Progressives Shouldn’t Be Asked to Accept Long-Term Domination from Big Corporations and Wall Street in Exchange for Humanitarian Assistance

On May 12, 2020, House Democrats introduced the HEROES Act, the latest legislation to respond to the coronavirus crisis. Like the CARES Act, the HEROES Act encourages, rather than constrains, the consolidation of corporate power that is at the root of so many of our economic and social challenges. Congress should immediately revise this misguided proposal to remove harmful giveaways to corporations and the wealthy and provide structural solutions that systematically empower workers, consumers, small businesses, and communities, while also prioritizing an aggressive humanitarian response.

To be sure, the HEROES Act includes important programs, such as aid to states and localities, unemployment insurance, nutrition assistance, and hazard pay. But without complementary measures that constrain corporate power, additional aid to workers, consumers, and small businesses will ultimately end up in the hands of banks, monopolies, and big landlords, creating a society that is even more unequal and undemocratic. 

Relatedly, thanks to decades of deregulation and privatization, America lacks institutions capable of adequately and equitably promoting both public health and economic stability and security. This has presented a false choice: protect public health or keep the economy shuttered. Now is the time to begin rebuilding the underlying institutional capacity necessary to minimize both the loss of businesses and jobs and the loss of life.

Consider the following examples, all of which followed or were exacerbated by the CARES Act:

• Amazon has aggressively undermined attempts to secure its workers’ health and safety, operating as an essential service even as the company forces its employees to expose themselves to coronavirus and punishes those who speak out. At least 600 Amazon workers have gotten sick.
• Meatpackers created a health and food security crisis by abusing workers and suppliers and were bailed out by the president for doing so, even as they continue to cause some of the largest coronavirus outbreaks across the country. As of April 27, nearly 5,000 workers in meat and poultry processing facilities have gotten sick or died.
• Private equity funds that own hospitals and emergency room staffing companies have been furloughing doctors and nurses or cutting their pay, even as these same workers put their own lives on the line to fight the coronavirus pandemic.
• Large banks have proven incapable of lending effectively using the Paycheck Protection Program, showing favoritism to large clients, even as small and community banks have attempted to serve their communities more comprehensively.
• Boeing and GE permanently laid off tens of thousands of workers even as they benefit from the Federal Reserve’s credit support programs.

The HEROES Act neither addresses nor prevents these kinds of corporate abuses. In fact, it bails out corporate lobbyists, debt collectors, and mortgage servicers. It funnels money to monopolistic health insurance companies instead of expanding public capacity. It places no limitations on predatory mergers that will hurt workers, consumers, small businesses, and communities. And it places no constraints on private equity firms using public money from the Federal Reserve to cherry-pick corporate assets on the cheap.

In short, the powerful are using the pandemic to gain even more control over an economy that is already hard-wired for inequality and exploitation, while we fail to rebuild the long-term institutional capacity we need to support both public health and economic stability and security. 

How Could the HEROES Act Be Fixed?

Below, we lay out provisions that should be removed from the HEROES Act and additional measures that would help build structures and institutions that would empower workers, consumers, small businesses, and communities.

• Instead of expanding health care coverage through Medicare, Medicaid, or Tricare, the bill would fund COBRA. This enormously expensive and inefficient program will transfer taxpayer dollars to health insurance monopolies while offering nothing to millions of Americans whose jobs never offered health insurance to begin with.
• The bill makes Paycheck Protection Program funds available to 501(c)6 trade associations, the institutional vehicle for corporate lobbying, and to 501(c)4 trade associations, the institutional vehicle for dark-money political spending. These provisions should be removed.
• The bill extends federal aid to mortgage servicers, the thinly capitalized entities at fault for the foreclosure crisis. Since the financial crisis, these servicers have aggressively fought attempts to reform their industry to make their business safer. This provision should be restructured so that servicers are either nationalized or aggressively regulated.
• The bill establishes a Federal Reserve credit facility for debt-collectors, providing low-cost, long-term, taxpayer-funded loans to prop them up until debt-collection forbearance programs expire. This provision should be removed.
• The bill establishes a Federal Reserve credit facility for landlords, which will provide cheap money to large institutional investors like AIG, JPMorgan, and UBS— and weaken Section 8 protections for low-income renters. This provision should be removed.
• The bill includes a repeal of the cap on the State and Local Tax deduction, which primarily benefits the wealthy. This provision should be removed.

Do More to Protect Workers and Small Businesses:

• Fund direct payroll support and Paycheck Protection Program: Making sure that workers and employers retain their relationship is critical in this pandemic. Congress should provide direct payroll support through a program like one proposed by Rep. Pramila Jayapal and Sen. Josh Hawley, or implemented in countries such as the United Kingdom or Germany. Moreover, Congress should continue to recapitalize the PPP as needed, shift it towards grants with clear guidance on how to do so, and take measures to ensures equitable access for small businesses with fewer than 25 employees, such as Rep. Ayanna Pressley and Sen. Kamala Harris’s Save Our Streets Act.
• Continue to exclude private equity from the PPP program: Congress has successfully held the line against private equity firms and other financiers extracting economic relief funds. We urge Congress to continue to maintain the “affiliate” rule in future relief packages to exclude private equity-backed companies from accessing funding meant for small business owners and their employees.
• Repeal Trump’s meatpacking executive order and address abusive agriculture monopolies: President Trump’s reckless decision to use the Defense Production Act to keep meat production plants open jeopardizes the health and safety of half a million workers in the meatpacking industry. And it will only lead to further consolidation in the meat production system—even though decades of consolidation created this public health and workplace safety crisis in the first place. Congress should repeal the executive order and use the next recovery package to restructure the industry. And it should direct the Department of Labor to develop strong occupational health and safety standards specifically for the meat and poultry processing industry—without leaving these standards to Labor Secretary Eugene Scalia’s discretion.

Keep Money from Wall Street and Monopolistic Corporations:

• Protect the public from pandemic-profiteering private equity funds: Congress should seek to prevent private equity executives from looting the bailouts. Enacting the Stop Wall Street Looting Act as part of the next relief package will ensure private equity firms share responsibility for the companies under their control, preventing them from capturing all the rewards of their investments while insulating themselves from risk. It would also bar dividends for two years post-acquisition and reform the bankruptcy process to prioritize worker pay and pensions while incentivizing job retention.
• Enact a temporary merger moratorium: The CARES Act bailouts supercharged big corporations’ and Wall Street’s ability to prey on and abuse small businesses and the communities they support. Including the Pandemic Anti-Monopoly Act in the next relief package will ensure this national crisis does not become a monopoly free-for-all and prevent big corporations from further consolidating their economic and political power.
• Strengthen and elevate antitrust scrutiny: In addition to barring future mergers, Congress needs to create a mechanism for rolling back corporate concentration already fueled by the pandemic. Congress should establish an independent, no-fault commission to break apart or regulate essential businesses that have become stronger and more concentrated due to the coronavirus. The commission would help structure open and competitive markets, without decades of litigation or the need to prove wrongdoing.
• Bar oil and gas company bailouts: Thanks to the efforts of industry lobbyists, at least 90 fossil fuel companies could get bailouts from Federal Reserve facilities created by the CARES Act. Congress should enact the ReWIND Act to ensure that taxpayer funds intended for struggling businesses are not used to bail out oil and gas companies that made poor investments before the pandemic.
• Reverse the reckless tax cut in the first CARES Act: In the original CARES Act, Republicans inserted an easy-to-overlook, $170 billion tax break long sought by wealthy real estate investors. Congress should immediately reverse this outrageous give-away.

Build Institutions to Lead a National Recovery:

• Establish a national investment authority: Congress should create a new investment authority to marshal public resources and help structure the post-pandemic economy. A Reconstruction Finance Corporation-like institution would allow businesses to go through quick reorganizations without too much damage to owner equity or creditors who had extended commercial loans. This is the government bank that could manage industries that must be temporarily nationalized, such as mortgage servicing or Boeing.
• Reverse Federal Reserve secrecy provisions from the first CARES Act: The first CARES Act included a provision to eliminate open meeting and record-keeping requirements at the Federal Reserve. This should be reversed. Given the track record of oil and gas lobbying for Fed loans, and the Fed granting such lending, it is obvious the Fed must be constrained with public scrutiny of its actions. Even without such a clear example of political favoritism, the Federal Reserve is now our central economic planning unit, so transparency will legitimize its activities.