During this time of public health and economic crisis, it’s clear that we’ve learned some lessons from the federal bailouts in response to the 2007-2009 financial crisis, but rather than taking small steps in the right direction, we need to make a significant leap forward.
In response to the Great Recession, Congress pumped money into the financial sector and other industries virtually no strings attached. What happened? The money wound up going to things such as executive bonuses and to prop up share prices for extremely wealthy investors.
For the stimulus package in response to the COVID-19 pandemic, the Senate has included limitations on executive bonuses, stock buybacks and dividend payments by companies that receive a share of the $500 billion corporate slush fund created by the bill that Congress passed on Friday.
The restrictions outlined in the Senate bill are a good idea, but they cannot be the only limitation we put on the wealthiest among us.
In what kind of economic system are we living when hospitals are likely to run short on ventilators because buying more would hurt their bottom line, not because they are unavailable? In what kind of system are we living when Black southerners have less safeguards than most U.S. workers against receiving COVID-19 and less ability to receive treatment when they contract the virus? In what kind of economic system are we living when without emergency federal legislation, millions of us wouldn’t have access to sick leave and would therefore have to choose between starvation and COVID-19? In what kind of economic system are we living when the emergency paid leave federal legislation leaves out the employees of the richest corporations, including grocery and restaurant companies like Walmart, Starbucks, and McDonald’s, just because their lobbyists demanded it?
Minor, temporary restrictions on stock buybacks and executive compensation aren’t going to solve the problems that turned a public health crisis into an economic crisis. And we shouldn’t be satisfied by them.
Here are a few things we need to start doing now:
- Demand a different model for bailouts. The bailout for the airline industry is very different than other industries. While half the money earmarked for airlines goes to the airline companies, the other half of the money goes to airline workers directly (Note: this is not the money going to Boeing, which has a separate bailout all for itself). Instead of cutting a giant check directly to the airline CEOs, with the hope that something will end up in the hands of working people, airline workers will directly receive money. This should be a floor for all subsequent corporate bailouts, whether for COVID-19 or any other reasons why a bailout is deemed necessary.
- Take the fight directly to corporations. Hank Paulson, who served as Treasury Secretary under George W. Bush, stated that he was taken aback by the number of companies that announced huge executive bonuses after they received the 2008 bailout: “There was such a total lack of awareness from the firms that paid big bonuses during this extraordinary time,” Paulson said. While those bonuses were immoral, they were not shocking nor were they the result of a total lack of awareness. Bank executives fully knew that people would be angry about it, but they also believed we wouldn’t join together and rise up against them. They figured we’d rely on the federal government to sort out the mess. But even with Democrats in control of both chambers of Congress and the White House, the federal government did not force any of these executive to pay back their bonuses, and did not send anyone to jail. No matter who’s running the federal government, we cannot count on them to hold super-rich CEOs and the corporations they control accountable for their actions. We need to put pressure on them directly. Walmart, Amazon, Starbucks, McDonald’s and their ilk will respond to pressure if we put enough of it on them.
- Demand a seat at the table in return for our money. An economic crisis as a result of the COVID-19 pandemic did not have to happen, but it’s easy to see how we ended up here. We know full well, wealthy corporations are responsive only to their executives, stock prices, and boards of directors. Even before the pandemic spread throughout the United States, 85% of Americans believe working people should have paid leave, but rich corporations are still not required by law to provide paid leave. There is a fundamental breakdown of democracy that will not be cured by pushing for legal reforms. We are paying huge sums of money to these corporations, and we will continue to pay. We need to demand a say in corporate governance in response, whether in the form of nationalization, public ownership, seats on the board, or changes to our labor law that require workers voices to be included in management decisions.
Make no mistake, we are navigating uncharted and scary waters. Tens of thousands of people are sick, more than 1,000 people have perished from COVID-19, and the government is about to hand over huge sums of money to corporations. But NOW is the time for us to demand big and bold action from our government and finally hold corporations accountable.