The Coming Bailout Is a Moral Failure

Congress has leverage to rebalance the economy, but so far, it isn’t using it.

Yesterday, I left the protective membrane of my house to get a bit of exercise. As I ran down to the corner, along our main street, I could see the victims of the virus everywhere. There was the movie palace, which has existed since the 1930s as the source of neighborhood identity and a monument to the past. The windows holding promotional posters were bare; the shades were pulled down over the ticket booth. As I peered into the empty stores, I saw the familiar figures of daily life slumped over their counters. There was the dry cleaner, who has promised my daughter a job when she turns 15; there was the surly woman at the Italian deli counter, who has inexplicably given me the stink eye for the past 20 years. I got teary-eyed as I plodded past them. Before social distancing ends, they will likely be erased from commercial and communal existence.

In the meantime, the lobbyists are set to plunder. This morning I heard Nicholas Calio on the radio. During George W. Bush’s administration, he was the White House’s smooth operator on the Hill, a kibitzer and arm-twister who advanced its legislative agenda. Now he works for the airline industry, and he was pleading on its behalf. Of course, there’s every reason to keep vital industries afloat. A vibrant economy needs a transit system. But the injustice of spending $50 billion on the airlines should drive the public to apoplexy. The companies that used their fat profits to buy back stocks as they constricted the distance between seats, that only managed to innovate by charging new fees, will be the ones the government chooses to salvage.

The coming bailout is a familiar moral catastrophe. During the financial crisis, the government saved the banking industry’s bacon, while asking exceedingly little of the culprits. When the government spends billions of dollars to save industries, it has enormous leverage. This is the moment when Congress can shape an economy. It should demand, for instance, that the airlines keep their workers in their jobs; it should place hard caps on executive pay and prohibit stock buybacks; it can demand that airlines take steps to reduce their Sasquatch-size carbon footprint. (And, damnit, Congress should require that their seats actually recline!) If the industry wants the public’s money, it will have to deal with it.

In a crisis, the government can’t save everything. Just as hospitals must ration ventilators, the government must make choices. These choices are excruciating because every industry that perishes will take down workers and investors with it. But just because choices are excruciating doesn’t mean that they shouldn’t be made. Rather, if the public doesn’t make moral demands of its politicians, then the politicians will protect the well connected; they will siphon money to cronies: The Trump administration is considering billions in aid to casino magnates like Steve Wynn and Sheldon Adelson. While casinos are important employers, they also preside over a gambling industry that addicts and abuses citizens—why should they get pulled from the fire while independent booksellers and local florists wither and die?

Mitt Romney had the best idea for how to stimulate the economy and get through the next few months: The government should pay $1,000 to every household in America. (Or even more than that, as Michael Bennet, Cory Booker, and Sherrod Brown have proposed.) That’s a stimulus with immediate impact. Some vital parts of the American economy, like the airlines, might need help bridging the gap until demand returns, since their failure carries systemic risks. But the reconstruction of the American economy isn’t something that should happen in a back room, as the rest of the country fears for its life. Lobbyists shouldn’t be rewarded at a moment like this one, when protesting their greed in the streets would carry mortal risk. Even before this crisis, American capitalism desperately needed rebalancing. What emerges from this economic collapse should be shaped by political choices and moral thinking, not by crony capitalists seeking to jam a sick nation.