We Need a People’s Bailout as Inequality Worsens Amid COVID-19

After months of a pandemic, poverty, homelessness and suicides are on the rise in the U.S. Celebrations about a booming economy for Wall Street might evoke a sense of cognitive dissonance when taking into account the majority of the population. The gulf between those who have financially benefited from the COVID-19 lockdowns and those who have suffered has widened to new proportions.

To get a sense of the current situation many are facing, consider recent reports about communities on the outside of the “boom.”

According to the Los Angeles Homeless Services Authority, the homeless population in L.A. was 22,992 people in 2013. Seven years later, that number has increasedbefore evictions related to COVID-19 — by nearly 75 percent to 41,290.

Just as in Los Angeles, the rest of the U.S. was experiencing a housing crisis years before the lockdowns began. As The Center for American Progress recently reported, “More than 560,000 people experience homelessness on any given night, and at least 1.4 million utilize emergency shelters or transitional housing in the United States each year.”

These numbers are likely to rise as a record-breaking 44 million people have applied for unemployment benefits since March. Author Charles Hugh Smith calculated the “real unemployment rate” to be around 21 percent, using claim numbers from state unemployment offices and adding the 14.3 million contract workers currently receiving Pandemic Unemployment Assistance, plus 936,000 people in the Pandemic Emergency Unemployment Compensation program. During the Great Depression, the rate was close to 25 percent.

Accurate data on small business closures is difficult to gather since many aren’t filed in court, though according to the review site Yelp!, somewhere between 60,000-80,000 businesses have shuttered since the end of March. Another report looking at New York City found “Roughly one-third of the city’s 240,000 small businesses may never reopen.”

Due to expiring protections — like rent payment moratoriums — an estimated 30-40 million U.S. renters face potential eviction in coming months, according to analysis of U.S. Census data by the Aspen Institute. This situation alone should be grounds for renewed emergency relief measures.

Temporary eviction moratoriums, a one-time $1,200 stimulus check and diminishing unemployment insurance payments (down from $600 to $300) have failed to provide basic levels of needed aid. How are people supposed to house, feed and care for themselves and their families without immediate assistance during this unprecedented catastrophe?

These times call for a people’s bailout: continued eviction moratoriums, forgiveness of back and future rent, increased unemployment benefits and $2,000 monthly stimulus checks for those impacted by COVID-19. While many workers have been affected, communities of color are being hit disproportionately hard, which needs to be acknowledged when pressuring Congress on the next round of emergency funding. Furthermore, the corporations and institutions that exploited loopholes to unfairly claim aid money must refund tax-payers and face additional penalties.

The Usuals Win a Crisis

Despite this economic disaster, a small fraction of the population experienced new levels of success in recent times. A transfer of wealth unlike anything in modern history has taken place since the lockdowns began as billionaire wealth increased during the pandemic. Profits are up by 80 percent for both Walmart and Target, while Amazon’s have doubled. Overall, billionaires have seen their wealth rise by over $600 billion since the pandemic began.

The number of people facing extreme poverty was on the rise before the lockdowns, yet in a mirrored trend — but on the reverse end of the wealth spectrum — big corporations and other bloated institutions have seen record earnings.

Under the guise of “Providing emergency assistance to individuals and businesses impacted by the pandemic,” Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES) on March 27, after it passed the Senate with wide bipartisan support. CARES is the largest financial stimulus bill in the history of the U.S., totaling around $2.2 trillion.

After Democrats insisted on stronger oversight, both parties agreed on the addition of an inspector general, and a five-person congressional committee to monitor the distribution of funds. Five months later, we can see how CARES paid out. As Bloomberg reported:

As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judge to authorize the same amount as bonuses to nine executives. The rig operator is one of dozens of oil companies and contractors now claiming hundreds of millions of dollars in tax rebates. They are employing a provision of the $2.2 trillion stimulus law … that gives them more latitude to deduct recent losses.

In May, Business Insider reported that some large companies took $50 million meant for small business loans. Only 48 out of 387 of the takers agreed to return the loan money, after being named by critics.

Bloated behemoth Blackstone, the largest alternative investment firm in the world, already had $370 billion in assets in 2017. In March, Forbes reported the company to be worth more than Goldman Sachs and Morgan Stanley. Three days prior to the passage of the CARES Act, CNBC reports, Blackstone CEO Steve Schwarzman joined a call with Trump and prominent investors, and the company hired Trump fundraising lobbyist Jeff Miller to focus on coronavirus relief legislation. Blackstone eventually gained access to CARES funds.

Oil industry titans, financiers and monolithic hucksters of consumer goods (including tech companies like Apple, whose shares rose to record highs in August) aren’t the only lockdown winners. The military continues intaking a seemingly untouchable share of tax revenue despite the scale of CARES expenditures. After voting “No” on a measure to reduce the Pentagon’s budget by 10 percent, the Senate approved a $740.5 billion allotment for the military in July. This accounts for around 50 percent of Trump’s entire 2021 discretionary budget request (along with $1.6 trillion in cuts to low-income programs). In 2020, military spending increased by $21 billion from 2019. This is unacceptable at a time when money for the public’s basic needs has been sorely lacking, especially given reports that the budget exceeded the Pentagon’s own expectations.

The consolidation of wealth away from the bottom 99 percent has gone into overdrive. Legislators need to focus their energy on redirecting available emergency funding streams back to people actually in need.

Operation Warp Speed

Pharmaceutical corporations, another familiar group of ruthless price-gougers, also reaped enormous profits during the pandemic. Thanks to Trump’s “Operation Warp Speed,” new tax money pipelines have been created for a number of manufacturers of COVID-19 vaccines and treatments. The new public-private agreement netted Pfizer and BioNTech $1.95 billion from the U.S. government, in exchange for joint production of 100 million doses of an “mRNA-based Vaccine Candidate Against SARS-CoV-2 … by the end of 2020 and potentially more than 1.3 billion doses by the end of 2021.” Novavax was awarded $1.6 billion, and Moderna, as of mid-August, has received $1.5 billion in taxpayer money to produce COVID-19 vaccine candidates. A total of six corporations have received hundreds of millions in such payments, though the government is threatening reduced payouts if milestones aren’t met.

NPR’s reporting showed potential financial gains to come for some vaccine makers. During a House Committee on Energy and Commerce hearing in July,

U.S. Rep. Jan Schakowsky, D-Ill., asked vaccine manufacturers … whether they would commit to selling their vaccines ‘at cost,’ meaning for no profit. Moderna’s president, Stephen Hoge, said, “We will not sell it at cost.” … Merck also declined to make this pledge during the hearing … Johnson & Johnson said it wouldn’t make a profit ‘during the pandemic.’ Moderna views pricing of its coronavirus vaccine in two stages: the pandemic period and the endemic period, CEO [Stéphane] Bancel said.

In other words, some Operation Warp Speed beneficiaries are saying they will likely collect a double payment from the public; once through taxpayer funding to develop the vaccines, and again through the selling of those vaccines at a profit. Perhaps three times, if one counts financial shielding from legal claims offered by Warp Speed: Under Trump’s plan, victims seeking compensation for vaccine injuries must enter a federal program that protects pharmaceutical companies from lawsuits, offering instead taxpayer money from a limited fund. Critics have voiced concerns about potentially unsafe, inadequately tested vaccines and treatments being raced to market. The risk and cost of such a rushed delivery should not be offloaded from corporations onto the public.

It should be emphasized that Open Secrets, an organization that tracks federal campaign contributions and related information, lists “pharmaceuticals/health products” as the number one highest spending lobbying industry in the U.S., outpacing even oil. Instead of leaving an open opportunity for these companies to further profit off the crisis, the public should demand that treatments be free, voluntary and safe.

Recovering Stolen Funds

These are only a handful of examples of industry players who have used this desperate moment to double down on their fortunes. Even when propped up and fueled by the peoples’ tax money, the richest have decided to continue adding to their billions. They have largely refused to cap their profits or return what wasn’t meant for them, leaving masses of people unable to meet their basic financial needs.

While the rich were able and willing to quickly take advantage of the CARES Act, other communities haven’t been so lucky. A three-month investigation conducted by the Howard Center for Investigative Journalism discovered that $4 billion allocated for homelessness aid programs, “had not made its way to local communities.” Though it’s unclear why the money hasn’t arrived, the investigation found two failures in local governments’ overall handling of COVID-19’s impact on homeless communities: “A lack of readiness to work across departments dealing with both housing and health, and insufficient data and testing to know who was getting sick and where.” With pressure mounting on Congress to negotiate a second relief bill, lessons must be learned from these problems. Clear pathways for funding homeless programs and cross-departmental cooperation need to be established before the act is passed.

Increasing taxes and penalties on the wealthiest corporations (and individuals) should be the topic at the forefront of political debates. If creating a ceiling on — and redistributing a percentage of — the military’s budget could stem the tidal wave of evictions, foreclosures, unemployment and homelessness, what reason is there to ignore this option? Both Democrats and Republicans have failed to tangibly acknowledge the needs of their constituents. Austerity for regular people combined with the continuation of tax loopholes for the largest corporations is a formula leading to disaster for the majority.

Not only should vulnerable communities be the central focus as Congress negotiates a new COVID-19 stimulus package, but an independent committee must also be created with the explicit authority to redirect misappropriated CARES Act aid money back to its intended destination: communities in need. The time for an emergency refund is now — all money acquired through price-gouging and loopholes needs to be returned. The choice is between collapse and giving people what is rightfully theirs.

Consider joining forces with one of 500 groups fighting back against Wall Street for a people’s bailout.