Here’s a thread about what Washington is doing with $2T of your money and what it reveals about Washington. If you prefer the storified version, I wrote about it @POLITICOMag. 1 politico.com/news/magazine/… 
The craziest thing about the emergency pandemic relief package that Congress passed virtually unanimously and Trump signed Friday is that it doesn’t do the things the experts say are needed to stop the pandemic. 2
South Korea tamed coronavirus with an unbelievably massive testing regime and an unbelievably aggressive SWAT team-style public health approach to coordinate testing, tracking, isolation, quarantine, etc. The $2T legislation doesn’t fund that for America. 3
There’s $180 billion for heath care, mostly for hospitals. But there’s nothing for testing and not much for public health. I quoted @drJoshS on how it’s not just a medical crisis: “We need to stand up a massive public health response if we’re going to get this under control.” 5
The next big point is really two points: There’s a lot in the bill to get money to people in need, which was the top priority for Democrats. And also: There’s a real asymmetry between our two political parties. 5
Democrats fought for $260B for expanded unemployment benefits, $150B to help states avoid layoffs and service cuts, $30B for safety net. They also rewrote the Republican plan to send checks to families so poorer families get more rather than less and rich families get zero. 6
Of course, Trump is already taking credit for all that stuff. The Ds played hardball to get more money for people who might end up being grateful to Trump for the help. 7
It’s amazing when you remember that in 2009, Republicans who had just lost a landslide election simply decided not to help the new Democratic president fix the mess he had just inherited. They nearly unanimously opposed his mere (!)$800B stimulus bill as a big government joke. 8
What do I know, I only wrote a book about it, but I seem to recall some Republican complaints that the Obama stimulus would blow up the deficit. One now suspects those might not have been motivated by pure fiscal conservatism. 9
Anyway, Rs decided to play politics instead of playing ball, and it worked. Their mockery made the stimulus unpopular and dragged down Obama’s numbers. Their all-out strategy of no helped them take back the House, Senate and eventually the White House. 10
Ds took a different approach last week. They tried to push for their policy priorities at the negotiating table but they weren’t willing to say no during a crisis. They got more money for the vulnerable and for hospitals, but not much else. 11
They didn’t get vote-by-mail to protect the 2020 election. They didn’t get automatic stabilizers so stimulus can happen smoothly in the next crisis even if the President is a Dem. They didn’t get much oversight, and Trump has vowed to ignore the oversight they did get. 12
In short, Dems didn’t get anything that Trump really didn’t want. But even though Dems control the House and could have blocked any bill, Rs got some huge things that Dems didn’t want: a $170B tax cut for real estate investors like Trump and a $500B corporate bailout. 13
It’s hard to play chicken when you’re Aaron Rodgers in those insurance ads, worried about your safe driver discount. Dems made it obvious they wouldn’t say no to the relief bill. When they delayed it for one day, their freakout over Dems Block Aid headlines was palpable. 14
Anyway, let’s talk about that corporate bailout. I don’t think it’s a “$500B Trump slush fund,” except insofar as giving $500B to big corporations will inevitably help a lot of Trump donors. But I do think it might turn into a terrible mess. 15
There’s $46B for airlines and big firms “critical to National Security,” which everyone assume means Boeing, though it’s possible Trump could use it to bail out his oil pals. But I’m more focused on/confused by the other $454B, which is supposed to flow through the Fed. 16
I know a little bit about the Fed, I’ve read the statutory language for that $454B over and over, and I’m still not sure what the hell is supposed to happen here or how the hell it would work. 17
Part of it seems to suggest the Fed should keep doing the aggressive stuff it’s doing (Have you noticed that it’s rerunning its 2008 playbook? Kinda scary!) on a larger scale and launch some even more aggressive stuff to inject liquidity into credit markets. That makes sense. 18
Nobody wants a big wave of avoidable bankruptcies. Maybe the Fed can help by buying corporate bonds. And maybe the giant backstop from Congress can embolden the Fed to buy riskier-than-usual bonds to help less creditworthy firms weather the storm. That’s not crazy. 19
But whoa, the Fed is also supposed to buy random bank loans to mid-to-large-sized firms? And the firms wouldn’t have to make payments on the loans for six months, but couldn’t lay off more than 10% of their workforce? That’s not how the Fed rolls. That’s not central banking. 21
Really, the bailout fund sounds like a Rube Goldberg scheme where Congress funds Treasury to backstop the Fed to backstop banks to fund firms to get money to their employees. But it’s asking the Fed to do un-Fed-like stuff. We need the Fed to do Fed stuff. 22
It makes sense that Congress wants to get money to firms with no reasonable expectation right now of paying it back, and with conditions to try to reduce layoffs. And it turns out that the relief bill includes a bipartisan $360 billion program like that for small business! 23
The small business plan might be slow and kludgy, and I’ve heard the SBA sucks at administering this kind of thing. But it basically gets the government to cover payroll and rent/mortgage costs for the next two months. It’s a bridge to June. 24
But instead of doing that for larger businesses, Congress created a game of Fed roulette. A timid approach could lead to a corporate meltdown. An aggressive approach could turn the Fed into a grantmaking agency for busted firms. It’s very confusing. 25
No doubt, the relief bill will provide some relief. But since it won’t go big to contain the virus, it probably won’t be the last relief bill. And its black-box bailout could go very wrong. Like the Dem aide said in my kicker: “I don’t really get it. I hope someone gets it.” END
