USA GOP AGENDA
Employers May Soon Get Protected From Lawsuits While Workers and Customers Are Left In The Dark On Safety

“There is no playbook. There are no established best practices. This uncertainty is impacting our decisions.”

Paul McLeod BuzzFeed News Reporter
Reporting From
Washington, DC
Posted on May 22, 2020

Saul Loeb / Getty Images
Senate Majority Leader Mitch McConnell

WASHINGTON — As states reopen, nonessential workers across the country can be summoned back to work, but there are no federal coronavirus rules protecting them and their ability to sue over unsafe work conditions could soon be severely limited.
The Trump administration has not enacted any health and safety rules to govern how workplaces must keep employees safe during the coronavirus epidemic. There are no federal requirements to provide masks or enforce social distancing when possible. At the same time, Congress is debating whether to pass sweeping liability reforms to shield employers from coronavirus-related lawsuits.

That combination could result in a legal landscape where employers are under no obligation to adapt to coronavirus, yet workers and customers are unable to sue for changes or if they get sick.

Senate Majority Leader Mitch McConnell has made passing a liability shield his top coronavirus priority, insisting it be included in any aid bill Congress passes next.

An immunity shield would mean workers couldn’t sue their employer over allegations that they contracted COVID-19 due to unsafe working conditions, and customers couldn’t sue a business they believe caused them to be infected.

Employers ranging from hospital groups to the owner of Burger King have made a hard push for legal immunity as the country reopens. But the driving force has been the US Chamber of Commerce.

During a Thursday conference call, Chamber executives called for Congress to pass a liability shield and opposed any new health and safety regulations on businesses.

The White House has so far avoided taking a firm oversight role. OSHA, the Occupational Safety and Health Administration has released only guidance — nonbinding advice that is unenforceable — rather than enforceable regulations. The White House’s “Opening Up America Again” plan punts workplace health and safety to being a state responsibility.

OSHA falls under the purview of Labor Secretary Eugene Scalia. Scalia was formerly a corporate lawyer at the Washington office of Gibson, Dunn & Crutcher, where he specialized in overturning workplace protections. Scalia has lobbied on behalf of the Chamber and represented the group several times over the years.

In 2001, then-president George W. Bush tried to appoint Scalia as Labor Department solicitor, but he was initially blocked in the Senate because of his perceived hostility toward worker protections.

He had led a US Chamber of Commerce legal campaign against Clinton-era workplace safety design rules, mocking the underlying science as “quackery.” He was later appointed through a rarely used process that circumvents the Senate. (And, yes, he’s the son of late Supreme Court Justice Antonin Scalia.)


Alex Wong / Getty Images
Labor Secretary Eugene Scalia answers a question during the daily coronavirus briefing as White House coronavirus coordinator Deborah Birx looks on.

Over the past decade he cemented himself as a star attorney for his successful lawsuits to overturn and weaken Dodd–Frank provisions. He has also been a key figure in opposing whistleblower protection laws as he represented employers fighting OSHA’s Whistleblower Protection Program.

“This is a pro-business agenda. He’s an essential part of opposing and undercutting the whistleblower laws,” said Lynne Bernabei, an employment lawyer at Bernabei & Kabat, PLLC.

The Department of Labor did not respond to a request for comment as of deadline.

The lack of federal standards only increases the uncertainty for businesses looking to reopen. Employers that follow federal guidelines can offer a defense of regulatory compliance if they are sued.

Last week at the Senate Judiciary Committee meeting, witnesses told Congress that no one knows what the best practices are and without them, workplaces are fearful to reopen.

“There is no playbook. There are no established best practices. This uncertainty is impacting our decisions,” Texas Christian University counsel Leroy Tiner Jr. said, testifying on behalf of the American Council on Education, a group that represents hundreds of colleges and universities.

Senate Judiciary Committee Chair Lindsey Graham, a Republican, seemed to agree.

“The big whole in the puzzle right now is the standards. We have workplace safety rules for how you do business in a meatpacking plant, but there’s no rules about how to protect yourself from the coronavirus in a uniform way,” Graham said.

But Republican senators have been loath to criticize the Trump administration’s handling of the coronavirus outbreak. Graham’s office did not respond to a request for comment on whether he supported new OSHA regulations.

The Chamber of Commerce argues that passing coronavirus regulations is not feasible. Executives say that factoring in the public notice and comment period, plus any challenges, the process would take months if not years.

“In that kind of environment, the idea that you could write a regulation or even multiple regulations that would recognize the differences in all 8 million workplaces, it’s just not practically possible,” said the Chamber’s chief policy officer Neil Bradley.

Under normal circumstances, rulemaking is a monthslong process. But Bernabei argued there is precedent for federal agencies using their emergency powers — having “good cause” to waive the notice period in the public interest — to fast-track new rules.

In Congress, liability reforms are shaping up to be the defining battle of the next round of coronavirus aid. Republicans say a liability shield for employers is necessary to prevent a "lawsuit lottery" where businesses are brought to ruin by an avalanche of false claims.

On the Senate floor, Majority Whip John Cornyn raised the specter of a person entering a newly reopened restaurant and then suing a week later, after testing positive for COVID-19, despite not knowing when they were infected. "We're already seeing lawsuits piling up," said Cornyn.

One Senate Democratic aide called the policy “a line in the sand” and “a complete nonstarter” in coronavirus negotiations. Labor, consumer advocacy, and progressive groups say they are building a campaign to fight the proposal, arguing it will deprive workers of legal recourse if they are put in reckless or unsafe working conditions.

A database tracking coronavirus-related lawsuits maintained by the law firm Hunton Andrew Kurth shows that if there is going to be a tidal wave of workplace safety lawsuits, it has not started yet. Of the almost 1,300 recorded coronavirus-related lawsuits filed in the country so far, just 26 involve exposure to the virus at work. The bulk of the lawsuits involve prisoners suing to be released, people or businesses suing insurance companies, or civil rights suits that challenge closure orders.

Sen. Patty Murray, the powerful ranking member of the Senate Health Committee and a key player in negotiations, is coming out hard against liability reforms.

“We absolutely cannot use a pandemic as an excuse to rollback protections for workers,” she said in a statement to BuzzFeed News. “Federal labor laws are intended to protect workers at all times, but particularly, during times of heightened health and safety risk.”

But Democrats have $3 trillion in coronavirus aid policies they want to get done soon. To pass anything through Congress you have to go through McConnell, who has shown a willingness to wait until he gets what he wants.

If you're someone who is seeing the impact of the coronavirus firsthand, we’d like to hear from you. Reach out to us via one of our tip line channels.



Paul McLeod is a politics reporter for BuzzFeed News and is based in Washington, DC.

USA

Small Businesses Owned By Women And Minorities Are Struggling To Get Federal Loans During The Coronavirus Pandemic

The Small Business Administration was supposed to give guidance to lenders to prioritize underserved small businesses, but the agency’s inspector general found it did not.

Kadia GobaBuzzFeed News Reporter

Posted on May 22, 2020,

Courtesy Kathleen Labadie

Linda Broderick and Kathleen Labadie, twin sisters who run Murphy's Maids in Little Neck, New York.

BuzzFeed News has reporters around the world bringing you trustworthy stories about the impact of the coronavirus. To help keep this news free, become a member and sign up for our newsletter, Outbreak Today.

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WASHINGTON — Business at Murphy’s Maids was somewhat steady in the early days of the coronavirus pandemic.

Just before New York announced a stay-at-home order, calls into the 40-year-old cleaning service in Little Neck had slowed. But loyal customers kept at least a handful of the 12- to 15-person staff working, according to Linda Broderick who runs the business with her 73-year-old twin sister, Kathleen Labadie.

On March 20, the phone stopped ringing altogether.

Broderick sought help from the Paycheck Protection Program — an initiative in Congress’s $2.2 trillion economic stimulus plan meant to help small businesses stay afloat and keep employees on the books.

Broderick spent more than two hours to complete the “cumbersome” application on April 8. More than a month later, she’s still waiting for the money.

“That has been one fiasco after another,” Broderick told BuzzFeed News. “First of all, I don’t have a computer so I’ve been using phones and having my friends help me to get all this stuff through.”

Broderick said she kept getting error messages when she was prompted to put in tax forms that didn’t really apply to her business. She resigned to just photographing and then downloading a note that said, "We don't have 940 and 945 [tax forms]. We have 1099s.” It went through.

Now they’re waiting to hear from the third bank after two others denied their application. In the meantime, Broderick still has to pay the fees that come with running the business, including $1,000 every month for worker’s compensation insurance.

“My payroll per month is 20,000,” she said. “And I don't have $20,000 to pay these girls until I can get money back from my customers,” adding, “I mean, it’s like a saga."

Broderick’s is one of many small businesses that are hemorrhaging money because of the coronavirus and seeking help from the federal government. The Paycheck Protection Program was explicitly supposed to prioritize loans to help rural small businesses and those, like Broderick’s, that are women- and minority-owned. Earlier this month, the Small Business Administration’s inspector general found it did not.

On May 8, SBA Inspector General Mike Ware issued a report that found the agency failed to provide guidance to lenders requiring they prioritize rural, women, and minority-owned businesses, even though the coronavirus legislation passed by Congress expressly says to do so. In fact, the report says it “did not find any evidence” that SBA issued that guidance to any lenders doling out the payroll protection loans.

Since Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the SBA says they’ve issued more than 4.3 million small businesses paycheck protection loans as of May 20, equalling just over 13% of the country’s 30 million small businesses. And it’s impossible to know how many women and minority-owned businesses received loans from the program, the SBA inspector general wrote, because the agency did not instruct lenders to collect demographic data.

Absent federal data, the Brooklyn Chamber of Commerce gathered their own data, finding that only 4% of women and minority small business owners who applied for PPP loans in the first phase received them, in a survey of 592 small businesses in the borough. By the second phase — which SBA instituted after larger businesses exhausted the bulk of the first round of PPP funding — that number rose to 87%.

“The big banks got such bad press in the first round that in the second round, they were just more responsive to small businesses,” Randy Peers, the president of Brooklyn Chamber of Commerce, told BuzzFeed News.

The SBA also implemented emergency lending facilities to assist in processing and distributing loans during the second phase; several small business owners who spoke to BuzzFeed News said they didn’t get loans until the second phase began.

Courtesy Morgan Baum

Morgan Baum, who owns a pottery store in Minnesota, and received a paycheck protection loan to keep her business afloat.

Even small stores who’ve received PPP loans are struggling with the SBA’s requirements. Several small business owners told BuzzFeed News they haven’t gotten enough guidance from the SBA and are confused about the requirements for loan repayment and forgiveness.

“Nobody has really explained what the parameters are,” said Morgan Baum, who owns a pottery store in Minnesota and received $15,200 as part of the program. “We’re out there spending the money because we have a ticking time clock and we have no clue if they’re going to change the rules and [the loans] won’t be forgiven. And that’s terrifying.”

Damon Gorton of Sisters restaurant in Brooklyn echoed the same sentiments. “I’m having a hard time figuring out exactly how to use the funds so that the funds are forgiven,” he told BuzzFeed News. Gorton also said he was instructed to seek the advice of a lawyer or an accountant to find more information.

The inspector general also reported that the SBA added a requirement stipulating that 75% of PPP loans must go to payroll and 25% to rent and utilities in order to be eligible for forgiveness, but that’s problematic for small businesses in larger cities where rent can come close to or surpass their payroll amount.

Courtesy Daniella Stromberg

Daniella Stromberg wears a mask outside her small business, d’mai Urban Spa in Brooklyn.

“Ultimately, I’m going to be saddled with debt,” Daniella Stromberg of d’mai Urban Spa in Brooklyn told BuzzFeed News. “If I use it now, I have no money to pay my employees when I open. I have $30,000 a month rent and I’ve been closed for five months with no income.”

Stromberg, 54, said the disadvantages of the program outweigh the advantages and told BuzzFeed News she feels “caught between the greed of a landlord and the ineptitude of the SBA. Their solution is an insult — an absolute injury to Main Street.”

The SBA declined to comment on whether or not they would change the 75/25 model that could disproportionately impact businesses in larger metropolitan cities. And while House Democrats recently passed legislation to remove the restrictions, the Republican-led Senate would also need to pass the bill, and so far, Majority Leader Mitch McConnell has expressed that he’s not in a rush to take on any additional legislation.

Ware’s report made five suggestions for SBA, including adding demographic questions on loan forgiveness forms, issuing guidance to lenders to prioritize buyers in underserved markets, and examining how the 75/25 guidelines for loan forgiveness could hurt businesses.

In the meantime, the economic downturn continues to stress many small business owners in addition to the exhaustion of the pandemic itself.

“I’m so tired,” Stromberg told BuzzFeed News. “Like, I’m a badass person and I’m wasted from this.”

WHILE THE WORLD IS BUSY WITH COVID-19

Israel's Netanyahu Says He Won't Miss West Bank Annexation Opportunity

Monday, 25 May 2020 10:37 AMShort URLEmail ArticleCommentContactPrint|    A   

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Israel will not miss a "historic opportunity" to extend its sovereignty to parts of the West Bank, Prime Minister Benjamin Netanyahu said on Monday, calling the move one of his new government's top tasks.

Palestinians consider such a step as illegal annexation of occupied land they seek for a future state. Last week, they declared an end to security cooperation with Israel and its ally, the United States, in protest at the territorial plan.

Netanyahu has pledged to put Jewish settlements and the Jordan Valley in the West Bank under Israeli sovereignty. He has set July 1 as a starting date for cabinet discussions on the issue, which has also raised alarm within the European Union.

U.S. Secretary of State Mike Pompeo has called the matter complex and said it required coordination with Washington. Netanyahu's new political partner, centrist Benny Gantz, has been equivocal about de facto annexation.

At a meeting of legislators of his right-wing Likud party on Monday, Netanyahu set land moves in the West Bank as "perhaps the first in importance in many respects" of the tasks to be undertaken by the government he and Gantz formed on May 17.

"We have a historic opportunity, which hasn't existed since 1948, to apply sovereignty judiciously as a diplomatic...step in Judea and Samaria," he said, referring to the year of Israel's birth and using the biblical names for the West Bank.

"It is a big opportunity and we will not let it pass by," he said a day after the start of his corruption trial. He denies charges of bribery, fraud and breach of trust.

Netanyahu has cited U.S President Donald Trump's plan for Israeli-Palestinian peace as underpinning de facto annexation. The Palestinians have rejected the proposal, announced in January, under which most Jewish settlements would be incorporated into "contiguous Israeli territory."

Palestinians and most countries view the settlements on land Israel took in the 1967 Middle East war as illegal. Israel disputes this. Israeli critics of annexation have voiced concern it could increase anti-Israeli violence.

© 2020 Thomson/Reuters. All rights reserved.

Johnny Cash's daughter slams 'ignorance & hatred' over wearing masks

BY JUSTINE COLEMAN - 05/26/20

© Getty Images

Johnny Cash’s daughter, Rosanne Cash, on Tuesday, slammed the “ignorance & hatred” over wearing masks.

The writer, in a tweet, condemned a man who she said called her daughter a “Liberal pussy” for wearing a mask to the grocery store in Nashville, saying her daughter was a survivor of H1N1 and is “trying to survive” the current pandemic.

“My daughter lives in Nashville & wore her mask to buy groceries. Guy yells at her: ‘Liberal pussy!’ ” she posted.

SAME KIND OF DEPLORABLE SCREAMS AND ASSAULTS PEOPLE TELLING THEM TO WEAR A MASK
“Back story: she nearly died of H1N1,” the writer continued. “She was in the ICU for a week, on a ventilator for 3 days. She CANNOT get covid. The ignorance & hatred is so painful. She’s trying to survive.”

My daughter lives in Nashville & wore her mask to buy groceries. Guy yells at her: ‘Liberal pussy!’ Back story: she nearly died of H1N1. She was in the ICU for a week, on a ventilator for 3 days. She CANNOT get covid. The ignorance & hatred is so painful. She’s trying to survive.— rosanne cash (@rosannecash) May 26, 2020


Videos have circulated on social media of reporters and others being called out and attacked for wearing masks in public.

Several political leaders have encouraged their constituents to wear a face covering, including New York Gov. Andrew Cuomo (D), who said Tuesday that, “Wearing a mask is now cool.”

Cuomo says wearing a mask is 'cool'
Biden changes Twitter, Facebook avatars to him wearing mask

North Dakota Gov. Doug Burgum (R) delivered an emotional speech over the weekend, saying he hopes his state skips the "ideological and political" argument about using face masks.

The Centers for Disease Control and Prevention (CDC) has recommended people wear cloth face coverings in public to prevent the spread of the coronavirus in communities, including among vulnerable populations.

Initially, the CDC instructed that healthy people should not wear the masks because it would not protect them from the virus, but research about asymptomatic spreaders led the agency to reverse its recommendations.

Trump anti-reg push likely to end up in court
BY REBECCA BEITSCH - 05/25/20



An executive order signed by President Trump directing agencies to slash regulations in order to boost the economy is likely to lead to a number of court challenges.

The Tuesday order directs agency heads to “identify regulatory standards that may inhibit economic recovery,” highlighting that regulations could be permanently or temporarily lifted in order to fight the economic fallout of the coronavirus.

But experts say speeding up the regulatory process or nixing public comment periods would likely be slammed in court unless the Trump administration can demonstrate their actions were necessary due to the pandemic.
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“The problem there is those measures have to be directly related to addressing the pandemic. They can't just be political priorities the Trump administration wants to speed up and get across the finish line in the first term,” said Amit Narang, a regulatory policy advocate with Public Citizen, pointing to the requirements of the Administrative Procedure Act.

“They’re not going to be able to claim that their ideological rollbacks are needed urgently to address the coronavirus just because they’re going to create economic growth. It’s not an argument that’s going to carry water on the policy side but certainly on the legal side in court either,” Narang said.

The order may be as likely to spur eye rolls as it is to spur lawsuits, however, as some say the directive is more about messaging than affecting regulation.

Critics say even with the accelerated timeline the administration seems to be pushing, the White House has little time to accomplish much else this term.

“What are you going to do? Are you going to review the whole suite of statutes and regulations that you implement and that you've spent three-and-a-half years rolling back and then you’re going to try and get more blood from a stone? And then try to accomplish that feat by 2021? It's not going to be possible,” said John Walke with the Natural Resources Defense Council.

The Trump administration told The Hill they believe the order will withstand legal challenge.

“Statutes frequently allow an expedited regulatory process during urgent circumstances. The heart of what this administration is working to accomplish is clear: get our economy back to historic levels and get millions of Americans back to work,” the White House said by email.

The Trump administration has prided itself on pushing deregulation since nearly day one, with the president signing orders to nix two regulations for every new rule they want to issue and another requiring agencies to offset the costs of any new rules by scrapping old ones.

But Walke and others argue the administration will face hurdles with its approach.

“Trump does not want to appear helpless so he’s directing agencies to pin blame for the economy on regulations that have nothing to do with the economy. It’s plain to see that the pandemic and shelter-in-place orders are the reasons for the economic downturn,” Walke said.

The Trump order encourages the temporary suspension of regulations, a move already in use by the Environmental Protection Agency (EPA).

The agency in late March issued a temporary order, though it has no set end date, announcing it would not fine companies that stop monitoring their pollution emissions — something required by both the Clean Air Act and the Clean Water Act.

The EPA says companies must document when they stopped monitoring and why the coronavirus was the cause to avoid fines down the road, but environmental groups and states have already sued, arguing the damage will have already been done, risking the health of residents near industrial operations.

It’s a playbook that could easily be adopted by other agencies, who might consider lifting private lending restrictions, regulations on food safety like inspection line requirements at meatpacking plants or suspending contract rules that require agencies to pick the most competitive bid.

Trump, however, appears hopeful that those temporary suspensions might be permanent.

“We want to leave it that way,” he said at a Cabinet meeting Tuesday. “In some cases we won’t be able to, but in other cases we will.”

Opponents say that would be illegal.

“That's rulemaking 101 that you cannot just make these things permanent,” Narang said.

Sean Moulton, a senior policy analyst with the Project on Government Oversight, said Trump’s attempt to issue a “get out of jail free card” won’t be able to bypass the lengthy rulemaking process, even in the name of economic recovery.

“You have to go through the rulemaking process, do research, issue a proposal, offer a public comment period, read the public comments, you have to respond to the public comments, you have to explain the changes you’re making, and if you ignore data just because you don't like it, people can take you to court,” he said.

What worries critics the most is that agencies will suspend enforcement of regulations, much like the EPA has done with its temporary order.

A number of studies have found agencies under the Trump administration have been less aggressive about going after companies that break the law by issuing fines or enforcement actions. That has been the case at the Food and Drug Administration, the EPA, the Consumer Financial Protection Bureau and many others.

“That’s the part that gives me the greatest concern, the idea of nonenforcement and telling agencies without any real basis or explanation that more lax enforcement will help us economically,” Moulton said. “That’s not to say you can’t drag them into court but it takes time.”

Conservatives groups have praised the memo.

“Many of the problems we’re experiencing today are decades in the making. They stem from well-meaning but tragically harmful laws and regulations that have accumulated over many years. This isn’t about politics, it’s about breaking barriers,” the Charles Koch-funded Americans for Prosperity wrote in a statement, saying the order would “empower the country to recover stronger.”

But critics of the executive order said the White House should be focused on addressing the core health issues that underlie the economic fallout.

“This crisis needs to be addressed through the administration with real public health measures,” Narang said. “Instead we get deregulation as an answer to the pandemic that makes no sense and is a complete distractio

Marianne Williamson touts endorsements for progressive congressional candidates

5/26/2020

Former Democratic presidential candidate Marianne Williamson said her recent list of endorsements is meant to bring attention to lesser-known progressive candidates running for Congress.

“Too many people don’t know who these people are, so that’s why I made this endorsement list. Most congressional candidates don’t win the first time out, they win with their name recognition,” the author said Tuesday on Hill.TV’s “Rising.”

Williamson, who dropped her White House bid in January, argued that the Democratic Party has a way of ousting progressive ideals. She said progressives need to focus on congressional races now that the former Vice President Joe Biden is the presumptive Democratic nominee.

“They already voted me off the island,” she said. “Progressives, we know what happened in the presidential race. We need to now pivot… and do it in Congress now.”

VIDEO 

https://thehill.com/hilltv/rising/499516-marianne-williamson-endorsements-progressive-congressional-candidates?jwsource=cl

Sweden Steadfast in Strategy as Virus Toll Continues Rising

Tuesday, 26 May 2020 

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STOCKHOLM (AP) — Sweden's government defended its response to the COVID-19 global pandemic on Tuesday despite the Scandinavian country now reporting one of the highest mortality rates in the world with 4,125 fatalities, or about 40 deaths per 100,000 people.

“Transmission is slowing down, the treatment of COVID-19 patients in intensive care is decreasing significantly, and the rising death toll curve has been flattened,” Foreign Minister Ann Linde told foreign correspondents at a briefing in Stockholm. “There is no full lockdown of Sweden, but many parts of the Swedish society have shut down.”

More than 76,000 people have been made redundant since the outbreak of the disease and unemployment, which now stands at 7.9%, is expected to climb higher.

Sweden took a relatively soft approach to fighting the coronavirus, one that attracted international attention. Large gatherings were banned, but restaurants and schools for younger children have stayed open. The government has urged social distancing, and Swedes have largely complied.

But opponents to the government’s strategy gained an influential voice this week after the country’s former state epidemiologist, Annika Linde, expressed doubt about the strategy adopted by the Swedish health authority. She said that in retrospect she believes an early lockdown could have saved lives.

“Most likely, we would still be a bit worse off (than other Nordic countries), but better off than we are now, and we would possibly have gained time to prepare the strategy to protect the elderly,” she told The Associated Press in a phone interview on Monday.

Sweden’s epidemiologist from 2005 to 2013, Linde headed the country’s response to swine flu and SARS and says she felt provoked by comments from a leading member of the health agency claiming Sweden’s strategy was the best in the world, irrespective of the number of deaths.

“I felt this can’t go on,” she told the AP. “Such a denial may prevent us from acting rationally.”

Sweden’s health policy is traditionally based on recommendations issued by medical authorities and followed by the political leadership. But as the death toll mounts, Linde believes elected officials would have been more cautious in risking the lives of citizens.

“In retrospect, I think it would have been worthwhile trying the strategy of Denmark, Norway and Iceland and Finland,” she said.

Yet for the Swedish government, it’s still too early to tell what measures have worked and which have failed.

“This is not a sprint, it’s a marathon,” Foreign Minister Ann Linde said. “It’s a good thing that many experts are saying what they think. We have freedom of speech in Sweden,” when asked about Annika Linde’s remarks.

The foreign minister said that the government wouldn't hesitate to change Sweden's policy "if we think that will be necessary.”

Follow AP pandemic coverage at http://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak

© Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

How the COVID-19 Bailout Gave 

Wall Street a No-Lose Casino

While ordinary Americans face record unemployment and loss, the COVID-19 bailout has saved the very rich
By
MATT TAIBBI  ROLLING STONE MAY 25, 202

Illustration by Victor Juhasz
This story appears in the June 2020 print edition of Rolling Stone.

In late April Marko Kolanovic, a financial analyst for JPMorgan Chase, wrote to clients with good news. Pandemic aside, investors should expect stock prices in S&P 500 companies to return to record numbers some time early next year!

“The S&P 500 should attain previous all-time highs,” Kolanovic wrote, “if the monetary measures are sustained.”

The key part of this phrase was the last bit, “if the monetary measures are sustained.” In countries that did not have a Federal Reserve Bank shooting a bazooka of cash daily at Wall Street, Kolanovic suggested the coronavirus would result in a 30 percent decline in the present value of earnings.

In other words, without intervention by the Federal Reserve, the United States in the coronavirus era would be looking at a Depression-level contraction.

Assuming the Fed bazooka keeps firing, however, a large portion of the investor class is already on a road leading back to champagne and confetti. And that, as Robert Frost would say, has made all the difference.






On the road more traveled, on the real side of the coronavirus economy, the pain has been historic. As of this writing, 30 million people have filed jobless claims during the COVID-19 crisis, and millions have lost their employer-based insurance.

At least one in three can’t make their rent, millions more can’t afford groceries, and workers in supermarkets, medical clinics, warehouses, and other professions are now in a macabre race to see if they’ll turn blue and die before corporate employers decide to slash their salaries or retirement benefits — which has already happened to front-line caregivers in some cities.

There are no projections of record earnings in the futures of such people. The best case is survival, and the grim reality of diminished economic horizons. Yet for the tiny sliver of people whose fortunes depend not on salaries, tips, and commissions, but upon the prices of financial products like stocks and bonds, the coronavirus response heralds a brave new world.

The $2.3 trillion CARES Act, the Donald Trump-led rescue package signed into law on March 27th, is a radical rethink of American capitalism. It retains all the cruelties of the free market for those who live and work in the real world, but turns the paper economy into a state protectorate, surrounded by a kind of Trumpian Money Wall that is designed to keep the investor class safe from fear of loss.

This financial economy is a fantasy casino, where the winnings are real but free chips cover the losses. For a rarefied segment of society, failure is being written out of the capitalist bargain.

This is a fresh take on a long-developing dynamic. Dating to the late Eighties, when then-Fed-chief Alan Greenspan slashed interest rates after the 1987 stock-market crash, there’s been an understanding that the government would be there to help Wall Street back on its feet in hard times.

That belief was so strong it had a name: the “Greenspan put.” Bloomberg’s Tim Duy defines the term as “the implied promise that central bankers led by Fed Chairman Alan Greenspan would bail out market participants who indulged in risky behavior.”

The Fed stepped in to flood Wall Street with cash (these are called “liquidity injections”) after a series of messes in the Clinton and Bush years, from the Asian-currency debacle to the collapse of the Long-Term Capital Management hedge fund in the late Nineties to a deflation panic in 2002.

A prolonged period of liquidity injection in the early 2000s prompted a now-familiar pattern of pushing investors out of traditional safe-haven investments (the low interest rates punished savers) and into ever-riskier gambles in commodities, stocks, and the housing markets.

All three arenas saw bubbles, but the one in the U.S. housing market burst after an orgy of Ponzi-style scheming sent mortgage prices shooting through the roof. In the space of a few months in 2008, the pension funds and municipalities that had been urged by greed-sick bankers to invest in a “real estate boom” (actually a fraud-driven speculative bubble) lost fortunes.

President Donald Trump looks on as Treasury Secretary Steven Mnuchin speaks during a news conference at the White House in Washington, Wednesday, March, 25, 2020, along with members of the coronavirus task force.
ERIN SCHAFF/"The New York Times"/R

Taxpayers and homeowners bore nearly 100 percent of the pain. Nearly 3 million people filed for foreclosure in 2010 alone. Back then, the notion of using state funds to rescue these folks was rejected as laughable, a dangerous “moral hazard.” As billionaire Charlie Munger put it in 2010, homeowners needed to “suck it in and cope,” and not wait for a handout.

Wall Street, though, got the mother of all rescues. The response wasn’t limited to a traditional liquidity injection. Banks were given trillions in bailouts and emergency loans, allowed to dump years of bad investment decisions into special garbage facilities set up by the Federal Reserve, and urged to “drink themselves sober” through years of free money from a zero-interest-rate policy.

The Fed, beginning in late 2008, added a new crisis-response tool called quantitative easing (QE), a fancy academic name for printing trillions of dollars and using it to buy everything from mortgages to government debt. This was with the ostensible aim of increasing “the availability of credit” for things like home purchases, but also to “foster improved conditions in financial markets more generally.”

The dubious underlying logic was that rescuing the economy and rescuing the financial markets were the same thing. To save people, we had to save the economy in which they operate, which meant saving the high-risk investments of Wall Streeters, as much as they might suck.

What’s happening in the COVID-19 crisis is the next step: a financial bubble where the Fed isn’t the cleanup mechanism, but the source of the mania itself. While the real economy is seeing record disruptions, Wall Street has seen prolonged rallies of “rational exuberance” over the Fed’s decision to usher in “QE infinity” and essentially ban losing in finance capitalism.


Though this is a Trump bill — El Pompadour is so determined that the CARES Act be remembered as his work, he fought to get his signature on relief checks — it passed unanimously, by voice vote in the House, and 96-0 in the Senate.

Talk to Democrats on the Hill and they will tell you this is a bailout to be cheered and supported, nothing like the 2008 rescue. This time is different, the argument goes: Three-quarters of the money goes to real people.

This is true, if one squints and uses a narrow definition of “money.” The $2.3 trillion imagines $560 billion for “individuals” (including $300 billion in cash payments, much by way of the famed $1,200 “Trump” checks), plus $377 billion for small businesses, as well as $339 billion for state and local governments, and $100 billion for hospitals and other health care providers, plus some aid for students and children.

Technically, “only” about $500 billion of the congressionally passed rescue package goes to “big business.” Moreover, the big-business aid ostensibly comes with a range of draconian-sounding conditions barring greedy hijinks, meaning no layoffs, no stock buybacks, no big bonuses, etc., if companies want the handout.

The loophole comes via $454 billion created as part of that big-business package. This “emergency fund” will be dumped into a “special-purpose vehicle” used to backstop further lending by the Federal Reserve.

That $454 billion is designed to grow by a factor of 10 or more. “We can lever up to $4 trillion,” said Steve Mnuchin, playing the “free-spending Goldman Sachs-trained Treasury secretary” role that apparently is a prerequisite for financial-disaster narratives in modern America.

Democrats early on expressed concern about old-school Tammany Hall-style graft, i.e., that the fund would be used to invest in businesses with connections. “We’re not here to create a slush fund for Donald Trump and his family,” is how Elizabeth Warren put it.

However, once Democrats won superficial oversight concessions (including the creation of a Congressional Oversight Commission), Warren and everyone else in the caucus approved the “slush fund” concept, despite the far more radical issues it poses than individual graft.

The CARES Act “slush fund” imagines a future in which markets for all financial products are stressed, perhaps permanently, by lockdowns. In place of a heartless free market of panicked investors who might want to cut their losses and sell, the plan is to simulate real buying and selling of financial products like mortgages and bonds with directed deployments of the Fed’s endless trillions.

And they will be endless. As Fed chief Jerome Powell put it, the Fed is “not going to run out of ammunition” in the war against the economic crisis. Marcus Stanley of Americans for Financial Reform said, “The Fed’s perspective on this is, they want to create normalcy.” But what does “normal” mean in an economy that may be changed forever?

Investors were fleeing stocks, bonds, money-market funds, etc., in the first weeks of March for the perfectly logical reason that most businesses suddenly looked like dicey investments. But the instant the Fed announced its new purchasing programs, most of these markets bounced back nearly all the way up.

Major bond funds that were on the brink of failure on March 23rd — like BlackRock’s $30 billion LQD fund — rebounded and recovered nearly all of their value in the next days. The S&P 500 sank 34 percent in 23 trading sessions at the beginning of the crisis, then after the Fed’s announcement on March 23rd, rose 27 percent in its next 16 sessions. The NYSE Composite hit a low of 8,777 on March 23rd, then started a long march back up over 10,000 and then 11,000 from that day forward.

Investors have begun following the Fed. Analysts are encouraging clients to “buy what the Fed is buying,” because “the stimulus seems to be endless.” The boom isn’t in any particular kind of company or product, but in the Fed itself.

“The Fed is the market, and all the big players know it, while the real economy will stagger far behind,” is how Nomi Prins, author of Collusion and an expert on central-banking policy, puts it.

This plan is getting support from both the right and the left. Wall Street analysts are cheering Fed chief Powell’s decision to act “forcefully, proactively, and aggressively” to forestall financial collapse, while liberal economists seem to cheer the spectacle of the government abandoning harrumphing conservative rhetoric about fiscal restraint to invest massively in the economy.

“I’m more sympathetic than I might otherwise have been,” says noted progressive economist Dean Baker, adding that the extraordinary crisis has created real trouble for a lot of good companies that the Fed’s actions will address.

Decades ago, America started down the road of creating two economic worlds. Our once-mighty brick-and-mortar economy went into decline and began to be exported overseas, to cheap labor zones and countries with less-stringent environmental laws — places that, as economist Larry Summers infamously put it, were “vastly underpolluted.” That American factory workers would be left behind by this process was just their bad luck, another thing requiring a “suck it in and cope” attitude.

Not so for their bosses, though, who were rescued from the decline by transitioning to even-more-profitable work in a new, “financialized” economy. This world emphasized making money by moving it around in the capital markets — prioritizing fees, interest, capital gains, etc. A generation of minds that were trained in the logic of “financialization,” and its underlying principles — which include the idea that workers are fungible, parasitic drains on the more crucial “wealth creators” above — accelerated the aggressive tilt to the political right by America’s wealthy in recent decades.

Even the experts at the Federal Reserve, whose official mandate includes attaining “maximum sustainable employment,” became more and more removed from their real-world purpose over the years, devoted instead to tending to the needs of this second, sandcastle economy over the problems of disenfranchised working people, whose fates mostly couldn’t be helped. And why not? What Fed official ever interacts with anyone not employed in the financial sector? How could the real world ever seep in?

The coronavirus bailout could end up being the last chapter in this hideous story. Although we’re seeing a graphic demonstration of how “unskilled” workers like home health aides and delivery people and grocery clerks are actually the vitally important people in our society, they’re not getting the radical rescue. There’s no sudden universal health care, no guaranteed sick leave, no massive jobs plan, just Band-Aids. They will die in massive numbers and emerge from this crisis, if and when it ends, poorer and more vulnerable than before.

But the financial markets are getting the World War II-style “whatever it takes” financial commitment, based upon the continuing fallacy that “wealth creators” must be the first in line for rescue in any crisis. This was a wrong assumption on the decks of the Titanic, a wrong assumption after 2008, and a criminally wrong assumption now.

Continuing belief in the trickle-down myth that has been destroying and dividing this country for decades will kill us faster than any pandemic. If we’re going to spend in “unlimited” amounts, let’s for once do it in the real world and for the people who need it most

TRUMP FACES GRIMM

Watchdog who found hospital shortages unfazed by Trump barbs
By MATTHEW DALY

In this image from video, acting Health and Human Services acting inspector general Christi Grimm testifies during a remote hearing of the House Oversight Committee, Tuesday, May 26, 2020. (House Television via AP)


WASHINGTON (AP) — The author of a federal report that found U.S. hospitals faced severe shortages of coronavirus test supplies says she is not intimidated by criticism from President Donald Trump, even after he moved to replace her as chief watchdog of the Department of Health and Human Services.

Christi Grimm, who has served as acting inspector general since January, told a House panel that there was no “chilling effect” from Trump’s criticism of her last month and his subsequent move to replace her.


“We are plowing ahead” with 14 new reports and audits on the health department’s response to the virus, Grimm said during a videoconference briefing Tuesday with the House Oversight Committee.

Democratic Rep. Jackie Speier of California asked Grimm if she believes there was a “chilling effect” from Trump’s criticism: “If you say something or do something that is offensive to the president that you will be removed from office?”

Grimm said no, adding: “I personally and professionally cannot let the idea of providing unpopular information drive decision-making in the work that we do.″

Congress can be assured that 14 pending reports and audits of health spending related to the virus outbreak will continue unfettered “to protect people, to protect funds, to protect infrastructure and to ensure effectiveness,″ Grimm said. “We are operating as we did on May 1” when Trump nominated a new inspector general to replace Grimm.

Jason Weida, an assistant U.S. attorney in Boston, must be confirmed by the Senate before assuming the position. Grimm remains in charge of the office as principal deputy inspector general while Weida’s nomination is pending.

With coronavirus cases skyrocketing, the inspector general’s office reported April 6 that a shortage of tests and long waits for results were at the root of mounting problems faced by hospitals.

Trump called the report, based on a late March survey of 323 hospitals nationwide, “just wrong” and suggested that its conclusions were skewed by politics.

“Give me the name of the inspector general,” Trump told reporters. “Could politics be entered into that?” Trump later dismissed the report on Twitter as “Another Fake Dossier!”

Democratic Rep. Carolyn Maloney of New York, who chairs the Oversight panel, said Tuesday that Grimm “should not have had to endure these senseless personal attacks just for doing her job.″ Maloney thanked Grimm for “tolerating” Trump’s attacks “with dignity while she continues serving the American people.″

Grimm, a career government manager who has served under four presidents, told lawmakers that as acting IG, she has long been aware that she can be replaced at any time and does not let that fact affect her work.

“I do think independence is the cornerstone of what any office of inspector general does,″ Grimm said. “That allows us to be impartial in the work we do ... letting the facts take us where they may.″

Grimm called the report “a snapshot in time,″ but said it offered “quick and reliable data from the ground” to document the nation’s response to the novel coronavirus, which has killed nearly 100,000 Americans.

Grimm also pushed back on a theory advanced by some critics that hospitals may have intentionally reported inaccurate COVID-19 data in an effort to win more federal money or equipment.

“I do not believe hospitals were being misleading in providing us with this information,” Grimm said. Investigators did not “independently go behind and verify” the hospitals’ claims, she added.

Ohio Rep. Jim Jordan, the panel’s top Republican and a close Trump ally, lamented what he said was the report’s “flawed methodology” and noted that investigators did not ask hospitals to specify actions the Trump administration had taken to help them respond to the crisis.

Rep. Gerry Connolly, D-Va., asked Grimm to investigate the federal Centers for Disease Control and Prevention, saying the agency failed to develop coronavirus tests in a timely fashion, and then saw its early tests plagued by a series of problems and false results.

“Clearly lives were lost because of that failure,″ Connolly said, adding that a report on the CDC should be “a primary focus” of the inspector general’s work.

Grimm said the office is reviewing CDC’s role in approving, producing and distributing test kits. Her office also is looking at the Food and Drug Administration’s role in approving the test, Grimm said.