CRISIS CAPITALISM AND COVID-19
Understanding the CARES Act and How Capitalists Profit Off a Catastrophe
By Lucy Brennan
The emergence of COVID-19 has shown the failures of a neoliberal, capitalist system’s ability to respond to a crisis in a number of ways. The free market has proven itself not to be an “invisible hand” that can provide for all people fairly. Instead, we are witnessing the capitalist system fail and amplify an already bad situation.
When the ruling class was first alerted to the impending virus months ago, many chose to lie to the public and continue business as usual. Some conducted insider trading to enrich their own wealth and protect themselves from the monetary fallout they knew was on the horizon. As the virus progressed, it was clear to even the most sanctimonious champions of austerity that some sort of relief was needed to combat the economic repercussions of a global pandemic.
On March 27th, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. This $2.2 trillion bill is the largest aid package in American history, and has the potential to be even larger. Of the $2.2 trillion, $500 billion is going to bailing out large corporations. $50 billion is allocated to airlines, an industry largely responsible for climate change and who have spent 96% of their income over the last decade on stock buy-backs. The rest of the money is distributed to large corporations as the treasury sees fit, with the ability of these funds to be increased by up to ten times that amount, totaling up to $4.5 trillion. With this in mind, the CARES Act is spending 3.5 dollars on corporations for every one dollar given to the public.
There are some restrictions on this money for large businesses, although the language in the bill is flexible and every clause seems to have a loophole. The Treasury Secretary, Steve Mnuchin, friend of wall street and big business, can waive any conditions as he sees fit. There is a lack of oversight to the bailout money, and the bill lacks any enforcement over misuse of funds. There’s not even a clause for subpoena power. Essentially, there is language in place to keep corporations in check with how they allocate this money, but it is largely ornamental.
For small businesses, $370 billion in loans is allocated for relief. Some of these loans are forgivable if the company keeps staff on payroll during the crisis. No such provision is included for large businesses, who have already made plans to lay off thousands of workers amid the virus. The loans for these small businesses will come from big banks, who will get a cut for administering them and potentially could make billions in fees, on top of interest.
The CARES Act does have some money allocated towards everyday Americans. People will receive a humble, means-tested sum of $1200 per individual, with some extra cash to those with children. There is also additional unemployment insurance granted to those over the next four months.
However, there are some glaring and deliberate holes in the coverage of this bill. Firstly, this money will be distributed using information from 2019 or 2018 tax returns, depending on what is available. This means that those who did not file a tax return in these years will be left out from coverage. Some of the most vulnerable people, such as those who earned less than the standard deduction (around $12,000), or those with unreported cash incomes, will be left out in the cold. Other low-income families may need to file more information to claim their payment, and likely will not be able to due to the pandemic.
Additionally, dependents over the age of 17 will not receive any money, and their caretakers will not receive the $500 per child additional payment. This means college students claimed as dependents who have likely had their work, living arrangements, and education compromised will be without aid, and no additional help will be provided to their parents who may support them. Furthermore, people without social security numbers will also be denied aid. Undocumented people and their families, who have paid their taxes and worked some of the hardest and most essential jobs during this crisis, are not able to receive any aid from this bill.
This money is likely not going to reach the hands of the public for weeks for those who have filed their taxes electronically, otherwise possibly months for paper checks. In those months, people will need to buy groceries, pay rent, cover medical expenses, car payments, and other financial pressures that will not loosen during this time. All while 13% of the American population is currently unemployed.
Beyond these shortcomings, the bill lacks many other efforts to combat the effect of the virus that we desperately need. The CARES Act does not provide sick leave to the huge chunk of the population who were left out under the Families First Coronavirus Response Act, namely, those who work at businesses that employ under 50 people, or more than 500 employers. The bill covers COVID-19 testing (whenever it will be widely available to the public), but does not cover any treatment thereafter. This is especially concerning when you consider that health care is tied to employment in America, and many have just lost their jobs and health insurance through no fault of their own. Under this bill there is no rent freeze, allowing landlords to continue to parasitically extract wealth from those without property.
The CARES Act was deliberately structured to leave out some of the most vulnerable people from relief, gives the rest of working people scraps, and shows the failure of a neoliberal capitalist government to meet the needs of its people. Under a capitalist system, the state serves no one but private property and capital. Just listen to the way politicians talk about sacrificing human lives to get the economy ”back to normal”. The machine must keep running, no matter the cost.
This abject failure of a neoliberal government shows the inability to imagine life beyond any sort of capitalist measure. Right now, the primary concern should be how to preserve human life and ensure the safety of our society. Instead, our government continues to prioritize the needs of the ruling class. Our fractured, decentralized government and distribution of resources has caused states to have to bid against each other for basic medical necessities. Without clear, centralized direction, some states have refused to take precautionary measures against the spread of the virus, with more infections and deaths as a result. In “the richest country in the world,” health care workers are without protective equipment, grocery stores are without basic necessities, and hardworking, everyday people are without the means to cover their expenses.
As we head towards a society where the impact of climate change grows greater, we will continue to see these same behaviors as in this pandemic. The wealthy elite will use their power and money to sway congress to write them checks with almost no accountability. Resources will be hoarded. Stockholders will play the market to their advantage and profit off of tragedy. The vulnerable will continue to be marginalized and their labor will continue to line the pockets of the already wealthy. Market failures will be bailed out with a socialized cost, but profit will continue to be privatized. Capitalism will continue to exploit every last resource to the very last drop.
The only alternative is a socialist revolution. Socialism or barbarism is not an abstract, theoretical device. It is the truth of a future that we have control over. COVID-19 has shown that we, the workers, are what create value. It’s time to take back what is ours.
El Lissitzky (Russian, 1890-1941). "Proun". Gouache and pencil on paper. 1922.
Sources:
https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html
https://jacobinmag.com/2020/03/corporate-debt-crisis-coronavirus-financial-covid-19
https://prospect.org/coronavirus/unsanitized-bailouts-tradition-unlike-any-other/
https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=406472