How To Apply For Federal Bailout Money – Congress last week faced a choice on how to restructure our economy in the wake of the coronavirus crisis – a choice about the magnitude and duration of pain and its impact on working people. While Democrats and Republicans were far apart in their first negotiation bids, the large, expensive package finally reached consensus and passed through Congress last Friday. It provides an answer to the healthcare crisis facing hospitals; a significant increase in unemployment benefits and some direct payments to natural persons; small business assistance; and, not surprisingly, saving the corporation. When all of this is added up, it is expected to cost around $ 2 trillion, but that is an understatement – $ 454 billion in corporate rescue funds will capitalize a Federal Reserve loan that has been raised several times, totaling as much as $ 4.5 trillion. according to Fed chairman Jerome Powell remarks.
The success of our economic response to the coronavirus will not only be determined by what was in last week’s law, but also by how the Trump administration decides to use its authority and the way policymakers exercise power and oversight. Although the final bill was over 800 pages long, this still leaves a great deal of freedom in shaping how nearly $ 6.5 trillion will flow through our economy.
How To Apply For Federal Bailout Money
On this point, the conclusions of the 2008 crisis are clear. More than ten years ago, federal policymakers saved banks with an asset relief program worth $ 700 billion. This legislation has left large structural choices to the executive – first the Bush administration and then the Obama team. Decisions about how to spend rescue money and direct aid to people and families, coupled with Federal Reserve actions that raised the stock market, have exacerbated rather than softened the economic inequalities that made our economy so fragile in the first place.
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There is a similar pivotal moment today, a public health crisis that is rightly devouring policy makers, and an economic crisis just half a step behind us. So what lessons can the 2008 Congress learn?
Demand simple programs. The Trump administration will have considerable flexibility in creating programs authorized by coronavirus legislation. Whether the aid is to flow quickly or slowly reflects how policymakers perceive different sets of interests.
When it comes to helping corporations in America, program design is usually straightforward and focused on getting the help they need quickly. After all, the Federal Reserve and the Treasury Department rescued powerful insurer AIG over the weekend of 2008.
But when it comes to helping ordinary people, program design is either shaky or intentionally complex. During the foreclosure crisis, complicated program rules were the main reason for the failure of loan modification programs. The Obama Treasury Department that ran these programs focused on “moral temptation” or the perceived problem of rewarding homeowners for bad behavior. This effort was intended to suppress attacks by lawmakers who were opposed to helping homeowners in the beginning and who were never satisfied, no matter how cumbersome and ineffective the program became. Stories are a legion of people who submit risk documents to qualify for a loan modification, only to find out that while checking their records one form has become obsolete or altered, or the bank has been seized anyway by the bank in the process of processing the application.
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Policymakers must require simple program design to deliver aid, rather than obsessively focusing on uprooting “undeserving” audiences. Anything less than that will send a strong signal to working people that their emergencies are not being recognized.
Chase your problems. While lobbyists have unlimited resources to bring their will to power, legislators are strained and corporations spend more money on lobbying than the entire budget for Congressional personnel. The last crisis is teaching a lesson again. While lobbyists managed to slowly, piece by piece, weaken the Dodd-Frank Financial Reform Act, the HUD’s $ 1 billion program to help unemployed homeowners went up in smoke with almost no one paying attention. . Due to bureaucratic setbacks and the lack of attention from Congress, HUD spent less than half of its allotted money, giving away $ 500 million that could help families.
With the Coronavirus rescue, lobbyists will work hard to ensure that money allocated to their industries is delivered as expected. The “lightning attack” on behalf of the airlines earned them $ 46 billion in loans and $ 68 billion in subsidies and other money; now lobbyists need to be sure that it will arrive as expected. A separate pool of $ 454 billion, with a leverage of up to $ 4.5 trillion, could go to other powerful industries such as hotels, cruise lines or casinos that will compete fiercely for these investments. When it comes to helping families and small businesses and taxpayer accountability, policymakers will have to apply the same level of lobbying persistence. Family checks may not arrive at the correct address. The $ 350 billion small business program, managed by the famously cranky Small Business Administration, may never get off the ground. And no matter what the modest corporate rescue conditions are, they may never be enforced. Members of Congress have a powerful role to play here, even after legislation is passed, to pursue these kinds of problems until they are fixed.
Know your power. Most of the power to write the regulations belongs to the staff of the Chamber and Senate management and a few key commission staff. But that doesn’t mean the rank and file of Congress don’t have power. Junior members can make real change by selecting one or two issues and then persistently following those topics as they investigate their Congressional offices. These little investigations can force defense contractors to pay back millions of dollars, put pressure on companies to raise wages, or expose Wall Street’s hypocrisy to millions of people.
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While Congress may not be able to embarrass the Trump administration, which has ignored the calls and demands to testify, corporate America will pay attention. Members need to know the power of their microphone and understand that simply paying attention to an issue can cause companies to change practices to detect harmful criticism.
Watch out for pandemic speculation. With $ 2 trillion in legislation raised several times over, new ways of speculating are inevitable, typically targeting the most vulnerable, already suffering the most from the coronavirus and its economic recession. With the 2008 bailout, which included big banks manipulating government loan modification programs and scammers trying to steal several thousand dollars from homeowners desperately seeking help.
Coronavirus legislation will have its own unique forms of profit generation. For example, the bill includes $ 100 million for the Treasury Department to hire a Wall Street company to help administer rescue packages. This contract and the tendering procedure to award it must be transparent. Members of Congress must demand accountability and aggressive prosecution of fraudsters, whether they are bad actors flying by at night or big corporations trying to manipulate new government agendas. Of course, we have law enforcement agencies to keep an eye on this scam, and in the event of a corporate rescue, a five-person oversight panel and a commission of inspectors general. But enforcers and overseers can compliment or be captured without Congress stamping on reforms.
I don’t have a short memory. No structural reforms to rebalance workers, wealthy people, and corporate America are likely to recover faster from the coronavirus pandemic than anyone else. Even before the coronavirus, younger and lower-income people and those with lower levels of education had difficulty returning to pre-Great Recession income and wealth levels, while 10 percent of the richest Americans surpassed pre-recession levels. And while many working people tried to get out even a decade after the last crisis, the largest corporations in recent years have recorded record profits.
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When a recovery inevitably occurs, bailout beneficiaries will revert to the same business practices that made many of their firms fragile at first – practices such as share buyouts that deprive companies of money or poor contingency planning, facilitated by outsourcing and just logistics for a time that exposes companies to shocks. Worse, some Capitol residents will be inclined to pretend the crisis never happened and seek advice from the same failed leaders. In the recent crisis, this meant Citigroup wrote legislation to reverse key Dodd-Frank reforms just six years after the bank collapsed without bailout.
A key test of Congress will be to counter the slow weakening of reforms. If the economy is bad, they will argue that deregulation is the macroeconomic stimulus we need to kickstart the economy. And if the economy is good, they will say regulation is no longer needed because everything works fine. This amnesia must be dropped if we have a chance to introduce lasting reforms that are moving forward.
One of the top Wall Street lobbyists is known to say that the day President Obama signed the Dodd-Frank Act was only “part-time.” The other half would be to implement the law. Good lawmakers recognize this as well and use the tools and power at their disposal to fight for the causes they care about.
TOPICS: 10 Economic Inequality, Economic Prosperity, Fiscal Policy, Health, Income and Earnings Volatility,
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