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The Pandemic Welfare State for the One Percent

While paltry emergency benefits taper out for millions of workers, the handouts to the superrich just keep on coming.

Cindy Ord/Getty Images

In addition to claiming the lives of over 110,000 people, throwing the economy into ruin, and putting more than 20 million people out of work, the pandemic has inconvenienced the rich. Forced to abandon their Manhattan penthouses or Brooklyn Heights brownstones to weather lockdown orders in the Hamptons, the economic elite has struggled mightily with being relegated to lavish outposts without domestic workers or Botox refreshes. “Being in quarantine is like being in jail,” Ellen DeGeneres joked in early April from the living room of one of her homes, as the coronavirus was spreading in overcrowded prisons. Around the same time, Justin Timberlake, presumably facing normal parenting responsibilities for the first time, said that “24-hour parenting is just not human.” One resident of Manhattan’s tony Upper East Side observed that the pandemic had left him struggling to use a vacuum but, happily, had made it easier to get an elevator now that most of his neighbors had decamped to their second homes.

Perhaps all that hardship is why the government decided early on to lend the rich a helping hand. According to The New York Times, the Cares Act—the $2 trillion stimulus package that sent a onetime payment of $1,200 to workers making under $75,000—also contained a number of tax advantages for the well-off, including reductions in capital gains taxes for the top one percent, and other provisions described by a tax law professor at the University of California, Irvine, as “just shoveling money to rich people.” A recent report in ProPublica further found that the combined tax breaks for the rich in the bill would, in total, “cost the Treasury—which is to say, the U.S. public—an estimated $257.95 billion for the 2020 calendar year.” At the same time, the Center on Budget and Policy Priorities estimated this week that as many as 12 million low-income people hadn’t yet received stimulus checks as a result of not filing taxes. Non-filers typically include the most vulnerable: those with extremely low incomes, people with disabilities that prevent them from working, and the homeless.

The rich have also managed to come out on top following an infusion of government aid to hospitals. Last week, the Times reported that a number of well-off hospital chains that had received billions of dollars in emergency funding had furloughed workers or reduced their pay while keeping CEO compensation packages—some worth more than $20 million—mostly intact. “Industry officials argue that furloughs and pay reductions allow hospitals to keep providing essential services at a time when the pandemic has gutted their revenue,” the Times noted. “But more than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on frontline staff, including low-paid cafeteria workers, janitors, and nursing assistants.” The essential workers who took pay cuts, then, continue to effectively subsidize the preservation of their bosses’ stock options and bonuses while also risking daily exposure to the coronavirus. Incidentally, a new poll indicates that only around 30 percent of essential workers—who are disproportionately black and Hispanic—are receiving hazard pay, with employers ready to yank it away as soon as the public’s attention is elsewhere. None of this even touches the looming disaster that is the end of eviction moratoriums, student loan and mortgage freezes, and other coronavirus emergency policies like the $600 supplement to unemployment insurance. (A BuzzFeed editor nicely synthesized the economic crisis to come, just days before he was laid off as part of that newsroom’s pandemic-era rolling furloughs and terminations.)  

Then, of course, there are the corporations (which, I suppose, also count as rich people) and the financial sector, or institutions that are generally impervious to any kind of oversight, let alone real public accountability. Last week, on behalf of the Trump administration, Treasury Secretary Steve Mnuchin refused to disclose the names of any businesses that had received money from the $500 billion bailout, a move that stands to cloak wide-scale corporate plunder of federal relief at a time when politicians are debating whether workers could do with another stimulus check. As Bartlett Naylor, a policy expert with the group Public Citizen, told Common Dreams, “Zero transparency is a red carpet for hucksters, schemers, and battlefield scavengers.” Meanwhile, a new regulatory change, quietly pushed by Trump advisers while the president was threatening to use military force against protesters, stands to line the pockets of private equity investors. The law will now allow companies to include previously prohibited high-risk private equity investments in their workers’ 401(k) plans, potentially subjecting those workers to high fees. “The private-equity industry—a massive campaign donor, by the way—wants your money,” MarketWatch’s Brett Arends wrote. “The typical private-equity manager charges 2% of assets as an annual fee, just for showing up, and then takes 20% of any profits.” By at least one estimate, that could amount to hundreds of billions of dollars in new income for private equity firms. And conveniently, if those firms tank or underperform—as they often do, despite proponents’ bluster—it’ll be workers who are once again left holding the bag.

In other words, for all its rhetoric of helping American families in an unprecedented moment of crisis, the government has mostly doubled down on what Martin Luther King Jr. once famously called, “socialism for the rich and rugged free enterprise capitalism for the poor.” Though the government is perfectly happy to buoy the one percent, its solution to the economic plight of anyone who isn’t already rich has been to hasten the end of statewide lockdowns in order to force people back to work as soon as possible. Of course, as a result of this reckless single-mindedness, parts of the country now appear to be on the cusp of a second outbreak, or more of a continuation of an already frightening wave. Though unemployment is projected to remain in the double digits until at least the end of the year, earlier this week, Trump adviser Larry Kudlow pledged to end the aforementioned $600 weekly unemployment supplement, calling it a “disincentive to work.” One could argue that having to risk one’s life to keep one’s employer’s profits flowing is another one.

Though the most recent stimulus bill passed by the Democrat-controlled House attempts to extend unemployment benefits and produce another cash payment for workers, the same bill also includes yet another tax cut that will almost entirely benefit high earners. And, according to Fox Business, if Republicans have their way, the bill could also eventually include “a reduction in the capital gains tax rate, an expansion of full, immediate expensing, protections for businesses from coronavirus-related liabilities and a return of the full deduction for business meals and entertainment.” In 2015, after a Democratic primary debate, Sean Hannity carped, “The race last night was to see who’s going to give away the most free stuff.” He could have said the same of the other party.