Steve Mnuchin’s $500 billion “Slush Fund”?

Three days ago, Senate Republicans unveiled their version of an economic-rescue bill, planning to secure quick bipartisan Senate approval followed by a pro forma approval in the House. Instead, Senate Democrats blocked it. Senate Majority Leader Mitch McConnell summoned his moral indignation to accuse Democrats of indifference to the economic crisis. “At a time when the country is crying out for bipartisanship and cooperation … we have an obligation to the American people to deal with this emergency,” he proclaimed. “Hopefully some folks will show up on the other side of this room and understand the gravity of the situation.”

McConnell has pointed out, correctly, that his bill funds some Democratic priorities, like saving hospitals and state budgets from ruin — though the funding levels he has offered are a mild palliative. The central flash point concerns a $500 billion corporate bailout. Democrats are absolutely right to oppose that provision. And they have all the leverage they need to block it. They would be mad to vote for anything resembling what McConnell offered.

There is nothing wrong in principle with bailing out large firms. The trouble with the Senate bill is the mechanism. Its requirements that bailed-out firms protect their workers are too weak. (Protecting the workers is the whole rationale for bailing them out, after all — at least from the Democrats’ point of view.) More disturbing, it’s designed as a pool of money to be doled out by the Treasury secretary. That is to say, the money is, for all intents and purposes, personally controlled by Donald Trump, who selected the Treasury secretary, Steve Mnuchin, and could replace him on a whim.

One obvious outcome of this financing arrangement would be to create the all-but-certain outcome that the Treasury would select the Trump Organization as one of the worthy recipients of its largesse. Trump’s vacation properties have indeed been forced to shut down, and while an unbiased manager might not select the Trump Organization over needier coronavirus victims, Trump himself probably thinks differently. Indeed, at his press conference, the president did not even bring himself to deny that he might. “Let’s just see what happens,” he replied, as if the outcome might contain any mystery.

Even worse, giving Trump control over a bailout fund would invite the sorts of abuses that he has routinely engaged in. This is a president who tried to direct the Justice Department to punish the parent company of CNN and successfully got the Defense Department to deny a contract to the owner of the Washington Post. The entire concept that the federal government ought to operate independent of the president’s political whims is inherently foreign to Trump. Handing him a half a trillion dollars to reward his allies and punish his enemies during an election year would not only be wildly irresponsible but also suicidal.

House Speaker Nancy Pelosi has an advantage McConnell lacks. She can pass a bill through her chamber without any votes from the opposing party. McConnell cannot — his Senate bills need 60 votes. McConnell is trying to depict his bill as the only alternative, pressuring Democrats to support it. But Pelosi can turn this trick back on McConnell easily by passing a Democratic bill and demanding he do the same. It is odd she has yet to exert this source of leverage, instead waiting for McConnell’s Senate to take the lead.

It is not difficult to imagine what McConnell would do, were the circumstances reversed. We don’t really have to imagine it. The 2008 financial crisis was the deepest economic collapse since the Great Depression. McConnell had supported fiscal stimulus while his party held the White House, approving a bill to send out checks in February 2008, but when Barack Obama assumed the White House (and the crisis had grown vastly more dire), he reversed himself. McConnell pleaded with Republicans not to support anything Obama would sign, arguing that they would gain in the midterms if the economy was still bad and would not face any blowback if the economy had recovered.

McConnell plucked out items in the stimulus for demagogic ridicule, exploiting the public’s anger over the bank bailout under Bush (which McConnell had supported) to paint all stimulus spending as a “bailout.” As Michael Grunwald’s book on the stimulus noted, McConnell’s messaging described Amtrak investments as a “Failed Passenger Rail Bailout” and Census funding a “Failed Census Bailout.” Now McConnell wants to hand over $500 billion for a corrupt president to disburse to himself and expresses indignation Democrats don’t want to vote for it.

To be clear, Democrats should not treat Trump the way McConnell treated Obama. They should hold themselves to a higher standard of patriotism. It is imperative that they offer good-faith proposals to alleviate the economic emergency, rather than hoping to tank the economy and profit from the ruin.

But they should also be very clear about the leverage they possess. The political costs of economic collapse will be borne by Trump and his party. Democrats have an obligation to save the country, but that obligation stops short of letting McConnell railroad them into an unpopular corporate bailout with noxious political and social side effects. Since McConnell agrees the recession demands quick action, Democrats should force him to vote on a bill funding the priorities both sides agree on and figure out later how to bail out big business.

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