Bailing Out the Bailout

It will take years to sort through the details, but Trump’s $2 trillion COVID-19 response looks like a double-down on the last disaster.

By Matt Taibbi and cross-posted from Rolling Stone.

“I’ve never signed anything with a ‘T’ before,” Donald Trump quipped at the signing of the $2 trillion CARES Act. He reportedly wants his signature on coronavirus relief checks, as if they were Trump Plaza casino chips. This might be a fitting metaphor for America’s post-virus economic future.

The new bailout bill, which combined with a series of Federal Reserve interventions is more like a $6 trillion rescue, is a massive double-down on the 2008 rescue efforts. This bailout of the last bailout sets the stage for permanent state sponsorship of America’s overheated financial markets.

Like 2008, only more so, the new mega-rescue is a bipartisan effort. Lawmakers sold this as a good thing.

“This is a 9/11 moment,” said Republican congressman Dan Newhouse of Washington state. “A time to put partisan differences aside.”

“We have our differences, but we also know what is important to us,” said House Speaker Nancy Pelosi. “America’s families are important to us.”

Congress needed a year of intense infighting to approve a $4.7 trillion budget, but just a single week to draft this $2 trillion deal. Although members quibbled over numbers before the vote — Bernie Sanders insisted on more unemployment insurance, while others worried about creating a “slush fund” for airlines and other industries — the bill ultimately cruised through, passing in a voice vote in the House and 96-0 in the Senate.

The Emergency Economic Stabilization Act of 2008, the only comparable “We need a gazillion dollars in 10 minutes” legislation in recent history, passed after a bitter battle, with 63 House Democrats and 91 House Republicans opposing.

Analysts and politicians insisted the new bailout, in the broad strokes, was uncontroversial, a fire hose of money for virus-ravaged hospitals, workers, and small businesses. Even critics of Wall Street agreed that this one isn’t a complete washout compared with the last disaster, when the taxpayer was asked to bail out the very people who’d caused the crisis.

“At least this bailout has a Main Street component,” says Dennis Kelleher of Better Markets, a financial watchdog group.

There are serious logistical questions about how money is supposed to get to Main Street — like, for instance, the use of the tiny Small Business Administration to push $377 billion in emergency loans out the door — but the larger problem has to do with the meat of the bill: the backstopping of the financial sector

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