Economists Warn Congress Not to Repeat Mistakes of 2008 Bank Bailout

WASHINGTON, DC — Some members of Kentucky’s Congressional delegation say there’s no daylight between protecting large corporations and American workers impacted by the coronavirus pandemic.

“I know a lot of people want to go after the big corporations. There were three people, me and two other people flying on a 737 that seats 180 people typically. That flight attendant’s job is just as important to them as somebody working on Main Street in Bowling Green,” said. Rep. Brett Guthrie (R) of Bowling Green, Kentucky. 

“68 million Americans work for large employers and their jobs are in jeopardy right now,” said Rep. Andy Barr (R) of Lexington, Kentucky.

Senior economist Heidi Shierholz with the left-leaning Economic Policy Institute says even she doesn’t rule out the role of corporate bailouts when responding to a public health crisis of this magnitude. 

“In normal times, these businesses are operating in a way that dramatically increases inequality in this country. There are huge disparities in pay, outrageous executive compensation. All that is incredibly problematic. But at a time like this when we have shut down huge swaths of the economy to make sure that we are safe, even the best-run companies will need this kind of help,” said Shierholz.

But Shierholz, who worked in the Obama administration, worries about what she describes as the minimal safeguards in place on the 500 billion dollars in corporate loans in the two trillion dollar stimulus phase three deal.

“One of the big issues with this industry bailout is while it includes some conditions on how businesses are allowed to use the funds, the language around it is really very weak and so it is going to be difficult to enforce.

It’s unclear if increased safeguards in a phase four deal could gain the support of President Trump or Senate Majority Leader Mitch McConnell who never hesitate to applaud the private sector.

“I think putting the private sector that is stepping up on full display is the right thing to do. I applaud the President for doing it. I think we should all applaud these private sector companies who are stepping up to help all of us deal with this crisis,” said McConnell to radio host Hugh Hewitt Tuesday.

Shierholz says if more taxpayer dollars are to be dolled out to large corporations in the phase four stimulus bill, there should be stricter conditions on new funds. 

“The most efficient use of those dollars right now would be to get loans to businesses with strings attached,” she said.