You have all read about the pending bailout of the American economy from the virus that has raged throughout the United States. This is the third bailout effort, in as many weeks, designed to blunt the economic impact of this pandemic. The first effort was tiny, a mere $8.3 billion to help with immediate medical needs such as securing masks and paying for tests. The second effort, $100 billion, involved a fight over some very basic needs, like ensuring that the lowest paid workers (at least those who still had jobs) could claim sick pay if they had to stay home because of the virus (unless of course they worked for an employer with over 500 employees). Both prior stimulus efforts were mere band aids, and the stock market responded accordingly by shedding trillions of value.
Now comes Bailout III.
How we act now will determine how our customers and employees will view our respective businesses in the months to come. We need to act with integrity and compassion, always remembering that the coronavirus is rampaging our communities and spreading fear and insecurity faster than the virus itself.
Consider this “request” from the Airline Industry as reported in yesterday’s New York Times:
If Congress approves at least $29 billion in grants for the [Airline] industry, the executives said they would commit to no furloughs or layoffs through August. If an equal amount in loans is passed, they would commit to limiting executive compensation and freezing stock buybacks and dividends for the life of the loan.
Obviously, the industry’s expectations are more nuanced. The airline industry, which has been decimated by this pandemic, presumably knows that it will not receive the first $29 billion as a grant, free from any expectation that they need to be socially-responsible corporate citizens.
Such bad press not only hinders the ability to secure much needed funds but also alienates customers more than the size of economy class seats. Of course, the airline industry is neither the only industry in desperate need nor the only one with their hands out. The dinner bell has rung and every K Street lobbyist has run to the table. When we ask taxpayers to help our business through these difficult times, we need to take special care not to sound tone deaf to the circumstances.
Of course the economy needs a bailout, and Congress is rushing to provide it without any real time to consider how the $2 trillion (up from the $800 million reported earlier in the week) is best spent. The GOP-controlled Senate is rushing to put out their bill without seemingly paying much attention to what the House Democrats are demanding and vice versa. Make no mistake, the House and Senate bills will be very different because each is responding to their own constituencies. The Senate wants the flexibility to use some $508 billion of spending authority where they will help the most. The House is reluctant to give President Trump what the Democrats see as $508 billion of cash to spread at his discretion in an election year. If the House and Senate bills are going to be reconciled before this pandemic shuts down our country completely, it will be because each side gives into the other and ignores any consideration of the price tag. After all, who can worry about how and when this debt will be repaid at this time of crisis (especially so close to an election)?
So please don’t expect logic this week; expect both politics and government largess. Your lawyers at Lane Powell are watching the bailout unfold in real time and we will be ready to help you and your business secure the funds you need to survive this crisis. We hope to do so both as advocates for our clients and for what is right in our communities. In the meantime, we should all remember that there is a positive role for business to play; whatever abyss we face, we do stand elbow-to-elbow with our employees and customers. Otherwise, we risk characterization of our pleas for support as tone deaf demands of entitled elites. When that happens, we run the risk that even the venerable New York Times will paint us in a negative light.