New York Gov. Andrew Cuomo has a plan to curtail corporate bailouts, and he's taking it to Washington, D.C. He has proposed the "Americans First Law," which would require that corporations return government money if they do not restore their workforce to pre-coronavirus levels. New York's congressional delegation will introduce the bill in the U.S. House of Representatives.
"No handouts to greedy corporations, no political pork, and no partisanship," Cuomo said at a Tuesday press conference.
"I understand businesses need to recover, this doesn't have to be a giveaway to the rich millionaires who are doing just fine anyway, and it doesn't have to be a giveaway to big business," he noted. "It shouldn't be that another episode in history where somehow the rich figure out a way to get more assistance when it is supposed to be about helping average Americans."
Cuomo said his concerns were informed by his time as New York Attorney General during the 2008 financial crisis, when the federal government rescued Wall Street with an aid package that partially bolstered executive compensation. But the governor's suggestion that corporations will be able to magically return to business as usual after months of being on economic life support makes little sense.
For instance, lawmakers attached similar conditions to $25 billion in federal bailout money for the airline industry. One such requirement stipulated that airlines keep employees hired through September 30, by which time many Americans believed life would be somewhat back to normal. But United Airlines has since announced it will convert 15,000 employees from full-time to part-time and begin layoffs on October 1. One analyst anticipates that 20 to 30 percent of airline jobs will disappear over the next year as major American carriers seek to reduce costs in response to a prolonged stretch of historically low air travel. The CARES Act also requires airlines to continue flying near-empty planes at a huge financial loss, causing carriers to burn through money that could soften those planned layoffs in the fall.
Nevertheless, Sen. Josh Hawley (R–Mo.) took to Twitter to speak to a manager after he found out about United's actions. "I'm at the airport, flying back to DC, and multiple United employees have told me the company is cutting their hours, pay & benefits immediately," he said. "This is AFTER United took billions in bailout money that was earmarked for workers."
United, like Delta and JetBlue, was likely to massively cut payroll regardless of whether it received a bailout, but it was unlikely they were ever going to close up shop completely. Large corporations can restructure through bankruptcy, while smaller businesses have less leverage with their creditors and a harder time bouncing back from economic slumps. (This is one reason why Rep. Justin Amash (L-Mich.) and hundreds of economists opposed the corporate bailouts in the CARES Act.)
While Cuomo is right to bemoan providing further subsidies to the country's largest companies and their wealthy investors, requiring all firms that received assistance to operate at a loss (or else) is simply another form of economic denialism.