March 23, 2020 By Alex Henderson, AlterNet
Liberal economist and veteran New York Times columnist Paul Krugman has been stressing that any economic stimulus bills passed by Congress in response to the coronavirus pandemic must not be simply corporate bailouts, but provide genuine help for struggling U.S. workers. And in a March 23 Twitter thread, Krugman slams Senate Majority Leader Mitch McConnell for trying to create a corporate “slush fund.”
McConnell, according to Krugman, is wrong to approach the economic fallout from coronavirus like the crash of September 2008 and the collapse of Lehman Brothers.
“McConnell wants everyone to imagine that it’s like the immediate aftermath of Lehman, and that everything will collapse unless we give Trump a $500 billion corporate slush fund with no effective oversight,” Krugman asserts. “That’s totally unacceptable.”
That is, the clear and present need is for disaster relief, rather than stimulus. And notice how the debate over this relief is being framed: calls to help Americans in need are portrayed as "Democratic demands" rather than the decent thing to do.
— Paul Krugman (@paulkrugman) March 23, 2020
The economist adds, “Even aside from trust issues, we have this thing called bankruptcy law that often allows corporations to remain viable entities even when they can’t pay their debts. There may be cases where that won’t be enough — but then you want conditions attached to aid, a la auto bailout.”
Krugman goes on to explain why he distrusts McConnell, writing that the Kentucky Republican “has shown that he can’t be trusted when it comes to corporate giveaways. Remember how that huge 2017 corporate tax cut was supposed to lead to an investment boom, and instead was spent on stock buybacks?”
Krugman is equally critical of President Donald Trump in his thread, tweeting, “Nobody in their right mind believes that we can trust Trump to use a slush fund in a non-corrupt way, as opposed to rewarding friends — including himself — and punishing enemies…. I mean, he won’t even use the power he has to order companies to produce urgently needed medical supplies. Not a chance that he would require good behavior from bailed-out businesses.”
But McConnell wants everyone to imagine that it's like the immediate aftermath of Lehman, and that everything will collapse unless we give Trump a $500 billion corporate slush fund with no effective oversight. That's totally unacceptable 8/
— Paul Krugman (@paulkrugman) March 23, 2020
And McConnell himself has shown that he can't be trusted when it comes to corporate giveaways. Remember how that huge 2017 corporate tax cut was supposed to lead to an investment boom, and instead was spent on stock buybacks? 12/
— Paul Krugman (@paulkrugman) March 23, 2020
Even aside from trust issues, we have this thing called bankruptcy law that often allows corporations to remain viable entities even when they can't pay their debts. There may be cases where that won't be enough — but then you want conditions attached to aid, a la auto bailout
— Paul Krugman (@paulkrugman) March 23, 2020
In his thread, the Times columnist asserts that a spending bill passed by Congress needs to emphasize “disaster relief” for American workers.
“This isn’t 2008, when you arguably had to rush money to financial institutions to avoid immediate collapse,” Krugman tweets. “Stimulus is needed, but there’s time to do it right. Just say no to slush funds.”
So, once more: this isn't 2008, when you arguably had to rush money to financial institutions to avoid immediate collapse. Stimulus is needed, but there's time to do it right. Just say no to slush funds
— Paul Krugman (@paulkrugman) March 23, 2020
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