Brian Dickerson: Drawing lessons from bank bailout, Democrats seek bigger bang for coronavirus bucks

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Nearly a week after the nation’s governors began banishing most Americans to their homes, Congress was at last poised Wednesday night to greenlight a $2-trillion rescue package designed to speed cash to workers and employers starved for income.

What took so long? And what did Democratic senators who rejected two previous stimulus packages get from the White House and the GOP majority after six days of haggling?

If you believe Republicans — not the ones who actually put the complex stimulus compromise together, but the GOP propagandists who attacked negotiations as a waste of time — the principal holdup was a laundry list of policy initiatives (like a $15 minimum wage) and subsidies (for solar energy, public broadcasting and the Kennedy Center for the Performing Arts) that House Democrats sought to tack on any coronavirus rescue package.

The miscellaneous items were part of a fanciful stimulus bill adopted by the Democratic House majority, and they provided endless sport for conservative commentators. But none of them were ever on the table in the negotiations between Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin, who represented the White House and Senate Majority Leader Mitch McConnell in the marathon talks.

Schumer and his caucus had bigger fish to fry. Haunted by memories of a 2008 bank bailout that enriched mortgage lenders and stockholders at the expense of homeowners and workers, they focused on directing a larger share of federal aid to wage earners, tightening restrictions on how corporations could spend stimulus money and establishing mechanisms to hold both the Treasury Department and bailed-out companies accountable.

The original stimulus bill McConnell tried to ramrod through the Senate last week would have given Mnuchin almost unfettered discretion to dole out $500 billion to companies whose earnings have been battered by the pandemic, and allowed loan recipients to remain anonymous for six months. Balking Democrats demanded congressional oversight, immediate disclosure of loan recipients and restrictions on how bailout money could be spent. They secured all three in the compromise sent to the Senate Wednesday.

So instead of a half-trillion slush fund ripe for abuse by a president seeking reelection, the Federal Reserve will establish a loan fund supervised by an inspector general and five congressional appointees. And instead of using federal money to subsidize stock buybacks designed to enrich shareholders, corporations who borrow stimulus money will have to use it for more limited purposes, such as payroll support, paid sick or medical leave, insurance premiums and utility payments.

Schumer and his caucus also won concessions that will direct a larger share of the money to expanded unemployment benefits. The compromise bill increases the size and duration of such benefits, and mandates that they be made available to freelancers and gig workers as well as full-time employees.

The compromise also includes a $350 billion loan fund for small businesses, which wouldn’t have to repay the money they borrow if they keep employees on the payroll until the pandemic subsides. And it earmarks more relief for health providers, earmarking $100 billion for hospital operators.

Despite a price tag that exceeds the annual federal budget by hundreds of billions, the compromise struck by senators may provide too little a buffer against a prolonged recession. State and local elected officials are already complaining that the package provides too little to support municipalities and schools, who face a catastrophic loss of the tax revenues they rely on to provide basic services.

But the protracted negotiations have produced that rarest of things in our polarized country — a compromise worthy of support by principled lawmakers in both parties.



Brian Dickerson is the editorial page editor of the Detroit Free Press.


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