Today, The Washington Post published an op-ed by Governor Andrew M. Cuomo urging Washington to make corporations ineligible for government funding if they don't maintain the same number of employees they had prior to the COVID-19 pandemic. Yesterday, Governor Cuomo announced that members of the New York Congressional Delegation will propose the 'Americans First Law' to help prevent corporate bailouts following the pandemic. The text of the op-ed that was published by The Washington Post is available here.
Full text of the op-ed is available below:
The covid-19 pandemic has thrust us all into unprecedented circumstances, even more dire than the economic collapse of the Great Recession. As the nation plots a course forward, I fear that mistakes of the past are being repeated — errors that put the well-being of large corporations above that of working Americans.
The latest monthly jobs report was staggering: Businesses across the nation shed more than 20.5 million jobs in April. The U.S. unemployment rate has climbed to 14.7 percent — the highest rate on record since tracking began in 1948. One in every five Americans employed before the onset of the pandemic are out of work. Ten years of unprecedented economic gains in our state were wiped out in a single month.
Over the past decade, New York generated 1.3 million jobs, reaching a record high of 8.3 million private-sector jobs in February, as unemployment fell to a record low. Wages increased by 47 percent, and we raised the minimum wage to $15 per hour. Now, our state is looking at a multiyear recovery, one longer and with a deeper decline than we faced after the Great Recession.
As states throughout the country take steps to reopen, Washington must not repeat mistakes of the past. Large corporations receiving government bailouts must be held accountable for doing right by their workers.
So far, Washington has been in repeat mode.
The $2 trillion federal assistance package passed in March included hundreds of billions of dollars to prop up large corporations without questioning their commitment to workers or business practices. I understand the desire to keep businesses from failing, but doing so makes sense only if government funds are being used to support workers — not to enrich executives and shareholders.
But that's what is happening. The Federal Reserve and Treasury Department are jointly launching a $500 billion bond-buying program without any requirement that companies receiving aid retain workers or limit distributions to their executives and shareholders. This is even more shocking given that the Federal Reserve's principal mandate is to promote maximum employment.
Think about that prospect — $500 billion in federal financial support with no strings attached. That's great for executives and shareholders! That's great for the largest corporations in this country, those that have increased their debt by close to $4 trillion since 2009, while enriching themselves via stock buybacks and massive dividends. Meanwhile, workers get laid off and taxpayers foot the bill for unemployment benefits, Medicaid, food assistance and other public supports.
We've seen this movie before. This is what Washington did after the 2007-2009 recession caused by mortgage fraud. Homeowners lost life savings and equity in their homes while bankers made fortunes. Taxpayers bailed out corporations and executives while those same taxpayers' home equity was lost. The injustice of our system was glaring and obnoxious. Bankers that had reaped record profits by selling what turned out to be toxic securities were then handed a taxpayer-funded parachute for a soft landing during the crash. This inequity is poised to happen again, as corporations are planning their next bailout scheme with their friends in Washington.
Even as the number of coronavirus cases in our country continues to rise, some corporations are looking for a chance to increase their profit margins on the backs of Americans they have laid off. Corporate leaders are telling Wall Street analysts that this is an opportunity to rethink their businesses and permanently reduce their payrolls as they get lean. This would mean significantly higher structural unemployment for longer periods. It would mean more spending by governments at all levels to keep Americans fed, housed and healthy. Ultimately, this stands to result in greater inequality, greater income disparity and potentially greater social unrest.
Our country cannot let that happen again. Washington must put in place stronger requirements for corporations that take federal bailout money. Corporations that do so must hire back at the same levels that they employed before the onset of the public health crisis and subsequent economic fallout. Federal financial assistance that refinances corporate balance sheets shouldn't be the catalyst for bigger corporate profit margins at the expense of workers.
Washington's bailout rule should be simple and clear: No government support if you don't hire back all of your pre-pandemic workers.
Government should not subsidize corporate plans to lay off workers, while any corporate layoffs must require a return of any government subsidy. The path forward for all of us will be difficult enough. Corporations are driven by profits. It is the role of government to ensure that those profits do not come at the expense of the Americans who are the backbone of our economy.