Big public companies under pressure to return millions received from COVID-19 stimulus
Fox Business host Charles Payne weighs in on the coronavirus business news of the day.
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The United States has overcome every challenge we have ever faced. The coronavirus pandemic will be no exception. Yet while the American people have risen to the needs of the moment, in some vital ways our political class has fallen short. They have done too much to help some who don’t need it, and too little to help some who need it most.
During a national crisis, extraordinary measures are not only reasonable, but they are also required. In recent months, the federal government has boosted unemployment insurance to directly help those who suddenly and unexpectedly lost jobs, created a forgivable loan program for small businesses that were forced into lockdown, and pushed critical funds into the health care system – the front lines of the fight against the virus.
These wise moves have saved lives and livelihoods. Unfortunately, they have been mixed with unwise ones.
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Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the largest government stimulus measure in American history, at a cost of roughly $2 trillion. The biggest chunk of money was up to $500 billion that can be used for bailouts for large corporations, many of which have access to private capital, and their shareholders. This is the opposite of the broad-based relief to individuals and small businesses that’s most needed. The pandemic struck everyone. When government singles out industries, it injects political favoritism into a process that must avoid it.
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Moreover, these bailouts turn America’s economic system on its head. Large corporations are typically financed and governed by sophisticated investors. Those investors rightly benefit from corporate profits in prosperous times; they should bear the losses when times are tough. It is fundamentally unjust to pass that burden to ordinary taxpayers who are themselves struggling.
We cannot have a system where corporate gains are private and losses are socialized.
Beyond the bailouts, the CARES Act too often failed to tailor relief to the most urgent problems. It included multibillion-dollar handouts to states, hospitals and universities regardless of how the virus affected them. Hospitals with large COVID-19 caseloads at times got less per patient than facilities with few cases. Wealthy universities with multibillion-dollar endowments got funding. Even the sensible unemployment benefit expansion went too far, with many now being paid more than when they were working.
Similarly, the well-intended small-business loan program ended up benefiting some 300 Wall Street-traded companies and many others that didn’t require help. That explains why the initial $349 billion in this program ran out in only 13 days, forcing Congress to refill it with an additional $310 billion. The billions that went to companies that didn’t need it left less for suffering small businesses and their workers.
Like many states, Illinois has a pandemic of irresponsible government. That’s one disease Congress must not try to cure with a bailout.
Yet maybe the greatest lesson from Congress’ coronavirus response is that massive blunders are inevitable when government spends this much money this fast. It is impossible to wisely spend nearly $3 trillion in two months.
There’s no question that this is an emergency situation that required huge spending. But it should not escape our attention that the federal deficit is now expected to reach nearly $4 trillion this year alone, pushing the national debt well over $25 trillion. This unprecedented burden will force painful decisions on future generations who will not have the comfort of knowing that it was all well spent.
Some lawmakers are now calling for hundreds of billions, if not trillions, more. On what? They want bailouts for states that have mismanaged their finances for decades. While the pandemic has caused a short-term decline in state revenue that can legitimately be addressed, some states were already facing massive shortfalls well before the coronavirus.
Illinois, for example, is asking for $10 billion to bail out a pension system that state politicians have chronically underfunded. Like many states, Illinois has a pandemic of irresponsible government. That’s one disease Congress must not try to cure with a bailout.
Finally, a chorus of socialist voices is claiming this crisis shows the failures of capitalism and the need for a government takeover of huge sections of the economy. Really?
The single best thing the Trump administration has done to address the crisis is clear away the regulatory hurdles for private research companies, scientists and the medical community to create the health care innovations that will bring America through this.
As for the economy – bigger, bossier, more bloated government will only get in the way and make a much-needed recovery harder and slower. We’re already seeing the favoritism, waste and unintended consequences that come when Congress quickly spends $3 trillion. Imagine the damage the socialists’ $30 trillion would do.
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Our biggest challenges are clear. They are mass unemployment, a shuttered economy that is crippling the small businesses that provide half of all jobs, and a virus that we still don’t fully have a medical handle on. We can address these challenges with direct payments to laid-off workers and struggling small businesses, and a massive infusion of private sector and scientific talent brought to bear on our urgent medical needs.
The cost of such efforts is worth it. Much more, and the price will be more than present and future generations of Americans can bear.