What relief will American workers get after the government poured $2.2 trillion into banks and businesses? Economist Dr. Jack Rasmus explains why the bailout for workers needs to be as big as the bailout for banks.
This is a rush transcript and may contain errors. It will be updated.
Jacqueline Luqm…: This is Jacqueline Luqman with The Real News Network. After weeks of dismissal and avoidance, the Trump administration has finally mobilized to address the growing crisis presented by the spread of the novel coronavirus, here in the US. While the recent announcement of an economic stimulus package of sorts in the works for US citizens that only came after massive financial assistance was given to banks to prop up the stock market, the economic reality of workers around the country is being exposed and acknowledged as the precarious situation that millions of people already know about. But what are the alleged leaders on Capitol Hill going to do about it, and are their answers so far going to be enough? I’m happy to be joined by Dr. Jack Rasmus economist, radio show host, and the author of the recent book The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump. Dr. Rasmus, thank you so much for joining me.
Dr. Jack Rasmus: Glad to join you.
Jacqueline Luqm…: So Dr. Rasmus, we are entering a whole new reality for most American citizens. Most of us can’t remember experiencing anything like this in this country, in our lifetime. The closest we’ve come is what you’ve done in your latest article called A Coronavirus Economic War Mobilization Plan, where you compare this crisis to wartime conditions in 1941, during World War II. But aside from the uniqueness of this issue in the US, this crisis is also one that disproportionately affects the working class, more so than the wealthy. Can you explain how workers, and the working poor in particular, are uniquely affected by this emergency?
Dr. Jack Rasmus: Well, the major effect of course, is the massive loss of jobs. We are about [inaudible 00:02:05] just starting and losing jobs at a rate that we did in the 2008 and nine crisis, which was a million jobs a month. Even Steven Mnuchin, Treasury Secretary, predicts that we could lose jobs equivalent to 20% unemployment. Well, that was pretty close to where we were in 2008 and nine. We were losing jobs, a million jobs a month for at least six, eight months, which was the rate of job loss of the 1929, ’30s Great Depression. So we could be facing the same thing. Certainly, this is a crisis at least as equivalent to what happened in 2008 and nine, and what we’re seeing now is that they are bailing out the banks even before they fail. In 2008 and nine, they spent $4 trillion to bail out the banks after credit had frozen up, and the banking system crashed. And when the banking system crashes, there’s no money for loans and lending, and other businesses begin shutting down and laying off massively. That’s what happened.
Well, now they’re bailing out the banks even before, and the whole financial system, even before it happens. We spent 4 trillion last time, the Federal Reserve, I’m seeing estimates now, expects to spend $4.5 trillion more to bail out the banks, 4.5 trillion. Last week, they already spent over 2 trillion, and we see more and more coming this week. And the question I have, is if we’re spending that much money to bail out the banks before they even fail, why aren’t we planning to spend the same amount of money to bail out Main Street and workers who are feeling the impact of this crisis right now, right now? What we got in Congress is a bill, a trillion dollars roughly, 500 billion for businesses, banks, and non-financial… Well, actually non-financial corporations, $500 billion, and $500 billion is supposed to go to households in various ways.
That is totally insufficient. Of course, it’s good, let’s take it, it’s acceptable, but they are so way behind the curve in Congress about what it’s going to take, and if we’re bailing out the banks to $4.5 trillion, Why aren’t we planning to spend the same if necessary, to bail out Main Street and workers? We’re going to have millions of workers unemployed very quickly. They’re already unemployed. They’re already working from home, they’re already being laid off. We haven’t seen the full effects of the layoffs yet. Not just people who are having to work at home or stay home, because there’s no nannies or you can’t afford the nannies, you’ve got to stay home if you have K through sixth grade kids, right, take care of them. What are they going to do?
Half of the people in this country, according to government figures, have $400 or less for emergencies. Over half, right? Small businesses only have 27 days of income, free income left. What are they going to do? I’m talking about your restaurants, your local businesses, and by the way, they employ most of the people in this country. How are we going to bail them out, or make them even whole here during this crisis? We spend $1.7 trillion a month on the economy, business investment, government, and consumption. 500 billion to households gives you about a month worth, a month worth of keeping the economy afloat. It’s going to take a lot more, and I’ve proposed that we should prepare to spend three to 4 trillion on Main Street, and households, and workers and so forth, it’s going to take [inaudible 00:06:10] before this thing is done with.
They’re not even close to that, but President Trump says, “This is wartime. I’m a wartime president.” Well, as you indicated in my article, if you look at the outset of World War II in 1941, the government’s total share of the economy was about 15%. within one year, we had increased that to 40%.
Jacqueline Luqm…: Wow.
Dr. Jack Rasmus: 40%. That’s a wartime budget, that’s a wartime mobilization, because we are facing an economic Pearl Harbor in this country right now, and they’re not approaching it as such. They are dribbling the money out to households. They are opening up a wide fire hose to the banks like they did in 2008, and financial companies, and they’re just dribbling it out to the households. They’re going to have to spend a hell of a lot more, if they want to save Main Street and save consumption in this economy, then they’re planning to do even now. They’re behind the curve, and more is coming. This problem is only really beginning. The true economic effects of this is only really beginning, and they’re going to simply have to step up.
If this is a real wartime mobilization situation, well, let’s mobilize. Let’s mobilize the economy like we did in 1942, and prepare for the government to take over some of these companies, and maybe consolidate some of these. Let’s take the airline industry. Part of this trillion dollar bill is to give $50 billion to the airline industry. Now, consider this. The airline industry made a lot of super profits in recent years, and they gave 45 billion of that back to their shareholders in stock buybacks, most of which went to senior managers in the airline industry. They got most of the buybacks. So they created a hole of 45 billion, and now they want us to fill that hole for them? Let’s let some of them consolidate, and let’s let the government take over partial nationalization of the airline industry if necessary, and let’s do this for other industries. We did it in 1990, 91, we consolidated and government took over the mortgage companies. Why can’t we do that with the airline industry and these other companies, and start doing more for the average homeowner?
Jacqueline Luqm…: So Dr. Rasmus, how can we expect the government to do any more for American citizens, when not only did the Trump administration, and I’m not just going to put it on the Trump administration, because the Democrats capitulated to the Republicans, in allowing something quite nefarious to be put into this so-called relief package, in regard to sick leave, paid sick leave for American workers. But how can Americans expect the government to do something like nationalize industry when corporations, the CEOs of corporations, can go into the White House and can negotiate with Steve Mnuchin, the Secretary of the Treasury, and the Trump administration to determine what goes into a relief package that all corporations are supposed to adhere to for their workers, but when they come out, then the big corporations are exempt from providing needed services for American citizens? How do we expect our government to do something like nationalize corporations and consolidate them, when the corporations actually seem to have more influence on the government then we’re comfortable with?
Dr. Jack Rasmus: Well, that’s an excellent question, because it really shows who runs the US government here, and that’s the corporations, and particularly the bankers. Where’d Steve Mnuchin come from? Well, he comes from Goldman Sachs. Trump’s administration is full of Goldman Sachsers, Gary Cohn, and who was left was from Goldman Sachs, and he and Steve Mnuchin crafted overnight behind closed doors, this four and a half trillion tax cut that was implemented in January 2018 here. $4.5 trillion, not one and a half, it’s four and a half trillion minus a one and a half trillion tax [inaudible 00:10:54] on the middle class, and doesn’t count the real tax cut for multinational corporations’ offshore operations. It’s really four and a half trillion, and then last year, they gave them another 427 billion in loopholes, so that’s like $5 trillion in tax cuts. Well, that’s because the bankers wrote that and they pushed it through Congress here almost overnight in December of 2007, ’17. And that’s what you got going on now, they are crafting this thing to their advantage, and you begin to see it. I just talked about the freebie to the airline industry here.
Jacqueline Luqm…: Right.
Dr. Jack Rasmus: And even in 2008, what did the government do? Well, the government pretty much bought, in exchange for the bailouts in the auto industry, and in AIG, and so forth, they took up a position of ownership, and those companies are kind of like a quasi nationalization, they send in government inspectors to sit on the shoulder of these guys to make sure that they didn’t enrich themselves with the bailout given to them. And it was like a quasi nationalization, the first step to nationalizing these companies. Well, we’ve done this before and that’s what we should be doing, and it would cost us far less, right? And we would have far more to bail out Main Street here if we did do that.
But as you point out, the problem is the composition of who influences these people in Congress, and you’re absolutely right, it was during the Obama administration as well. We spent $4.5 trillion to bail out the banks and another 750 billion to bail out the other companies, right? And we gave another $300 billion in tax cuts, mostly to the companies. What did the 14 million homeowners who were foreclosed get? They got $25 billion. That’s all they got. And of course, auto workers and a lot of other people lost their jobs, and the jobs that came back were low paid jobs, tech jobs, part-time jobs, about half of the pay of the jobs that we lost, and that was why we had such problem with wage growth over the last 10 years.
So yeah, the problem is the people who are influencing it, you see it in the airline, you see it in the other proposals, and you see it in the Federal Reserve, who was there to bail out the banks, already throwing mountains of cash at the banks, trillions of dollars at the banks, and no one’s saying anything about that. Why isn’t the Fed throwing trillions of dollars at households and Main Street? They could do that too.
Jacqueline Luqm…: Exactly.
Dr. Jack Rasmus: They could bail out homeowners. What we need is a moratorium of at least three to six months on mortgage payments, on auto payments, on student debt, and an injection of income immediately, 500 billion, a trillion, and a guarantee that everybody unemployed is going to get at least three fourths of their income, three fourths of the income they were receiving, at least, those making up to a hundred, 150,000 a year. In other words, the working class, right? And that would stave us over a for three to six months. That should go on for three to six months.
I have a proposal in an article I wrote on my blog, jackrasmus.com, and in that proposal, which is called An Economic Recovery Program–Theirs vs. Mine, and how to finance it as well. In that proposal, I have ideas and suggestions of a paid medical leave without exception, three fourths of unemployment insurance payments without exception, guarantees that when people, when this is over, people will go back to their same job at the same rate of pay and same benefits as before, there should be no charges at all for uninsured or insured health care, any services that they have, not just testing, you see. Any services, no charge, let the hospitals and doctors bill the government, put the whole thing under Medicare, an emergency category under Medicare and administrate it through Medicare if you want, and a whole host of other real provisions that are really designed to protect the income levels of working class folks in this country, instead of just financing bankers.
Jacqueline Luqm…: So Dr. Rasmus, let me stop you there for a second, because I want you to explain further a little bit about what you just said, but I want to make it clear to our viewers what the corporations got away with in this meeting with the Trump administration, and it ties to what you just said about guaranteed paid medical sick leave. Corporations with 500 or more employees, that’s the Amazons, that’s the McDonald’s, that’s the Burger Kings, that’s most of the large chain grocery stores in this country, that’s most of the hotels, the large chain hotels in this country, people who are employed in a lot of low wage positions who come into constant contact with other people all day long, as a critical and regular aspect of their job, the corporations, the CEOs of these corporations negotiated with the Trump administration, and the Democrats agreed to exempt the companies with 500 or more employees from the mandate in the relief package, that they have to provide paid sick leave, 14 days of paid sick leave, to their employees in response to this coronavirus outbreak.
Now, Dr. Rasmus, these companies claim that they were concerned about how much money they were going to lose waiting for their payment, their repayment from the government. And so that says to me that they knew they were going to get their money back from the government, they just didn’t want to lose any money waiting for it. So how does the programs that you suggest in your plan, how do they get paid for, in response to this ridiculous notion that number one, because that’s the question people are going to ask, well, how are we going to pay for all these things? And we need to know how it’s going to be paid for to respond to these businesses, whose reasoning for not providing critical human rights services for their employees hinges on, “Well, we don’t want to lose any money.”
Dr. Jack Rasmus: Well, let’s take hospitals. Let’s look at the medical thing. The hospitals have to bill the insurance companies, right? If you’ve got insurance coverage, that usually takes 90 days or longer, they get paid. So waiting is just a fake argument. The government can reimburse these companies for paid medical leave, just as they can reimburse hospitals. If the hospitals can wait for the payment, you know what? Why can’t McDonald’s wait for the payment from the government? I mean, they make payments to the government quarterly, or even in some cases, monthly. So there is this communication channel, this payment, the accounting channel that exists between them and the government, so the government just deposits its money in whatever account the company indicates, that can be done virtually overnight, if Congress would pass the legislation for it. It’s not as if you’ve got to set up a new administration channel.
Look, they don’t like this idea of paid medical leave, because people after this crisis may just say, “Well, why shouldn’t this be permanent?” Six paid sick leave days a year? I mean, that’s terrible. That’s the worst of the advanced world, of all countries in the advanced economies in the world, they all pay 30 days or more of paid sick leave. Why, in this richest country, it’s only six days, and then only if you got a union contract or if you work for a government agency, most of them don’t even have that? They’re really worried about the fact that, well maybe people are going to say, “Hey, that’s a right. I shouldn’t lose my house and my income because I’m sick for no fault of my own.”
My proposal calls for 14 days, and renewable by state legislatures, don’t leave it up to Congress, state legislatures, if they got to stay home or they’re unemployed longer than that, during this period of crisis. There’s no reason why there shouldn’t be 14 days paid medical leave, which means maybe you’re not sick. A lot of people out there have this virus and they should be staying home, and they are contagious, right? Or maybe they’re not quote, sick, but their kids are at home now because they can’t go to school, they have to stay home. They can’t afford nannies or babysitters, right? It should be that kind of a paid leave definition, and not just a sick leave. We need more than just paid sick leave, and it should be extended for as long as this exists. We have disability payments through the state legislatures, just as we have unemployment insurance payment arrangements.
Well then, you could use the disability, have people sign up for disability at their state level, and just as they would get a check deposited, well, not even a check, just deposited electronically, from the unemployment insurance, they would get a check deposited to disability insurance, or you could just have the government pay the company, make the company whole for their expenses, in this regard. The arrangements are there, the administration is not that difficult and there’s no need for a long delay, but they don’t like the idea that the US might have to catch up with the rest of the world in terms of paid medical leave, and that’s why they’re resisting it. Of course, they’re not resisting the fact, give me 150 billion in loan guarantees, or give me a 50 billion cash grant here. Airlines, they’re not resisting that.
Jacqueline Luqm…: Right. They are definitely resisting providing anything for workers who actually are the ones who fuel the economy in this country. This is the narrative that I think is being turned on its head, amidst this crisis. Hopefully, we’re seeing people, workers, citizens, realizing that it’s not business that drives the engine of the economy in this country, it’s the workers. Well, things are changing and moving very swiftly as each day passes, and I am sure we will continue this conversation about the economic toll this crisis has taken, and will continue to take on the country and its citizens. But I want to thank you Dr. Rasmus for giving us a great insight into just a little bit of a slice of what we should be demanding from the government to get through this economically. We will post your articles and your information along with this interview when it publishes, and thank you so much for your time and your information, Dr. Rasmus. I really appreciate it.
Dr. Jack Rasmus: Glad to join you, anytime. I’m sure this thing will continue, and we’ll need updates to it all, but I want folks just to remember that over the last 10 years, let me just finish with this, right? US corporations gave their shareholders a trillion dollars a year every year in stock buybacks and dividend payouts, and under Trump, it’s been 1.2, $1.3 trillion. We’ve given them a pot hole of money, and it’s time to take some of that back and give it to the folks who really need it.
Jacqueline Luqm…: Well, if you have been wondering how we’re going to pay for it, there was your answer. This is Jacqueline Luqman with The Real News Network, helping you to stay informed and hoping that you stay safe. Thanks for watching.
Production: Genevieve Montinar, Taylor Hebden
Studio: Taylor Hebden