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With all the talk of bailouts of airlines etc., here’s a must read from Tim Wu on American Airlines, which enters this crisis after a period of massive profitability:
“There are plenty of things American could have done with all that money. It could have stored up its cash reserves for a future crisis, knowing that airlines regularly cycle through booms and busts. It might have tried to decisively settle its continuing contract disputes with pilots, flight attendants and mechanics. It might have invested heavily in better service quality to try to repair its longstanding reputation as the worst of the major carriers. Instead, American blew most of its cash on a stock buyback spree.”
And here’s what we should demand in return:
“We cannot permit American and other airlines to use federal assistance, whether labeled a bailout or not, to weather the coronavirus crisis and then return to business as usual. Before providing any loan relief, tax breaks or cash transfers, we must demand that the airlines change how they treat their customers and employees and make basic changes in industry ownership structure.”
H/t Rep. Frank Hornstein who made the same argument to me Wednesday.
Sen. Elizabeth Warren says bailouts should come with these conditions: 1. Maintain payroll; 2. enact $15/hr minimum wage by one year after emergency ends; no buybacks, dividends, executive bonuses for minimum three years; 4. must turn over a board seat to workers.
This is not a time for cheap partisan points, but the public needs to be aware of how far Republicans have come on bailouts. I remember the memoir of David Stockman, who was President Ronald Reagan’s first budget director, and his frustration that Reagan caved on the Chrysler bailout even though the consistent free market position is to let firms fail.
Many Republicans were willing to let the economy crash into a depression during the financial crisis rather than bailout Wall Street and the auto companies, especially beginning Jan. 20, 2009. It was a principled position, if shortsighted and callous.
But we should remember that now as they keep upping the ante on a larger and larger deficit financed aid package that will go directly to Americans and also bail out certain industries.
The $1,000 checks proposed by leading Republicans and supported by the White House is an especially galling case. With unemployment skyrocketing as the result of a financial crisis he inherited, President Barack Obama put forth a stimulus package that was 40% tax cuts. It garnered just three Republican votes in the Senate. Imagine what the GOP response would have been if Obama said we should send every American $1,000 per month for three months? Oh the wails of socialism that would cry out on Fox News. After refusing to support any stimulus, Republicans continued to push austerity fiscal policy for years.
And it wasn’t just fiscal policy. Here’s then Texas Gov. Rick Perry, who was once a frontrunner for the GOP nomination in 2011, on then Fed Chair Ben Bernanke, whose academic specialty is the Great Depression and it’s fair to say knew what he was doing:
“If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous in my opinion.”
Where are these monetary hawks now, with the Fed slashing the rate to zero?
Why the change of heart? Have they realized the error of their ways? Was it motivated reasoning that led them to the wrong conclusions? Or were they trying to sabotage Obama’s presidency?
(Speaking of about-faces, watch this video of Fox News going from “It’s just the flu” on COVID-19 to “This is the worst pandemic in history” in literally a weekend. As Bush speechwriter David Frum joked, they’re like the Daily Worker pivoting after the invasion of Russia in World War 2.)
Back to my financial crisis rant: This isn’t just some academic argument. The austerity policies enforced by the Republican Congress beginning in 2011 — though too often supported by centrist pundits who were spooked by big deficits — led to needless suffering for millions of Americans. And the folly of it became clear when Trump was elected and they dumped a big deficit financed can of gasoline on the economy that lit a fire, at least for a year or so.
It’s unfortunate that Americans have total amnesia about things that happened as recently as 10 years ago. (Or more accurately, they often misperceived what was happening at the time.)
On the economic front, the Strib’s Jessie Van Berkel finds tens of thousands of Minnesotans slammed the unemployment office Tuesday as Gov. Tim Walz closed bars, restaurants and public accommodations. You can apply online here. 330K Minnesotans at risk of job loss.
Our hearts go out to these folks who are in difficult times through no fault of their own. If you’d like to write about your experience or talk to me or one of our reporters about it, let me know: [email protected]
Sen. Roger Chamberlain, noted epidemiologist (sarcasm), wants Walz to keep the bars and restaurants open, otherwise, “the effects will be devastating.”
Hey, Senator: See Reformer reporter Rilyn Eischens’ reporting above on our hospitals being overrun if we don’t flatten the curve on COVID-19.
Hoo boy, the good news just keeps on coming (sarcasm): Big court win for Twin Metals as they seek to mine near the Boundary Waters: Strib. When is Gov. Tim Walz going to intervene?
Walz announced he’ll give his state-of-the-state remotely.
Ok, that’s it. I can’t handle anymore today.
But before we go, a beautiful piece from Yo-Yo Ma that I promise will make you feel better.
And a day late but I love this version of “Fields of Athenry,” about a woman watching a ship sail out of Ireland, upon which her husband is bound for the penal colony in Australia because he stole corn to feed his family. If that’s not just the most Irish song in the world. I don’t know if it will make you feel better, but it will make you feel something.
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Hang in there gang. JPC