Unsanitized: Three Ways to Look at a Bailout

Plus a ground report from a hospital. This is The COVID-19 Daily Report for March 18, 2020.

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First Response

The Senate will likely pass the second coronavirus emergency bill today, after Rand Paul’s objection is disposed with, and then the real work begins. The third bill will comprise the economic stimulus for the nation, and with jobs at risk for over half of all Americans—an incredible thing to write—this needs to be a bazooka.

It also needs to be well thought-out. The bailouts in 2008 were sold as the only way to prevent a second Great Depression, which wasn’t entirely true but used as a device to get Congress hooked in. Last time the Congressional bailout (which was more of a cover for the Federal Reserve bailout) and the stimulus package occurred in different segments from different administrations. This time it appears to be all happening together, with the numbers soaring above $1 trillion.

During the last bailout, an ad hoc group of a few members of Congress and some outside experts that called itself the Skeptics Caucus questioned the bailout, and slowed it down enough that it had to be voted on a couple times, with theoretical help for homeowners added. (Longtime readers of mine know how that turned out.) This time, the Skeptics Caucus has assembled itself faster, though it’s a loose affiliation and it’s unclear whether there’s more than a toehold within Congress. “We have to stop these guys from stealing everything,” one skeptic told me.

For this group, and those who want to see justice in this time of crisis, there are three different areas of concern to think about. First you have the near-term economic pain of the country, which you can think of as the bailout for Main Street. Obviously there’s the concept of checks for everyone, which appears to be gaining steam as the quickest way to speed relief. There are objections to this approach as poorly targeted: if people are afraid to or just barred from spending, then giving everyone $1,000 doesn’t reach those who most need it (the newly unemployed and under-employed) with the most help. You could accomplish that with expanding unemployment benefits or a real medical and family leave benefit, not the hopelessly compromised one in the second emergency package.

Another way to keep people solvent is through moratoria: restrictions on evictions, foreclosures, utility shut-offs, auto repossessions, even a ban on parking tickets, as people in isolation can’t move their cars around in their neighborhoods. Most of that occurs at the local level, and many localities have been mandating these types of moratoria. The federal government can add a couple things. There’s student debt cancellation, which you could do by fiat at the Education Department or by putting everyone into income-based repayment and setting the coronavirus emergency income at $0.00 for the duration of the crisis. There’s also an idea to ban negative items to credit reporting during the crisis.

Next we have the bailout for corporate America, and we know that industries are coming for it: airlines, casinos, hotels, cruise ships. We put almost no strings on the financial bailouts, and plenty of people don’t want to see that happen again. Here are a multitude of ideas from Matt Stoller, Matt Bruenig, Sara Nelson, Dean Baker, and Elizabeth Warren. I’ll try to synthesize them.

First, where will the bailout money will go? Warren wants to force it toward maintaining payroll, with a ban on stock buybacks (96 percent of free run cash flow from the airlines went to buybacks in the past ten years), and years-long restrictions on dividends and executive bonuses. Baker wants caps on CEO compensation. Nelson wants an upholding of union contracts even if the companies touch bankruptcy. Stoller argues that no bailout funds should go to lobbying.

Second, there’s the question of what the United States will be buying with its bailout money. There’s a lot of talk about equity shares, whether voting shares or not. You could wipe out the shareholders, setting the stock to zero (we would hear a lot about the pension funds of working people who hold the stock in that scenario). And you could nationalize industries like airlines. The latter two make the equity shares look positively conservative.

The third bit is almost its own category, and that’s the bailout for the economy, to use a not-very-good phrase. The idea would be to use the bailouts to order structural changes to democratize the economy. Companies getting bailouts could be restricted from merging for five years, or they could be affirmatively broken up. Worker representation on corporate boards could be a string attached to a bailout. A guaranteed $15 an hour minimum wage for employees of any bailed out company. Shareholder approval for political donations. The government buys up cheap stock and holds onto it to maintain a social wealth fund. A more egalitarian vision becomes the conditions for the bailouts, a way to reset a stronger economy after the pandemic than before.

These are a lot of blue-sky ideas, and of course, Mitch McConnell and Steven Mnuchin and Donald Trump will have a say here. But Nancy Pelosi and the Democrats need to realize their power, as no less than Michael Grunwald explains. Trump must deliver quick relief to an economy hurtling toward oblivion. It’s an election year. Some united front of skeptics can make real change, necessary change. And it’s not just opportunity-in-crisis stuff, it’s vital to make sure the crisis in our country can be lifted, permanently.

Vital Stats

The New York Times lists 5,881 U.S. coronavirus cases, up from 4,482 yesterday (with 107 deaths). West Virginia got its first case, so now it’s in all 50 states. Johns Hopkins University has it at 6,519 (115 deaths). The COVID-19 Tracker shows 5,993 cases (100 deaths), with 58,536 tests completed, up from 49,423 yesterday. Infections will continue to multiply as more get tested; we’re finding more cases as much as generating them.

Watch This

Thanks to everyone who joined our virtual event yesterday with the American Economic Liberties Project. We had close to 250 participants at the peak. Here’s video of the whole discussion, with Congressman Mark Pocan (D-WI), Sarah Miller and Lucas Kunce of the Economic Liberties Project, and Rush Doshi of Brookings.

Also I was on KPFA on Monday talking about the crisis. Listen here.

I should add that all of our coverage of this crisis is available at prospect.org/coronavirus.

The View from Your Window

This is from a dialysis nurse at a large hospital in Pennsylvania.

It's a weird nervous energy in the hospital. We don't work directly all day with the Covid-19 patients. But they keep showing up in the different units and some of them get dialysis. There are not enough of the approved PPE masks, and we know that. There is about a quarter of the usual traffic in the hospital every day. Our hospital team keeps people updated and is handing out personal safety equipment like safety glasses for the transport workers, who move every patient from room to procedure room, from the ER to a hospital unit. They have safety glasses and gloves but no masks sometimes. The transport staff scoff when I tell them to wash their hands with soap and water before moving my immunocompromised patients.   

Nurses used to make jokes, but the jokes have abated now. An outpatient patient, who a week ago was joking "haha, it's not like the Spanish Flu, everyone needs to calm down, ya damn millennials" is now wearing a facemask, visibly scared. Mostly you can feel the fear from the cognizant patients. The ones who came in for a dangerously high potassium level in their blood stream, or their kidneys picked this week to finally kick the bucket. They put on this face of being normal but you can tell in how they watch the TV intently, watching the handwashing more than looking into the nurses' eyes when we start their dialysis.

I worry about the barely conscious or mentally confused patients. They are big ripe targets for neglectful or ignorant staff to transfer the virus. They don't stand a chance, is how I think about it. I try explaining as much health and handwashing safety and strategies to the patients who are awake and alert.  

The hospital has orders to keep the Covid-19 patients on what's known as airborne and droplet precautions at the moment. That means a room that's closed off from the rest of the nursing unit with a negative pressure in it; so opening the door will suck in air, not blow it out into the hallway. Most units have one or two rooms like that. The hospital knows this and has ominous directions to switch to droplet precautions only if too many cases show up. Those patients in droplet isolation can be in regular hospital rooms. It's gonna get bad. 

Right now our protocol at home is, I enter the basement, strip naked, wash my hands and put all my clothes directly into the washer, wipe down the door handles and surfaces I touch and leave everything I don't need in the basement on the floor after I Lysol it. Then I walk directly to the shower. Then do the process in reverse when I leave in the morning for work. 

I read about Italy and think that it's only a week or two until it's that crazy where I am. I have no frame of reference for knowing a life-defining period of history is just days away, and no one can stop it. Mostly I ask for everyone to, for the love of god, stop moving around. Stay in place. Especially young people. We are vectors who are asymptomatic for the elderly, we are the danger. The South Korean and Italian testing results show that. 

Tell me about how you’re dealing with COVID-19 by emailing me at ddayen-at-prospect-dot-org.

Today I Learned

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