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Trump demands that states take the lead on COVID-19 response but won’t give federal support for local governments or workers, and is still fighting oversight for the trillions already spent on stimulus.
Story Transcript
This is a rush transcript and may contain errors. It will be updated.
Marc Steiner: Welcome to The Real News. I’m Marc Steiner. Good to have you all with us once again. Now, as Congress and the Trump administration debate the contents of this $450 billion bailout bill for taxpayers and small businesses, the most critical measures we need to survive seem to be left off the table. The bill does not fund state and local governments, freeze rents, guarantee paychecks or salaries, hazard pay for front-line workers. Could this be done? How could this be done? Why isn’t it being done?
That will be part of our conversation today, along with how this ties into potential corruption, with Trump battling the idea of an inspector general to oversee the trillions that are being spent. Well, we’ll see what all that means when we talk with Bill Black, who has been a former financial regulator and is now Associate Professor of Economics and Law at the University of Missouri, Kansas City and a frequent Real News contributor and author of The Best Way To Rob a Bank Is To Own One. Bill, welcome back. Good to have you with us.
Bill Black: Thank you. Good to be here.
Marc Steiner: There’s a lot of complexity to this for people when they read it, and I think that part of it is we live in this country where quote-unquote states’ rights is supposed to be the bellwether for who we are as a people. And for years, it was a good argument for why we shouldn’t end the enslavement of Africans and many other things. But talk about this in terms of this bailout now. Clearly, the Republicans and many people in Congress do not want to bail out state and local governments, and other people have been saying if they don’t do this, we’re in danger of having a real economic turndown. So talk a bit about what your analysis is here.
Bill Black: Sure. This isn’t really an issue of state right, it’s about state fiscal capacity versus federal fiscal capacity. States and local governments do not have sovereign currencies. They can’t run long-term deficits. They are constrained the way households are constrained. They usually have statutory limits as well and sometimes constitutional limits about raising debt. And when there is an enormous, great recession, the states and localities are absolutely pounded into laying off workers at the times when we most want to be spending in the public sector, which is why it makes enormous sense for the federal government, which does have a sovereign currency, to provide large amounts of money to states.
Now, that makes sense in any recession, but on top of that, we have a president of the United States who has decided it’s going to be the states’ responsibility to respond to one of the biggest health crises we’ve had in our lives, the coronavirus epidemic, saying, “It’s not me. I take no responsibility for it. I’m not going to provide the funding. And I’m going to compete against you in trying to get protective equipment, the testing and such.” It’s just insane in these circumstances. Obviously, it’s the equivalent of an unfunded mandate, where the federal government says, “You, the states, will do this, but we ain’t going to provide no money.” And that’s always wrong, but at a time of a massive recession that is going to bankrupt the states, that is utterly insane.
Except that of course it isn’t, because this is all about politics, which is to say the most radical Republicans want leverage over the states to say, “I don’t care whether it’s safe or not, you’re going to reopen this economy and try to make it possible for Trump to be reelected in November. And the only way we’re going to be able to keep this pressure on your most precious parts is if we don’t give you money.” And therefore, as a deliberate policy, the states are being extorted by Mitch McConnell and of course the president of the United States.
Marc Steiner: So you have a situation where we’re broadcasting here, Maryland, where Governor Larry Hogan, who is a Republican, had to negotiate with the South Korean government and businesses separately just to get the equipment he needs and swabs for the hospitals and medical care here in Maryland. That’s an example of how this is playing out. And then Jordan Weissmann, who covers economics and public policy for Slate, his quote was, “We’re going to face a repeat of ’09-’13 where state-level austerity contributes to a lingering depression if we don’t fund state and local governments.” So how real is that?
Bill Black: That’s absolutely real. They’ll going to have to lay off hundreds of thousands of people at the worst possible time, adding to the recession. It is absolutely insane. But on top of this, when we put almost the entire response to the epidemic on the states and say, now we’re going to greatly increase your responsibilities because we’re going to try to do a cold opening to the economy, where you have to do all the testing, you have to do all the contact tracing and such, that requires tons more people at a time when you’re going to be firing or laying off hundreds of thousands of people at the state and local levels.
Now, that’s insane for all of us, and we can’t protect ourselves against what Kentucky does or Tennessee does or something. Kentucky actually has a rational governor at the moment, but you know, not a number of these other states. As you say, it’s not entirely along partisan lines. Ohio has a perfectly reasonable governor on these things as well. But there are a whole group of governors who aren’t going to take responsibility, are going to say, “I’ve got no money to do it. I’ll just open the economy. Trump wants me to do that.”
And more to the point, again, people move across state lines. So it can’t work this way, and the only point at which the Democrats have leverage is now. They can’t go, “Oh, well we’ll just trust the Republicans to come back and provide for the State of New York.” Donald Trump and Mitch McConnell have been giving the biggest F you to New York and New York City for months, and this Democratic belief that somehow this is all going to change and kumbaya is nuts.
I take you back to Romney, the now supposed sainted Romney, the only Republican who stand out, who, when he was behind closed doors with his richest owners, said, “My job is to not worry about the 47% of the nation that didn’t pay income taxes.” So that’s the most responsible Republican at the national level saying this. The Democrats have to use their leverage now. Similarly, they have to use their leverage now because you know, the Democrats were shocked, shocked that when they passed the prior bailout bills, Trump immediately decided to gut the inspector general defenses.
Marc Steiner: I was about to ask you about that, right.
Bill Black: What is the most predictable thing in the world? That Donald Trump will want to use this massive slush fund the Democrats have given him of hundreds of billions of dollars to benefit himself financially, which he can do indirectly. The Democrats put some protections in, but they’re easy to evade. You just use a cutout party. And you desperately need the most intensive inspector general investigations. And of course, Trump immediately gutted those as well, because the Democrats thought that Trump would actually play it straight, which is, boy, would you love to play poker against these people.
Marc Steiner: Who would win?
Bill Black: It’d get embarrassing.
Marc Steiner: So what we face, the outcome of this could actually be pretty dangerous for the economy and for the people of this country if this game continues to be played. And when I look at what’s happening in other countries, we always like to look at the Nordic countries, what are they… And when you have an advanced capitalist country looking at how they are doing things, that makes some sense with their social Democratic base. I mean, they are guaranteeing income for people, guaranteeing salaries. They are freezing rent. Even for businesses they’re freezing rent. They’re doing things to ensure that everybody is taken care of, because like people have been saying, add to that here to ensure that everybody has the medical care they need when they lose it because they’ve been laid off. We’re on the precipice of a disaster, and it’s like we’re dancing around the edges.
Bill Black: And even folks like Paul Krugman are making your point. We no longer have to drag that responsible Democratic middle that always refused to actually spend money when it was needed. They get it. Even they get it now. The Paul Krugmans of the world get it, that there’s a vastly better way to do this. Don’t let the income ever end to the workers. If you don’t ever have that happen, then you don’t have to worry about Trump scamming the money, because the money gets directly to the workers. It gets there quickly. You get more stimulus. You have people not suffering. You don’t see 10,000 people in a line for food, 10,000 people waiting in lines for food in the United States and such.
This is all preventable. We know how to prevent it. It’s being done in other countries. The Paul Krugmans of the world agree with us that we need to do it differently. It’s perfectly available to the Democrats. They don’t insist upon it. They give massive amounts of money that they know that Trump is going to use to benefit himself, benefit his cronies and political supporters, and harm anybody he views as a foe. He is open about the fact that he likes to use this, that he expects people to beg him for money, to give public thanks on bended knee for the money. And you’re right, we see better ways to do it, mostly in the Nordic States, but Germany, which is super conservative and such.
But we also see equally horrible ways to do it, like in Hungary. We see the rise of outright fascism, and Trump makes it absolutely clear with his “I have absolute powers” and stuff, but that is exactly what he wants to do. He wants absolute power of the money. He wants us to give him hundreds and hundreds of billions, trillions of dollars in his view would be best, so that he can dole it out, make himself wealthy, bail out his failing business empire, but mostly to try to get reelected. And what does he use, what has become the quintessential aspect of the small business bailout? Ruth’s Chris Steaks, which serves $70 stakes to people, you know, like regular Joe type of thing. This is the true face of the bailout, so the Democrats, again, there’s a saying, if you sit down in any poker game and you can’t figure out within two minutes who the fool in the game is, it’s you.
Marc Steiner: Well, okay. That’s an interesting point to conclude on. Your years in government fiscal oversight, the other work you did in government, teaching, what does that analysis tell us about A, why the Democrats are lacking in the ability to get things done and to push a line that really benefits the American people, and B, what do you do about that?
Bill Black: Well, first you educate them, so you take away the excuse, oh, we didn’t know there was another way to do it that was vastly better. All right, so we’ve taken away that excuse. You’ll notice that it’s barely, even though we’ve got super centrist Nobel Prize-winning Paul Krugman, who has often been a problem for progressives, saying, “You people are nuts,” that gets picked up almost nowhere. Instead, what we’re getting in the Washington Post, New York Times already is a whole series of columns saying the debt, the debt, the debt, at the federal level.
Now, state and local debt is a big problem. Federal debt in these circumstances is part of the solution, it is not the problem. Exactly the opposite. Again, the problem isn’t coming from conservative Republicans. They’re not the ones running these columns. It is the responsible right wing aspect, the Wall Street wing of the Democratic Party that is doing this pushback and preventing us.
And then it’s things like MSNBC that do cheerleading about how Nancy Pelosi has supposedly turned these bills into models. No, they’re awful bills. As you say, compared to the Nordic countries, they are a D minus. Now admittedly, the bill before they got to it was terrible. They made it less terrible. It’s just D minus terrible still. We shouldn’t be searching for D minus, not even a passing grade with grade inflation, folks. We know how to do better, so it’s time for Democrats to insist that our leaders aim high.
Marc Steiner: And instead of saying we have inspector generals.
Bill Black: And inspector generals as well. But again, never giving Trump the money and having the money go directly to the taxpayers that need it, the workers that need it, is vastly better. As long as you give him money, then it’s always a catch-up game of trying to reduce the corruption, but he’s still going to corrupt. So wherever possible it should be absolutely paramount to give the money directly to the workers, and that can be done. The motif of the Democratic Party from Nancy Pelosi, every speech ought to be the war against corruption.
Marc Steiner: Well, Bill Black. I’m sorry. I’m sorry. Finish what you were saying.
Bill Black: That is what needs to go on, and right now we’re not fighting it. We got one corrupt party who is laughing all the way to the bank. That’s Trump, if you need a hint.
Marc Steiner: Well, as usual, you have outlined and enlightened what we need to know, so we need to continue to struggle to make it better. Bill, thanks so much for all your thinking and work. Look forward to our next conversation.
Bill Black: Thank you.
Marc Steiner: And I’m Marc Steiner here for The Real News Network. Let us know what you think about this. Where do you want us to take these conversations? And please stay safe, stay home, stay healthy. Take care.
Production: Genevieve Montinar, Bababtunde Ogunfolaju
Studio: Bababtunde Ogunfolaju