and wages?
Republicans can quickly resolve this standoff by accepting the necessary changes to protect the public interest. Alternatively, the Senate could table the big-business bailout. Boeing, the major airlines and other companies clamoring for help simply do not need federal assistance with the same urgency as small businesses and individual workers do — particularly because the Fed in recent days has stepped in to help big companies borrow money.
Or the House speaker, Nancy Pelosi, could help Mr. McConnell do his job by passing a bill containing the necessary compromises and sending it to the Senate for approval.
The federal government is already lagging badly in its response to the coronavirus crisis. People are losing their jobs, and their businesses, with every passing day. It is time to act.“