The United States has passed five major economic bailouts and stimuluses since 2001. They are: the $15 billion airline bailout passed by President George W. Bush following the 9/11 attacks; the $120 billion 2008 Bush Economic Stimulus which cut checks to taxpayers; the $700 billion 2008 Emergency Economic Stabilization Package (EESA) also known as TARP; the $831 billion American Recovery and Reinvestment Act (ARRA) and now the $2 trillion Coronavirus Aid, Relief and Economic Security Act also known as the CARES Act.
The CARES Act is drawing comparison to many of the previous bailouts and stimulus plans. CARES contains a $500 billion earmarked for big business; similar to the TARP program of 2008 which allowed the United States Treasury to purchase up to $700 billion worth of troubled assets from financial institutions. At the time, TARP was a hugely controversial program. While there’s no doubt it helped stabilize the economy it provided little relief for struggling homeowners while granting billions to Wall Street and sometimes even paying bonuses to the same executives that oversaw the near total collapse of the financial system.
This time around Democrats fought for more regulations on what businesses could do with taxpayer funds including restrictions on executive compensation, prohibiting stock buybacks and directing President Donald J. Trump to appoint a “Special Inspector General for Pandemic Recovery.” However, in a signing statement Trump indicated that the Inspector General would report to him rather than to Congress directly. On Monday Senate Democrats pushed back, demanding that Mnuchin honor the terms of their negotiations and that Trump nominate an Inspector General that would report directly to Congress. Rep. Katie Porter, an influential freshman Democrat from California, is already raising concerns that Congress isn’t doing enough to protect taxpayer money calling the money a “$500 billion slush fund” and telling Vox that “I’m concerned about some of the potential for corporate abuse in this bill with that $500 billion fund, unless there’s really strong oversight, because…there are very few conditions put on it right now — a couple of conditions around stock buybacks, but there could be a lot more. There needs to be a lot more.”
The CARES act does provide for more direct cash support to individuals and families than either of the stimulus bills passed by Bush or Obama more than a decade ago. According to The Los Angeles Times while the income thresholds remain the same individual taxpayers will see a $1,200 check compared with an $400 tax rebate under the ARRA or a $600 check from the Bush stimulus. However, as NBC news analyst Jonathan Allen notes “faced with difficult choices about who to help and who to help the most, Congress opted for all of the above on the first question and major corporations on the latter.”
Looking at that half trillion corporate fund another way Washington Post economic reporter Jeff Stein points out how much more direct assistance the government could have provided to families and individuals “I looked at the overall cost of this package. And if you took that money and divided it up among every person in America, every single person could get $6,000. For a family of four, that would be $24,000 at once. And the bipartisan stimulus package — that offers $3,400 per a family of four. So if we had just taken the exact same money and divided it up evenly among everyone in the country, rich and poor, a family of four could get $24,000. And under the current law that’s going to be passed, that number is much closer to $3,400. So a huge disparity and raises the question of, ‘Would this money be better allocated not shoring up these large firms, but just giving to everyone in the country?’”
Who Was Watching the Bank, If Anyone
Airline bailout: Overseen by the Air Transportation Stabilization Board (four members, the chairman was a member of the Federal Reserve Board of Governors, other members included representatives from the Treasury and Transportation Departments). The legislation didn’t say that the board reported to either the White House or Congress, however, the Comptroller General of the General Accounting Office was a non-voting member of the board and the GAO is the investigative arm of Congress. The New York Times reported in 2004 that the board was subjected to lobbying by members of Congress. “The Congressional district represented by J. Dennis Hastert, the speaker of the House, is in Illinois, United’s home state, and Mr. Hastert has spent months lobbying tirelessly for United’s application. United executives and employees donated $10,200 to Mr. Hastert’s 2002 re-election campaign, according to Opensecrets.org, a Web site that tracks political contributions.”
Bush Economic Stimulus No oversight as the check amount and income thresholds were stipulated in the legislation
TARP: There were three main oversight bodies: The Congressional Oversight Panel a bipartisan committee that reported to Congress; Special Inspector General for TARP (SIGTARP) this was Barofsky’s committee and it was authorized by the EESA to “among other things, to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets under TARP”; and The Government Accountability Office was responsible for regularly reporting to Congress the evolution of TARP’s strategy and the status of TARP programs.
American Recovery and Reinvestment Act Vice President Joe Biden oversaw the Obama administration’s implementation of the ARRA. He was supported by the Recovery Act Transparency and accountability board.
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