Yes, we should worry about federal aid being misused. But the fate of our economy is at stake.
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Version 0 of 1. THE CORONAVIRUS pandemic and its associated economic damage have required the federal government to spend trillions of dollars, fast — and, in all likelihood, hundreds of billions of dollars more before it’s over. Understandably — indeed, inevitably — stories are starting to emerge about how much of the cash flow is going to apparently undeserving companies. The appropriate response is a healthy sense of concern — tempered by a healthy sense of perspective. The first implication of this is that there is no alternative to massive federal government support for businesses and workers, paid for by debt. Republicans who have begun to raise deficit concerns about more aid for state and local governments are playing with fire. Senate Majority Whip John Cornyn (R-Tex.), for example, said Tuesday that emergency spending is still needed but added that “the federal government can’t continue to spend money and add to our national debt and deficits.” In fact, record-low interest rates make it fiscally irresponsible not to borrow heavily. The Congressional Budget Office’s April 24 forecast notes that the federal government’s net interest costs are on course to decline slightly through September 2021. Full coverage of the coronavirus pandemic The second point is that, unlike the 2008 financial crisis, the calamity upon us now is not traceable to speculative excess on Wall Street or in corporate America (even if certain industries, such as the airlines, might have been in a better position if they had not spent money on stock buybacks). Rather, the cause is a pathogen that emerged suddenly through no one’s particular fault. Therefore, it’s relatively more important that money to rescue jobs and businesses gets spent than to avoid “moral hazard” — econ-speak for encouraging future bad behavior by rewarding past bad behavior. Yes, there should be audits to find fraud; yes, it’s inappropriate that the Los Angeles Lakers accessed a $4.6 million forgivable loan from the fund Congress probably intended to go to lower-profile small businesses. Treasury Secretary Steven Mnuchin has been right to try to screen out companies that probably have alternatives to government aid. On the other hand, even the Lakers have ordinary employees whose jobs are at risk. The deeper problems with the small-business loan program are that Mr. Mnuchin has set excessively strict requirements for how much of the funds must be spent on payroll and that it is still woefully underfunded. If Congress appropriated sufficient cash, arguments over who deserves to get what would loom much smaller. The Opinions section is looking for stories of how the coronavirus has affected people of all walks of life. Write to us. Finally, no one should get too hung up on whether the government ends up breaking even on its programs for larger businesses, as it did with the $700 billion Troubled Asset Relief Program “bailout” a dozen years ago. Mr. Mnuchin sounded an unduly defensive note on this point this past week when he spoke of a “base case scenario that we recover our money.” It could be a disaster for the economy if the Federal Reserve allows a risk-averse mentality to govern the $600 billion lending program for “Main Street” firms it is rolling out with backing from $75 billion in funds Congress allocated to the Treasury. There are, in short, good reasons to fret that Congress, the Trump administration and the Fed might go too far in risking public resources to save the economy; there are better reasons to worry they won’t go far enough. Read more: Hugh Hewitt: The next coronavirus relief deal ought to be Congress’s biggest yet Andy Puzder: Despite the rocky publicity, the small-business loan program is really working The Post’s View: This crisis could last a long time. Congress needs to be able to govern from afar. Bill Gates: Here are the innovations we need to reopen the economy The Post’s View: Small businesses needed this second round of loans. But they won’t be enough. |