Yuri Gripas/Abaca/Sipa USA via AP Images
K Street in Washington may be empty, but the lobbyists who work there remain on the job for their corporate clients.
First Response
The coronavirus bailout bill passed Congress and was signed into law yesterday. The House approved the package by voice vote, even though Rep. Bob Massie (R-KY), a libertarian, asked for a roll call and everyone was standing there. When society is unrecognizable in a few years, lots of House members can say they wouldn’t have voted for it, the way millions of people claim they saw Wilt Chamberlain’s 100-point game.
We’re only now learning what goodies were tucked into this bill. There’s an obscure tax change worth $170 billion to real estate moguls, along with other corporate tax breaks; an acceleration of approvals for “innovative” sunscreen products (L’Oreal, one of the beneficiaries of this, has a factory in Mitch McConnell’s home state of Kentucky); a reduction in capital requirements for community banks; a gift to for-profit colleges that get to keep federal loan dollars for students that drop out; a federal harbor-dredging directive that primarily benefits Mobile, Alabama shipping interests and their home-state advocate, Senator Richard Shelby; a six-month extension of abstinence-only education programs; and a $25 million bounty for the Kennedy Center. Even the Trump family business, barred in a showy way from big-business loans, could be eligible for small-business loans and grants under the bill, because of how it’s written.
But these aren’t the only ways in which corporate lobbyists have made their clients happy since the onset of the pandemic. Outside of legislation, K Street continues to rack up wins and fight for more.
Consider an interagency guidance from several bank regulators, which encourages banks to offer small-dollar, payday-style loans to borrowers suffering in the COVID-19 crisis. This is a green light to trap borrowers in debt and ring up fees in the process, which would create pure profit considering that banks are getting effectively free money from the Federal Reserve right now. Global banking regulators used the crisis to delay the implementation of additional capital requirements (in a crisis banks should probably have more capital, not less). Similarly, the Environmental Protection Agency used the opportunity of COVID-19 to waive enforcement on a significant number of laws, an invitation for industries to pollute.
This hasn’t stopped lobbyists from asking for more. Here’s the most hilarious example: a letter from the Plastics Industry Association to Health and Human Services Secretary Alex Azar, highlighting how single-use, disposable plastics are “the most sanitary choice” for food purchase and transport, in an attempt to demonize reusable bags as virus-laden. “We are asking that the Department of Health and Human Services investigate this issue and make a public statement on the health and safety benefits seen in single-use plastics,” reads the letter from the plastics lobby. Already New Hampshire has temporarily banned reusable bags, based on sketchy science mostly underwritten by the industry.
Then there are fintechs, the online lending firms, who have pronounced themselves “ready, willing and able” to assist small businesses. They could become eligible for the $350 billion-plus lending program in the bailout bill. A week earlier, the FDIC cleared a path for companies like this to get banking licenses, while nobody was paying attention.
Perhaps the most outrageous corporate maneuvering comes from Phialdelphia. Joel Freedman, a hedge fund manager, bought up Hahnemann University Hospital and closed it for the real estate last year. Now, additional hospital capacity is desperately needed everywhere. The city asked Freedman (who will benefit from the aforementioned real estate tax break) to re-open the hospital, and Freedman asked for $1 million a month in rent. The city finally broke off negotiations, and 500 beds remain inactive.
Just to the north of this, Easton Hospital, a for-profit facility owned by private equity network Steward Health (Cerberus Capital Management is the parent company), issued a deadline for a $40 million state bailout to remain open, shamelessly exploiting the crisis. Cerberus is a $50 billion private equity firm, squeezing a cash-strapped state that needs its hospitals open with infections increasing. It’s revolting.
But it’s also how America works, never tiring to find opportunity in a castastrophe.
Vital Stats
New York Times: As of this morning, 102,636 U.S. cases (85,381 yesterday), 1,646 deaths (1,271). Johns Hopkins University: 104,860 cases (86,012), 1,711 deaths (1,301). The death toll keeps rising exponentially, though Italy, with 9,134 deaths, remains well ahead of that pace. The COVID-19 Tracker shows 101,369 cases (82,234) and 1,593 deaths (1,197), with 645,669 tests completed (540,252). Testing capacity is way up, though the U.S. is likely still finding cases from weeks ago rather than tracking new spread. We’re at a level where contact tracing could be implemented, and hopefully it will in areas that haven’t yet sparked.
Antibodies or No?
It’s been one of the more mysterious questions surrounding the crisis; do sufferers who survive and eventually test negative become immune to COVID-19? The assumption of the scientific community has been yes, but a report in NPR yesterday seemed to question that. In Wuhan, China, epicenter of the outbreak, individuals who had tested positive and recovered have been re-infected with the disease. Worse, they appear to be asymptomatic, which means they could easily walk around among the population infecting others, despite their presumed immunity.
There are some possible explanations for this. They could have received a false negative at some point, meaning the virus never left them. These tests could be false positives, picking up residual bits from the prior disease.
But this uncertainty makes it hard to plan for the aftermath of the crisis. If we knew that survivors could not contract or spread COVID-19, they could become useful, going back to work or replacing front-line workers without fear of exposure. New York is working on an experimental treatment using the plasma of survivors, feeding their antibodies into patients. This has worked with infectious diseases in the past. Then there’s the ever-present theory of herd immunity, the idea that once a majority of people get COVID-19, spread will be cut off.
But if survivors can get re-infected, it calls into question these strategies. And it will prolong the crisis much further. We need sound science, not anecdote from a closed society like China, to understand this.
We Are United (For Six Months)
Thanks to the big airlines for making me look foolish. Yesterday I mentioned that the airline bailout, separate from the broader corporate bailout, had some good measures, thanks to strong union involvement. The airline bailout requires companies getting loans and grants to maintain payroll for six months. But in a statement yesterday, United CEO Oscar Munoz and President Scott Kirby announced that it “will not conduct involuntary furloughs or pay cuts in the U.S. before September 30.” The implication there is that they would make said furloughs and cuts on October 1, the first day they’re eligible to do so. Delta said the same thing, and both companies intimated they would eventually go forward with a smaller workforce. That they announced this on the very day their bailout passed suggests an unbridled shamelessness. But what’s anyone going to do about it?
Today I Learned
- Instacart workers angered by the lack of protections and hazard pay planning a nationwide strike on Monday. (Vice)
- Texas grocery chain H-E-B planned for the pandemic better than the federal government. (Texas Monthly)
- Trump signing statement suggests he can defy requests from the bailout inspector general. (New York Times)
- Fears that the small business lending program may be too little, too late. (Slate)
- Trump approval bounce starting to collapse as the crisis worsens. (Navigator poll)
- Bill De Blasio also rightly taking a hit. (New York Magazine)
