To: Interested Parties

From: American Economic Liberties Project

Reacting to the McConnell Collapse: People and Rent Now, Corporations Later

On Sunday, Mitch McConnell put forward a large multi-trillion dollar bill to take advantage of the Coronavirus crisis. It was a grab-bag of pro-corporate, non-urgent priorities that do not belong in a direct response.

With the bill’s failure, there is an opportunity to strategically reset the underlying parameters of the debate and secure a legislative approach that puts families, communities, and small businesses first — and addresses corporate welfare later.

This means shifting the debate away from conditions for corporate bailouts and using Wall Street’s efforts to profit off a pandemic and public outrage at practices like stock buybacks to demand that corporate bailouts be stripped out of the initial legislative response altogether.

The advantages of this approach are borne out by both policy and political realities.

In terms of policy, it’s important to understand that the underlying dynamics are very different from the 2008 crisis. The financial crisis centered on behavior on Wall Street and spiraled out to the rest of the economy; the Coronavirus crisis is first and foremost a public health problem.

In other words, unlike in 2008, corporate bailouts and Wall Street can wait. The Federal Reserve is printing trillions of dollars to keep large financial institutions and big businesses afloat, and it can continue to do so for some time.

However, rent for tens of millions of Americans is due in eight days. Wall Street and everyone in the political world knows that the economy will not stop crashing until we fix public health infrastructure and can restart the real economy. People-centered solutions are set up to do so, but Wall Street-centered giveaways are not.

Sen. Joe Manchin, one of the Senate’s most conservative Democrats, explained his vote against the bill on the basis that it “fails miserably at protecting the people most impacted by COVID-19…It fails our workers. It fails our small businesses. Instead, it is focused on providing billions of dollars to Wall Street and misses the mark on helping the West Virginians that have lost their jobs through no fault of their own.”

In terms of politics, there is also a significant change from the 2008 financial crisis. In 2008, there were two important bills, the Fannie Mae/Freddie Mac and TARP bailouts, and that was the extent of Congressional legislating on finance until the massive Dodd-Frank reform bill two years later. We have gotten used to Congress passing extremely large packages and then doing very little for long periods of time, with courts interpreting the details. In practice, this meant that corporations got what they wanted immediately, while homeowners waited for aid that was promised but never came.

The scale and scope of this crisis, however, means that Congress will be forced to pass many different laws dealing with supply chains, public health infrastructure, aerospace and travel, and so forth. Just fixing Boeing, for instance, with its massively complex dysfunction across different lines of business, will take a significant amount of time and focus. The failure of McConnell’s bill shows his strategy of blocking all legislation except in extremely narrow cases that privilege corporate aid is over. Moreover, opportunity exists for bipartisan cooperation on grants to small businesses and cash payments to families, which several Republican Senators have proposed and support.

The single most important move now is to demand that Congress take care of people first and address corporate bailouts later.

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Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.