Bailout of US corporations expands while workers see little relief
Two weeks after the passage of the $2.2 trillion coronavirus pandemic corporate bailout bill, grotesquely misnamed the CARES Act, it is clear that it was only the initial shot in the funneling of countless trillions of dollars to the corporate-financial aristocracy that rules America.
While billions have already flowed to the corporations and banks, the limited provisions of the act that were touted by both parties as a boon to working people hit by the shutdown of much of the economy have yet to kick in, and for millions they likely never will.
The act includes $454 billion as a Treasury
backstop to enable the Federal Reserve to
provide some $4 trillion in cheap loans to
major corporations and banks, meaning the
real scale of the bailout—thus far—is more
than $6 trillion.
The vast bulk of the money allocated goes to covering any losses suffered by major corporations and fueling a new surge in the stock market. That it has succeeded, at least for the present, in lifting the markets is seen in more than 10 percent surge in the Dow over the past several trading days. This has occurred in the midst of an ever-rising toll of death and suffering from the pandemic and grim projections by bankers and economists of a depression-level contraction in the economy and a catastrophic growth of unemployment.
The expanding scale of the bailout and euphoria on the financial markets, alongside the economic and social catastrophe facing the broad mass of the population, demonstrates that the interests of the ruling class and those of the working class are diametrically opposed. The response of the ruling elite and its two political parties to the crisis has from the onset been single-mindedly focused on defending the economic interests of corporate-financial oligarchy, no matter the cost in human life.
In just the last several weeks, the Federal Reserve Board has announced at least 12 major measures to rescue the financial markets and backstop big business. These include:
- Two emergency interest rate cuts, bringing the benchmark lending rate back down to near-zero
- A pledge to purchase at least $500 billion in Treasury securities and $200 billion in mortgage-backed securities and to continue the program for “as long as needed”
- Nearly unlimited sums in short-term loans to 25 large financial institutions that control the market for repurchase agreements, or repos, including $1.5 trillion in the days following the announcement
- Foreign exchange swap lines, the purchase of short-term loans to US corporations in the commercial paper market, short-term loans to 24 large financial institutions, and, for the first time ever, direct purchases of corporate bonds and direct loans to corporations.
The Wall Street Journal quoted Jean Boivin, head of BlackRock Investment Institute, as saying, “The amount of measures taken in a short amount of time is surreal and unprecedented.”
“It’s kind of crazy how they’ve almost done as much in this week as they did in several months in 2008,” JPMorgan’s chief US economist Michael Feroli said last month. “Now they do have the advantage of just being able to dust off [former Fed Chairman] Bernanke’s playbook.”
Fed Chairman Jerome Powell gave a blanket
guarantee of unlimited funds to corporate
America, telling the “Today” show this week,
“Where credit is not flowing, we have the
ability in this unique circumstance to step in
and provide those loans.”
Now both the Trump administration and the Democrats have committed to provide an additional $250 billion to the so-called “Paycheck Protection Program.” That is the Orwellian name given by the two parties to the $350 billion program ostensibly established to provide government-backed loans to small businesses, many of which face bankruptcy as a result of the shutdown of much of the economy, and save the jobs of their workers over the next eight weeks. (That this is farcically inadequate, even if implemented in full, in the midst of the greatest economic crisis since the Great Depression, is self-evident).
The program is designed to provide a windfall for the big banks, which actually extend and administer the loans that are backed by the Small Business Administration (SBA). This ensures that Wall Street receives billions of dollars in fees and other charges.
On the eve of the official launching of the program last Friday, the law was amended, under pressure from the banks, to double the interest rate from 0.5 percent to 1.0 percent. Now the banks are demanding that the Fed buy any loans they extend to small businesses so as to remove them from their balance sheets. This will allow them to more freely engage in financial speculation and parasitic activities such as stock buybacks.
Moreover, the great bulk of the money will go not to mom-and-pop groceries, gas stations or eateries, but rather to large corporations that are included in the program. Thus, for example, the program was amended to include billion-dollar restaurant and hotel chains.
Small businesses desperate for cash are finding it difficult if not impossible to actually find lenders who will provide the loans, even if their applications are approved by the SBA. Banks, intent on maximizing profits, are turning down applications right and left.
Citigroup is refusing to participate. Bank of America is not accepting applications from companies that have borrowed from other banks. Wells Fargo says it has already reached “capacity.”
Hundreds of thousands of businesses have applied under the program, but to date only a handful have received any money.
Meanwhile, congressional Democrats are pressing the Trump administration to expand the $50 billion bailout of the airlines included in the CARES Act. This is, supposedly, another “jobs-saving” effort. Delta, for its part, has already laid off thousands of its employees.
There are no real restrictions in the law on how the corporations use the money they are given by the government. No one should doubt that the airline carriers, which spent some $16 billion over the past three years to purchase their own stock—in order to further enrich their top executives and major investors by driving up the stock price—will use their bailout money to do more of the same.
The Trump administration, for its part, is reportedly considering such additional “stimulus” measures as a payroll tax cut—which would starve Social Security of funding—a capital gains tax cut, 50-year Treasury bonds and a waiver that would relieve businesses of liability for employees who contract the coronavirus on the job.
Trump has moved to negate even the token congressional oversight of the bailout program mandated in the law. On Monday, he named a White House lawyer and Trump loyalist, Brian Miller, as inspector general of the Treasury Department’s $350 billion small business (“Payroll Protection Program”), and on Tuesday he removed Glenn Fine as head of the Pandemic Response Accountability Committee, tasked with monitoring the entire $2.2 trillion program. Trump replaced him with a “senior policy adviser” at US Customs and Border Protection, Jason Abend.
Workers are finding that the promised relief from the bailout law—which accounts for only a small fraction of the total cost of the measure—is uncertain if not entirely illusory.
The New York Times reported Monday that many Americans will not receive the promised relief check of $1,200, plus $500 for each child, until August or September. As many as 10 million low-income, childless adults who are eligible for the stimulus payment program may receive nothing because they have not filed tax returns. Millions more, including undocumented workers, prisoners, students and adult dependents are excluded.
As for the $250 billion expanded jobless benefit part of the law, which is supposed to extend state benefits for 13 weeks and add $600 a week in federal funds for up to four months, workers are finding it all but impossible to apply. Multiple state unemployment websites have crashed under the crush of millions of applicants, and scenes of hundreds of workers lining up, in the midst of a pandemic lockdown, to apply in person are proliferating around the country.
Fed Unleashes $2.3 Trillion of Aid to U.S. Economy
2:07
The Federal Reserve Thursday unveiled $2.3 trillion in additional aid to American households and businesses besieged by the coronavirus outbreak.
The Fed said Thursday that it is activating a Main Street Business Lending Program authorized by the CARES Act, the largest economic relief package ever passed by Congress.
Federal Reserve Chairman Jerome Powell said the Fed’s role was to “provide as much relief and stability as we can during this period of constrained economic activity.”
In a webcast from the Brookings Institution, Powell said that the Fed fully intended to use its powers “forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery.”
He said there was “every reason to believe that the economic rebound, when it comes, can be robust” because the economy was doing well before the virus hit.
Among the actions taken Thursday, the Fed activated a loan program for municipal governments, as well as additional support for the Paycheck Protection Program, which the Small Business Administration rolled out last week. The program provides loans to businesses with fewer than 500 employees.
The Main Street lending program “will make a significant difference for the 40,000 medium-sized business that employ 35 million Americans,” Treasury Secretary Steven Mnuchin said Thursday.
The government’s pay protection plan for small businesses is off to a rocky start. Businesses have had difficulty getting banks to provide the loans. The banks have said that the government has not made clear how they should process such loans, even what forms businesses are required to use.
The Fed announced the new infusion of cash on the same day the U.S. reported applications for unemployment benefits reached a staggering 6.6 million last week. That means more than one in 10 workers have lost their jobs in just the past three weeks to the coronavirus outbreak.
Trump Is Surrounded by Criminals
https://mexicanoccupation.blogspot.com/2019/11/the-fall-of-donald-trump-final-days.html
“The legal ring surrounding him is collectively producing a historic indictment of his endemic corruption and criminality.” JONATHAN CHAIT
Bankrupting America
|
Posted: Apr 08, 2020 12:01 AM
Two weeks ago, President Donald Trump signed the largest stimulus bill in U.S. history: more than $2 trillion.
For once, both Republicans and Democrats agreed. The Senate voted 96-0. The House didn't even bother with a formal vote.
At the White House, a reporter asked the president, pointing out that the bill includes $25 million for the Kennedy Center, "Shouldn't that money be going to masks?"
"The Kennedy Center has suffered greatly because nobody can go there," Trump responded. "They do need some funding. And look -- that was a Democrat request. That was not my request. But you got to give them something."
"Something" they got. The bill includes $25 million for Congressional salaries, $50 million for an Institute of Museum and Library Services and lots of other wasteful things.
Only a few politicians were wary. Rep. Thomas Massie complained that he wasn't even allowed to speak against the bill.
Rep. Alex Mooney asked: "How do you pay for it? Borrow it from China, borrow it from Russia? Are we going to print the money?"
Those are good questions.
Our national debt is already $24 trillion. Now it will jump, percentage-wise, to where Greece's debt was shortly before unemployment there hit 27%.
Greece was bailed out by the European Union. But the United States can't be bailed out by others.
How will we pay off our debt? That's the topic of my new video.
There are really three options:
1. Raise taxes.
2. Print money.
3. Default.
Let's consider each:
1. Raising taxes on rich people is popular. Even Michael Bloomberg wants "higher taxes on billionaires" like him.
But raising taxes on the rich often kills the wealth and jobs some rich people create. And it won't solve our debt problem. Even if we took all the billionaires' wealth -- reducing their net worth to zero -- it would cover only an eighth of our debt.
2. Some on the left now say, "Don't worry about debt, just print money!"
This belief, called Modern Monetary Theory, destroys lives.
Zimbabwe's dictator tried it. Eager to spend more money on wars, higher salaries for government officials and luxury for himself, he had his government print more money. But that meant more money pursued the same goods. That caused explosive inflation. Soon, a $2 bag of onions cost $30 million Zimbabwean dollars.
The more money the government printed, the more inflation there was. They eventually even issued 100 trillion dollar bills. Today those 100 trillion bills are worth about 40 cents.
Inflation wrecked lives in 1920s Germany, Argentina and Russia, and in modern-day Venezuela, too.
3. America could simply refuse to pay our debt. But that would betray everyone who invested in America, and bankrupt Americans who bought Treasury Bonds.
Defaulting on your debt wrecks economies, too. When Argentina defaulted, unemployment rose to 21%.
Once you're deep in debt, no option is good.
How did we get to this point?
Presidents have talked about the dangers of debt for decades. But they didn't deal with it; they just talked about it.
"We have piled deficit upon deficit, mortgaging our future and our children's future," warned Ronald Reagan. "We must act today to preserve tomorrow."
Bill Clinton said, "We've got to deal with this big long term debt problem."
Barack Obama called driving up the national debt "irresponsible" and then proceeded to do exactly that.
Donald Trump complained that Obama "doubled" the nation's debt. But now, under Trump's presidency and the new CARES Act, our debt will grow even faster.
This will not end well.
So far, the deficit spending hasn't done enormous harm. But it will. You can stretch a rubber band only so far, until it breaks.
Our debt will wreck our children's lives.
Yet, today politicians mostly talk about spending more.
John Stossel is author of "Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media." For other Creators Syndicate writers and cartoonists, visit www.creators.com.
Trump Is Surrounded by Criminals
https://mexicanoccupation.blogspot.com/2019/11/the-fall-of-donald-trump-final-days.html
“The legal ring surrounding him is collectively producing a historic indictment of his endemic corruption and criminality.” JONATHAN CHAIT
TRUMPERNOMICS FOR THE RICH…. and his parasitic family!
Report: Trump Says He Doesn't Care About the National Debt Because the Crisis Will Hit After He's Gone
"Trump's alleged comment is maddening and disheartening,
but at least he's being straightforward about his indefensible
and self-serving neglect. I'll leave you with this reminder of the scope of the problem, not that anyone in power is going to do a damn thing about it."
but at least he's being straightforward about his indefensible
and self-serving neglect. I'll leave you with this reminder of the scope of the problem, not that anyone in power is going to do a damn thing about it."
TRUMPERNOMICS:
THE SUPER RICH APPLAUD TWITTER’S TRUMP’S TAX CUTS FOR THE SUPER RICH!
"The tax overhaul would mean an unprecedented windfall for the super-rich, on top
of the fact that virtually all income gains during the period of the supposed
recovery from the financial crash of 2008 have gone to the top 1 percent income
bracket."
Why do Republicans want to bail out a top Democrat funder?
BECAUSE BILLIONAIRES AND BANKSTERS ARE ALL
DEMOCRAT BRIBESTERS!
A $50 Billion Airline Bailout for Warren Buffett
Why do Republicans want to bail out a top Democrat funder?
March 23, 2020
Daniel Greenfield
In March, as the Wuhan Flu was taking off in America, the Oracle of Omaha began buying airline stocks. Specifically, one of the wealthiest men in the country increased his stake in Delta Airlines to 11%.
Warren Buffett wasn’t oblivious to the coronavirus. The University of Nebraska Medical Center, not far from the black gated mansion of the billionaire, was on the front lines of fighting the outbreak. Passengers from the Diamond Princess cruise ship were being treated 5 minutes from his house.
What was Warren Buffett thinking when he shoved $45 million more in good money after bad?
Berkshire Hathaway now owns 11% of Delta Airlines, and between 8% and 10% of United Airlines, Southwest Airlines, and American Airlines. When you’re squeezed into a 17-inch airline seat, it’s because a major funder of Democrat political causes is extracting maximum value from his investment.
And now Airlines for America, whose major members include American, Delta, United, and Southwest, along with lesser airlines, want a $50 billion bailout. That includes $25 billion in grants and $25 billion in loans and tax relief. While the airlines warn about an economic catastrophe, Buffett isn’t worried.
Warren Buffett is no stranger to bailouts. In 2010, he penned a fake folksy New York Times op-ed thanking “Uncle Sam” from his nephew “Warren”. Later that year, he became a key propaganda figure in Obama’s push to raise taxes. By the winter of the year, Obama had placed the Presidential Medal of Freedom around the neck of the man who had fundraised for him and acted as his financial adviser.
As Peter Schweitzer noted, “It was only on September 23 that he became a highly visible player in the drama, investing $5 billion in Goldman Sachs, which was overleveraged and short on cash… Berkshire Hathaway received preferred stock with a 10 percent dividend yield and an attractive option to buy another $5 billion in stock at $115 a share… As he admitted on CNBC at the time, ‘If I didn't think the government was going to act, I wouldn't be doing anything this week.’”
Buffett seems to think that the government will act and bail out the airlines. Again. And this time for a lot more than the $15 billion price tag of the airline bailout that passed after September 11.
By 2009, Berkshire Hathaway had invested $26 billion in eight financial companies, including Goldman Sachs, Wells Fargo, and Bank of America, which benefited from around $100 billion in TARP money.
There’s no question that the Democrat billionaire is a very sharp investor. But there’s no reason for taxpayers to keep subsidizing his investments. As small businesses are forced to shut down and millions of people are put out of work, should they really be helping Warren Buffett get even richer?
Just as during the bailout, Buffett is betting that the government is going to back his investment.
If the major airlines were really about to go down, Buffett would be trying to get everything out, instead of getting in deeper. The billionaire is betting that Berkshire Hathaway will emerge in a stronger position after the bailouts and the surge of optimism that will follow the lifting of the coronavirus curfews.
He’s almost certainly right.
But if he wants to profit from the turnaround and the potential takeover of an airline, he should do the heavy lifting on his own. Berkshire Hathaway is sitting on $125 billion in cash. But why cash out his treasury bills when the D.C. swamp will be happy enough to do most of the heavy lifting for him.
Where will those taxpayer-funded profits go?
In 2014, the Oracle of Omaha predicted that Hillary Clinton will win. “I will bet money on it, and I don’t do that easily,” he boasted.
Republicans lobbying for an airline bailout are literally fighting to secure taxpayer money that will then be used to fund their political opponents. It’s an insane act of fiscal political suicide.
Beyond political donations, Buffett has spent millions covertly funding abortion activism. Due to his obsessive secrecy, the full scope of his abortion funding is unknown, but the Buffett Foundation donated almost $4 billion to abortion causes, including $674.5 million to Planned Parenthood.
It’s a revelation that clashes with his folksy image and invocation of small-town values. But behind the Garrison Keillor routine, Buffett is just another version of George Soros with an American accent.
That’s not just rhetoric.
At the heart of Soros' power over American politics is the Democracy Alliance, a club of powerful organizations funneling money into transforming this country. The Democracy Alliance's core partners include the NoVo Foundation, run by Buffett’s son and daughter-in-law, and funded by $150 million from the Oracle of Omaha.
NoVo funds hate groups like Van Jones' Color of Change, which plotted to defund the David Horowitz Freedom Center, along with the Rockefeller Family Fund, the Tides Foundation, and the National People’s Action.
That last donation is especially interesting considering NPA’s role in creating the Community Reinvestment Act which forced banks to dispense mortgages to insolvent borrowers. This, as the Freedom Center’s Discover the Networks notes, “ranks high among the primary causes of the 2008 financial crisis.” That’s both fascinating and disturbing considering Buffett’s links to that crisis.
Buffett avoided the subprime crisis while profiting massively from the resulting disaster.
Putting money in Buffett’s pocket will mean more cash for Biden, it will mean more Democrats in the House and the Senate, more abortions, and more power for George Soros’ Democracy Alliance.
So why are Republicans ready to make concessions to Democrats in exchange for the privilege of electing more Democrats with a Buffett bailout? Even if one were to argue that a bailout of the airline industry may be necessary, why would Republicans lobby to cut their own throats?
When the wall isn’t funded, how can the GOP justify a second billion-dollar bailout of an industry that will then just turn around and cut another 2 inches from the cramped seats of the taxpayers who bailed them out?
CCP Virus Exploding Federal Deficit Even as Comptroller General Warns of ‘Urgent’ Need for Debt Reduction
March 20, 2020 Updated: March 22, 2020
WASHINGTON—There were only rumors of a possible $1 trillion economic stimulus package on March 12 when U.S. Comptroller General Gene Dodaro urgently warned the Senate Budget Committee that federal spending and debt are on an “unsustainable” path.
“I am concerned because our debt-to-gross domestic product (GDP) ratio as of the end of the last fiscal year was 79 percent. That’s the highest it’s been since World War II, when we hit the historic high of 106 percent,” Dodaro said.
“So we are very heavily leveraged in debt at a time when we are going to be facing a steady annual deficit of a trillion dollars a year for as far as the eye can see.”
He was referring to the fact the national debt now exceeds $23 trillion ($122 trillion if unfunded obligations such as those of Social Security and Medicare are included).
That $23 trillion currently equals 109 percent of the 2019 GDP of $21.4 trillion. But interest costs more each year as the national debt goes up and the Government Accountability Office projects those costs to exceed total non-defense discretionary federal spending by 2024, go beyond defense spending the next year, and blow past Medicare in 2042 and Social Security in 2046.
“This is why we believe the current path is unsustainable,” Dodaro said.
Five days later, amid an intensifying worldwide crisis occasioned by the CCP virus, Treasury Secretary Steven Mnuchin confirmed that President Donald Trump wants Congress to pass an economic stimulus package that will cost at least $1 trillion.
“It is a big number. This is a very unique situation in this economy,” said Treasury Secretary Steven Mnuchin. “We put a proposal on the table that would inject $1 trillion into the economy. That is on top of the $300 billion from the IRS deferrals.
“Now let me just say, this is a combination of loans, this a combination of direct checks to individuals, this is a combination of creating liquidity for small businesses.
“You can think of this as business interruption money. The president is determined to put money back into this economy to protect hard-working Americans and small businesses.”
About half of the funds will go to individuals and families based on reported income from 2018, with most of the other half being loans made available to corporations and small businesses primarily for the purpose of keeping payrolls as intact as possible during the crisis.
Details are still being worked out in negotiations between the Trump White House and congressional leaders from both parties.
Asked by a reporter if Congress should be concerned about rising deficits, Mnuchin demurred, saying: “I think Congress right now should be concerned about American workers and small businesses. You know interest rates are incredibly low right now, so there’s very little cost of borrowing this money, and, as I’ve said, in different times, we’ll fix the deficit, but this is not the time to worry about it.”
Even so, the $1 trillion stimulus package raised eyebrows, especially as more details became known. The budget committee has asked the Congressional Budget Office (CBO) for an assessment of the package’s impact on the government’s financial health, according to a senior Senate aide who asked not to be identified.
The conservative Heritage Foundation released an analysis warning that “any action that Congress takes should be targeted, temporary, and linked directly to the coronavirus epidemic in order to address the source of the economic shock, while limiting any political abuse that can develop in a moment of crisis.”
“Unfortunately, the Senate’s coronavirus bill, the Coronavirus Aid, Relief, and Economic Security Act, misses this mark by including special benefits to specific industries that will exceed $200 billion,” it said.
Truth in Accounting President Sheila Weinberg told The Epoch Times that it appears “the federal government is going to cover trillions of dollars of other losses and costs, including those for business interruption, personal income loss, and health care costs.”
“This type of coverage is what insurance companies do, but not at this scale,” Weinberg said.
“The federal government requires insurance companies to have reserves to meet their customers’ benefits. Since the federal government has become a multitrillion-dollar insurance company, it should have reserves to cover the costs of crisis. Instead, the government is $23 trillion in debt (plus another $100 trillion for unfunded Social Security and Medicare benefits).”
The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.
Contact Mark Tapscott at Mark.Tapscott@epochtimes.nyc
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