Expected Democratic presidential nominee Joe Biden wants an even bigger ‘stimulus’ bill, this one focused more on cities, states, and small businesses. He told Politico the goal to hand out cash to cities and states is to make sure they avoid layoffs of “teachers and cops and firefighters” while the aid for small businesses seems more of the populist playbook of Bernie Sanders.
Biden repeatedly unloaded on big business and big banks, noting that “this is the second time we’ve bailed their asses out,” accusing the Trump administration of managing the stimulus for their benefit. He railed about banks like Wells Fargo that are “only alive because of the American taxpayer” giving their large corporate clients the first shot at CARES Act aid intended for small businesses. Over the last month, 26 million Americans have lost their jobs, and Biden said many of those jobs could be gone for good if mom-and-pop operations get left behind.
“We knew from the beginning that the big banks don’t like lending to small businesses,” Biden said. “I’m telling you, though, if Main Street businesses don’t get help, they’re gone.”
Fun fact: Biden voted for the bank bailout of 2008. Perhaps he’s having second thoughts now that he’s got to convince Sanders and Elizabeth Warren voters to support him in November.
Biden’s comments on banks giving money to big businesses spawn from lawsuits filed against multiple banks, including Wells Fargo, claiming small businesses failed to get Paycheck Protection Program money. Attorneys involved in the case believe the banks gave money to bigger corporate clients instead, hence why smaller businesses lacked success in securing PPP cash. Tax attorney Jason B. Freeman did note at Forbes there’s no real proof but the lawsuits may influence public perception enough, especially should the banks change loan policy.
Hence why the rhetoric from the vice president likely works towards certain voters. All he has to do is point towards the lawsuit as ‘fact’ regardless of what happens next. Everything changes if leaked documents from big banks prove the allegations or if bank attorneys admit in open court to putting big lenders over smaller. The moves by Ruth’s Chris and Shake Shack to return loans received from the federal government also help promote this theory.
Biden’s other argument regarding money for states and cities to avoid layoffs of firefighters, teachers, and police officers contains a small bit of truth. Cities and states are preparing for massive budget deficits. However, the federal government already sent hundreds of millions of dollars to municipalities as part of coronavirus ‘aid’ packages with the requirement they only be spent on virus-related issues. This raises the question of whether the government put too many restrictions on municipality spending or allowed cities and counties to ask for too much money promoting potential wasteful spending. Better questions are whether the so-called “tax and spend” policy preferred by politicians of all stripes need reconsideration even for sacred cows or if states and cities went too far in coronavirus restrictions.
The final stimulus argument from Biden simply attempts to appease those who favor the so-called Green New Deal. Via Politico:
Biden suggested that after four rounds of legislation designed primarily to stanch the economic bleeding, the next round should include more forward-looking investments that could help the economy start to recover and grow once the virus is contained. He suggested a “trillion-dollar infrastructure program that can be implemented really rapidly,” as well as “dealing with environmental things that create good-paying jobs.”
Trump and Senate Majority Leader Mitch McConnell have suggested that “green stimulus” would be a non-starter with Republicans, but Biden said investments in light rail, clean drinking water, and half a million electric vehicle chargers on the nation’s highways could help retool the economy for the future.
Pure pandering and not likely to gain traction especially while gas prices stay low. Consumer demand will drive the economy of the future, not government spending.
Do not mistake this hole-poking of Biden’s arguments as a defense of Republicans. The Senate and the president deserve plenty of criticism for approving a grocery list of spending including $8.3B in early March, $100B in mid-March, $2T in late March, $484B last week, and whatever expenditures come next. TARP and the 2009 ‘stimulus’ cost “just” $1.5T. Coronavirus spending is at least $3T, although it might be more dependent on supplemental bills approved by Congress and signed by the president. So much for deficits and reduced spending mattering within the halls of government or with those who seek re-entry.