While the stock market has nearly recovered to its pre-coronavirus levels (even with recent drops), more than 44 million people remain unemployed. The pandemic has hit those making the least the hardest: 40 percent of those making less than $40,000 have lost their jobs.
Despite this, Senate Majority Leader Mitch McConnell (R-Kentucky) has indicated he’d like to wait and see how the actions taken so far turn out before acting again. The markets have been responding strongly to the actions of Federal Reserve Chair Jerome Powell, who made it clear at the end of March that the Fed was prepared to do whatever it takes to rescue the economy. But no politicians go on TV and say they will do whatever it takes to make sure no one goes hungry or bankrupt during (or after) the pandemic. In fact, it seems that the only thing that may drive McConnell to pass another coronavirus package is another market crash.
On March 22, McConnell pleaded for action on the Senate floor, “The American people are watching this spectacle. I’m told the futures market is down 5 percent,” and said that inaction was “fiddling with the markets.” But once the stock market began its recovery from the March lows, McConnell lost any urgency to act further.
The financial markets’ recovery is largely attributed to the Fed’s unprecedented actions. As one example, the agency said it will buy the debt of corporations, including those whose debt was reduced to a “junk” rating after March 23.
This move made it easier for companies (like the oil and gas firms that are the largest issuers of junk-rated debt) to find buyers of their corporate debt in the private market, because investors believed the Fed’s commitment made buying corporate debt less risky.
Former Fed Governor Sarah Bloom Raskin has argued that this exacerbates inequality, since junk bonds are predominantly purchased by hedge funds, which you cannot even invest in unless you are wealthy.
When asked by Sen. Chris Van Hollen (D-Maryland) why that was a good move, Fed Chair Powell said these “fallen angels” employ lots of workers. But in other Fed programs, such as the Main Street Lending Program, the Fed itself does require companies to keep their workers on payroll.
Not only has the Fed’s response been unequal in who it helps, it’s also quite directly lining the pockets of a Trump administration official who helped design the programs. ProPublica recently reported that the person behind the corporate bond purchase programs is Deputy Treasury Secretary Justin Muzinich, whose family has a $10 billion hedge fund invested mostly in corporate bonds, a clear conflict of interest.
Meanwhile, the government won’t use one of the easiest tools we have to boost the real economy, not just the stock market: cancelling federal student loan debt, the vast majority of which is owned by the government. It would not only help 43 million federal student loan borrowers, it would boost the economy for everyone. And the administration could do it without even needing Congress to act. Instead, Trump’s Education Secretary Betsy DeVos is fighting to prevent DACA recipients from receiving money from the relief funds directed at schools and students.
We also don’t see the administration using its existing enforcement tools to act to ensure the protection of workers. The Occupational Safety and Health Administration (OSHA), which is the agency responsible for creating and enforcing workplace health and safety standards, has taken just one enforcement action in the entire pandemic, despite receiving over 1,364 COVID-19 whistleblower complaints as of May 26. OSHA has effectively abandoned all workers outside health care: Any complaints received from non-health–care employees will simply generate a letter to the employer.
At the end of May, National Economic Council Director Larry Kudlow suggested making the response even more unequal. He proposed creating a new incentive for investors to trade even more by waiving the capital gains taxes that investors pay when they buy and sell stocks and other securities.
The vast majority, over 80 percent of the stock market, is held by the wealthiest 10 percent of the U.S. That’s who Kudlow wants to target with this relief. Those, and the many sports bettors who, in lieu of sports, have moved to gambling on stocks. But it’s not just policies laser-focused on the wealthy. It’s the protection of their property above the rights of human beings to protest, and even the guarding of their symbols.
An image of the Wall Street bull covered in a blue tarp and surrounded by police protectors amid a Black Lives Matter protest in Manhattan went viral this weekend on social media. McConnell is working to protect companies’ bottom line against the health and safety of their workers by advocating that any future package have immunity for firms whose workers get sick when they return.
Colleges and universities, through the lobbying organization the American Council on Education (ACE), also wrote to Congress asking for immunity from class-action lawsuits if their students and workers come back and get sick with COVID. Meanwhile, ACE also argued against broad debt cancellation for all federal student borrowers, effectively putting the needs of the institutions ahead of their own students, alumni and workers.
Congressional inaction in the face of mass layoffs and dying small business makes clear that our lawmakers’ priorities are defense of capital over human life. As a nation, we had to crowd-source personal protective equipment to health care workers while cops have all the gas masks they need as they tear gas protesters.
It took ten years after the financial crisis for wages to return to where they were before the crisis. Meanwhile, the banks returned to profitability less than a year later, in 2009.
We are facing an even steeper cliff in this crisis for working people, which makes now a more urgent time than ever to ask ourselves: What should be the true measure of a healthy economy? It’s certainly not the level of the S&P 500 stock index. It’s also not just unemployment numbers.
We have to start measuring the health of our economy in terms of life expectancy, bankruptcy rates, health security and human well-being. True economic health would look like the vast majority of people being able to go to sleep without worrying about money.
In the PBS “Frontline” documentary about the 2008 crisis, Money, Power and Wall Street, author Satyajit Das explained, “in the modern age, our God was finance. Except it’s turned out to be a very cruel, destructive God.”
When I worked on Wall Street during the last crisis, the trading floor had a massive scoreboard mounted close to the ceiling, which displayed the latest stock index numbers. Traders would look up at the numbers like supplicants.
We have a choice to respond to this crisis differently than the last one. But first, we have to stop protecting and worshipping the golden bull.