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We’re Dying From Coronavirus. Corporations Are Getting Rich Off It.

The 2008 bailout was a giant giveaway to corporate America. 2020 is more of the same.

Traders, some in medical masks on the floor of the New York Stock Exchange. Photo by Spencer Platt / Getty

The 2008 financial crisis was disastrous for working people in America. Millions lost their homes, jobs, and retirement savings. Half the wealth of African American households evaporated. Suicides surged, particularly for older men unable to find a new job.

When people finally found new jobs, they were often inferior positions with lower pay and less benefits. Moreover, youth unemployment persisted long after the “recovery,” and many college graduates found their career trajectories irreparably disrupted.

For corporate America and Wall Street, however, the federal bailout and the decade of quantitative easing that followed was a bonanza. Bankers got bonuses, corporations got handouts, and all the big players enjoyed access to incredibly low interest rates.

The skewed nature of the recovery, and the anger it precipitated among ordinary Americans, destroyed the legitimacy of neoliberal capitalism and laid the groundwork for the election of Donald Trump. So, when it became clear in March that a federal bailout was needed as a result of the coronavirus pandemic, elected officials made a lot of noise about not repeating the mistakes of 2008.

They have not backed up their words with actions, however. Once again it is the billionaires and giant corporations, not working families, who are getting bailed out.

No Strings Attached.

On June 16, the Federal Reserve Board began directly purchasing existing corporate bonds through the newly created Secondary Market Corporate Credit Facility (SMCCF) in a bid to “support market liquidity and the availability of credit for large employers.” The SMCCF will use Treasury money (given a green light through the CARES Act) to buy (through a “special purpose vehicle”) a portfolio of corporate bonds.

The SMCCF is part of a broader scheme that includes the Primary Market Corporate Credit Facility (PMCCF) and the Term Asset-Backed Securities Loan Facility — which is designed to provide liquidity for corporations who don’t qualify for other federal bailout programs.

The Treasury is authorized to invest up to $750 billion in the SMCCF and PMCCF, adding to the mountain of no-strings-attached money available to America’s largest corporations. Corporate executives can use the cash they raise selling bonds to the Fed to buy back their company’s own shares, issue dividends, and give themselves bonuses.

Just Deduct It.

The CARES Act also initiated a gargantuan tax giveaway for billionaires and corporations. The legislation lifted the $500,000 cap on tax deductions for individuals, allowing wealthy investors — like sports team owners, real estate developers, and hedge fund investors — to “deduct 100 percent of their business losses to reduce taxes paid on profits made between 2018 and 2020.” 82 percent of the individuals who stand to gain from this tax giveaway make more than $1million a year, according to the Joint Committee on Taxation.

Corporations will also get theirs. The Financial Times reports that, moving forward, corporations will be able to deduct any business losses accrued between 2018 and 2020. They will also be able to deduct 50 percent (up from 30 percent) of their interest payments and, to the delight of the retail and hospitality industries, “immediately offset investments made to improve property.”

These breaks come on top of Trump’s 2017 tax bill, which lowered the corporate tax rate from 35 percent to 21 percent. With corporations and elites off the hook for paying their fair share, the cost of rebuilding the country will fall on everyone else.

Gimme Some of That 401(k).

The Department of Labor (DOL) has opened up American workers’ $9 trillion in 401(k) investments to private equity firms. Employer-run pension funds have long invested in private equity investment vehicles, but until now 401(k)s have been protected from vulture investors.

Why? Because as Edward Siedle at Forbes argues: “Private equity funds are the highest cost, highest risk, least transparent and most illiquid. Their assets are the hardest-to-value and the easiest-to-inflate.” In the past, officials worried that private equity firms’ risky ventures and exorbitant fees would adversely impact small-time investors trying to build their retirement nest egg.

Yet, for no reason whatsoever, the coronavirus has changed their minds. The DOL claims that the changes to Employee Retirement Income Security Act of 1974 (ERISA) are necessary to “level the playing field for ordinary investors” and promises that the deregulatory decision is “another step by the Department to ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement.”

Private equity companies have been trying to get their hooks into 401(k)s for years. Apparently all it took was a pandemic.

I Won’t Tell If You Won’t.

The Paycheck Protection Program, designed to help small- and medium-sized businesses pay their bills and maintain their payrolls, was denounced early on for handing out millions to big, publicly listed firms who should have been ineligible, such as Shake Shack and the Los Angeles Lakers.

After a public backlash some of these companies gave the money back. But many did not. Dozens of publicly-traded firms — who have much easier access to capital markets — took money from the program. Who are these companies? Steve Mnuchin says we’ll never know.

Last week, the Treasury secretary announced that the names of the 4.5 million companies who received over $500 billion in federal bailout money will never be revealed. Mnuchin’s allergy to oversight comes straight from the top. President Trump has fired numerous inspector generals, including Glenn Fine, the lead auditor hired to oversee the $2 trillion coronavirus relief package.

While the Trump administration bails out the rich and powerful, ordinary Americans are about to be cut off from the meager relief they received from the CARES Act. Despite record unemployment and a grim economic outlook, federal unemployment benefits will end in July and Congress looks unlikely to pass another round of stimulus payments for individuals.

It appears that the real lesson from 2008 is that we didn’t learn any lesson at all.