“Socialism For The Rich, Hard Capitalism For The Rest In The US”

The economic collapse caused by the coronavirus pandemic has caused some unexpected reactions. That of the American billionaire Leo Cooperman is one of them. “I think that everything we are going to go through will have very clear long-term consequences. Number one: capitalism as we know it will probably change forever “said the head of an investment fund that works exclusively for very wealthy people and companies. Cooperman’s personal wealth exceeds $ 3 billion.

A queue of people outside the office of a local congresswoman who delivers food in New York in collaboration with the NGO of the Spanish chef José Andrés.

Jorge Fuentelsaz / EFE

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Cooperman sees clearly that the immediate effect of the crisis will go through an increase of the regulations ordered by the State and the increase of taxes. “When you ask the government to protect you when things are going very badly, they have every right to regulate you if things go well,” he explained, referring to aid that only in the US will end up reaching trillions of dollars.

A man sleeps on the street in a US city.

A man sleeps on the street in a US city.

EFE

Their reasoning is not without logic, but the same was also said after 2008. What has just happened in the United States with the first major package of aid to small businesses indicates to what extent the political system is capable of winning them. the same as always, that is, the corporations that have more funds and especially with more influence in the institutions.

The Congress-approved Paycheck Protection Program (PPP) was intended to help small and medium-sized businesses survive the first impact of the crisis. As can be seen from its first word (payroll), it should serve so that the workers were not fired and maintained their wages. This is a loan program that is converted into a grant if the company is unable to repay it and demonstrates that the money received has been used to pay for labor or rental costs. The total endowment was $ 349 billion. It was, because it was consumed whole.

The speed with which it vanished says a lot about the economic catastrophe that is happening. That is only part of the story. Contrary to Cooperman’s opinion, capitalism as it is known in the United States knows how to react very quickly by pressing the keys that have always worked.

The surprise – if you can call it that – spread when the names of some benefited companies were known. Shake Shack, a restaurant chain with 200 locations worldwide and 595 million revenue in 2019, received ten million thanks to the PPP (returned them later after the criticism received). He had no liquidity problems. He obtained 150 million a few days later with the issue of his shares on the Stock Market.

Other companies with similar characteristics, and which are also publicly traded, they also received the m aximum allowed

such as Potbelly, Quantum and Hallador Energy, or sometimes more if one of their subsidiaries had made the same request for funds. The most benefited sector it was that of construction, with 13.1%. It was favored by its close relationship with the banks, which are the ones that manage the aid application and that gave them priority, according to an analysis by KBW.

Where was the trick? Companies had to have a maximum workforce of 500 workers, a very high entry limit for SMEs. Thanks to an amendment in the Senate promoted by lobbying companies that work for the restaurant sector, that limit was applied to the personnel that worked in each of its facilities. There are few restaurants that each have more than 500 employees. One of the senators who promoted that amendment was Florida Republican Marco Rubio.

Among the beneficiaries there was a friend from the party. Companies owned by millionaire Monty Bennett received a total of 59 million. One of them has 100 hotels across the country and none of them alone employ half a thousand workers. The amendment fit him like a glove. How not to help Bennett who had donated $ 150,000 to the reelection committee of Donald Trump and other Republican candidates in the last six months?

The program was awarded in strict order of arrival. Corporations with a large group of lawyers and accountants who are experts in obtaining subsidies from the Administration and with better relationships with banks benefited. The real small businesses found that the funds allocated to the program had run out when their turn came.

Subsequent protests caused outrage to some politicians, in some cases quite imposting. As expected, Marco Rubio, one of those responsible for the changes introduced to benefit corporations, has been one of the most protested. This week, the two houses of Congress have approved another endowment of 320,000 million for the PPP. € 60 billion has been set aside for smaller companies that do not have a credit history with banks and had been relegated in the first round. The amendment with the maximum of 500 workers per location? That stays.

As the federal agency that channels the funds does not have the necessary infrastructure, the banks have been in charge of acting as intermediaries. They lend the money and if the companies cannot return them, the State does it for them. The PPP allows them to charge the government a rate of 5% for loans of less than $ 350,000, 3% for those of less than two million and 1% for those of more than two million. It is calculated that they will earn billions for your intervention. They are the first beneficiaries in this rescue package.

Ordinary workers are not in that position. Those below do not have banks to help them and who should do it does not measure up. It is the states that must process their applications to receive the unemployment benefit included in the rescue package for the economy that reaches two trillion dollars. The most regrettable case is that of Florida, where only 33,000 workers have received it until very recently, when the total number of applicants is 650,000, since state officials are outnumbered. In California and Texas, two thirds of petitioners are on the waiting list, according to collected data by the AP agency. The percentage in New York is 30%.

Why is the delay particularly clear in Florida? “The system is designed to be a complete failure. Why? Because it makes politicians save their faces by pretending that fewer people join unemployment, when the reality is that, even before the pandemic, people had it very difficult not only to apply but to receive the grant, “a Florida state senator tells the AP.

This jam could only be resolved now if state and city governments received federal aid to resolve these requests. Republicans refuse.

There is no such problem with airlines, which are among the most pressure-bearing corporations in Washington. Robert Reich, Secretary of Labor in the 1990s, did the math: “50 billion taxpayers have been spent to rescue the airline industry which is almost the same as the 48 billion that they have spent since 2010 to buy Stock your own shares “(and the price will not fall).

Reich ended the tweet writing: “Socialism for the rich, hard capitalism for the rest.”

At the moment, it seems that the forecast of the millionaire Leo Cooperman is far from being fulfilled.

A queue of people outside the office of a local congresswoman who delivers food in New York in collaboration with the NGO of the Spanish chef José Andrés.

A queue of people outside the office of a local congresswoman who delivers food in New York in collaboration with the NGO of the Spanish chef José Andrés.

Jorge Fuentelsaz / EFE



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