By Ron Forthofer
The name of the recent enormous transfer of wealth to the one percent, the CARES (Coronavirus Aid, Relief, and Economic Security) Act, represents a public relations coup. Unsurprisingly, this great sounding title misrepresents the bill’s contents.
Pattern of transferring wealth upward
Unfortunately, this bill is essentially a repeat of the bailout of Wall Street during the Great Recession that further enriched the obscenely wealthy at the public’s expense. This current legislation again showers Wall Street and gigantic corporations with oodles of money while providing aid for Main Street that is far too little and far too late. This legislation will also increase our already shamefully large wealth chasm.
This creatively misnamed act is the fourth time in the past 20 years that our government of, by and for the corporations has bestowed massive gifts on the wealthy. The gifts were in the form of huge tax breaks under the George W. Bush and Donald Trump administrations and gigantic bailouts under the Barack Obama and Trump administrations.
Naomi Klein’s 2007 book, “The Shock Doctrine: The Rise of Disaster Capitalism,” details how politicians use crises to transfer great amounts of wealth upward at the public’s expense. We saw an immediate example of this doctrine triggered by the 2008-09 Wall Street caused financial crisis that led to the Great Recession. The White House, Congress and the Federal Reserve quickly provided trillions of dollars to bail out Wall Street, but did little for Main Street. In addition, Wall Street executives were not held responsible for their crimes.
It wasn’t always this way. For example, during the Great Depression, the Franklin Delano Roosevelt administration passed many pieces of progressive legislation that greatly benefited the public and the common good.
Today, in response to an ongoing banking and corporate financial crisis, our corporate influenced government quickly took advantage of the horrific novel coronavirus outbreak to massively reward their major campaign contributors with a huge bailout.
Two sections of the CARES Act
Most of the corporate media reported that the CARES act would inject $2.2 trillion dollars into the economy. In reality, about $450 billion of the $500 billion set aside for loans to large corporations and banks can be used to insure lending to these corporations from the Federal Reserve. The Federal Reserve can leverage this money into an additional $4 trillion or so for the recipients. The media usually ignore or downplay this $4 trillion.
Instead the corporate media highlights the money set aside for so-called small businesses and workers. For example, there is the one-time, income-dependent transfer of at most $1,200 to most American adults and $500 for dependent children under 17. This one-time payment to the public is a drop in the bucket compared to the needs.
Another more substantial assistance is the expansion of eligibility for unemployment insurance. Crucially, unemployment recipients will also get $600 per week for four months on top of the state’s unemployment benefits. However, compare this to some European nations that are underwriting 70% to 90% of workers’ pay if their companies keep them employed during the crisis.
Politicians must do much more to aid the suffering public. For example, one of many examples of the failure of the profit driven system is health care. We clearly need an expanded Medicare for All, since tying health care to employment has failed miserably. We must also strengthen our public health system that has been weakened by severe underfunding. This pandemic and the Trump administration’s terrible response also show our security clearly isn’t tied to excessive military spending that is at the expense of domestic programs.
Unless politicians pass legislation to directly address public needs, the future will be extremely bleak. The U.S. economy has already experienced an unprecedented job loss. This situation is likely to worsen as more small businesses fold during this pandemic despite the CARES bill. When the pandemic is over, the number of unemployed and homeless will likely be enormous. After all the bailouts of the obscenely wealthy, it’s past time for the government to provide for the public’s needs. Otherwise, how will a desperate public react?
Ron Forthofer lives in Boulder.
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