The
White House is asking Congress for a $1 trillion coronavirus relief and
economic stimulus plan that would include industry-specific bailouts and
payments to individual taxpayers.
The big
picture: This is more than the $900 billion that the U.S.
government initially committed to bailouts in the 2008 financial crisis.
The
proposal, penned by the Treasury Department, includes:
·
Payouts to individual Americans: $500
billion.
§ This
would be done via two separate checks of equal amounts, one on April 6 and one
on May 18.
§ The
specific dollar amounts would be means-tested, meaning it would be based on
income level and family size.
§ Each
round of payments would be identical in amount, per the Treasury.
·
Airline industry bailout: $50
billion.
§ This
would take the form of secured loans to passenger and cargo air carriers, with
the Treasury to set interest rates and other terms.
§ Limits
would be placed on executive pay increases until the loans were repaid.
·
Other affected industries bailout: $150
billion.
§ Secured
loans or loan guarantees would be extended to "other critical sectors of
the U.S. economy experiencing severe financial distress due to the COVID-19
outbreak."
§ Among
the sectors raising their hands for bailouts, largely or wholly for the purpose
of paying workers: Hotels ($150 billion requested),
casinos, cruise line operators and shopping mall operators.
·
Small business interruption loans: $300
billion.
§ Employers
with 500 employees or fewer would be eligible, and would have to keep paying
all their workers for eight weeks from the date of the loan.
§ The
government would guarantee 100% of six weeks of payroll, capped at $1,540 per
week per employee, with the Treasury to set interest rates and other terms.
Historical
comparison: The amount budgeted in 2008 for TARP — the Troubled Asset
Relief Program — was $700 billion. The money was aimed at bailing out big
banks and auto companies. The same year, the government designated $200 billion
to rescue Fannie Mae and Freddie Mac, the giant mortgage enterprises.
·
In actuality, far less than the total $900 billion was spent.
·
By the time the programs were declared ended in
2014, the government had actually turned a profit on those bailouts.
·
According to ProPublica's Bailout Tracker, a total of $634 billion was
spent on TARP and the Fannie and Freddie bailouts: "Money has been coming
back in two ways: $390B of principal has been repaid, and the Treasury has
collected revenue from its investments of $364B. ... In total, the government
has realized a $121B profit as of January 31, 2020."
The
bottom line: While there were big moral and ethical implications to the
rescue of the banking and auto industries — which were seen as having largely
caused their own problems — many of the companies that are currently foundering
are blameless for their predicament.
·
This will make it easier for the public to support sweeping
federal appropriations.
·
Public support will be public important if the coronavirus emergency drags on and forces
even more federal expenditures and guarantees.
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