2.2 The Reality of Tournament Dirigisme

To get a sense of what we are really dealing with when we talk about “capitalism,” it is worth taking a look at the 2020 government bailout.

In the immediate aftermath of the COVID-19 outbreak and the resulting economic crash, President Donald Trump signed on March 27, 2020, a $2.2 trillion package titled the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act.” The legislation flew through Congress and was passed without an impact assessment by the Congressional Budget Office (“CBO”). Few legislators had the time to read it before it was signed into law.

To give an idea of the scale of the package, the total national debt of the United States stood at $23,535,039,888,496.42—essentially $23.5 trillion—on the day the president signed the CARES Act.¹⁶³ So the bailout represented almost 10% of our enormous national debt. Even that underestimates the size of the measure because the national debt has grown so fast in the past decades. The total national debt stood at only $5 trillion in 1996. It doubled to about $10 trillion by 2008, and then doubled again to about $20 trillion in 2017. With such a high national debt today, the CARES Act may seem like a relatively small contribution to the country’s indebtedness—but that is merely an artifact of the colossal size of the national debt itself.

To give a better idea, the size of the CARES Act is about 2.5 times the federal government’s financial deficit for the entire fiscal year 2019. The federal deficit for 2019 was approximately $984 billion—so almost a trillion dollars—up from $779 billion for 2018 and $666 billion for 2017.¹⁶⁴ Alternatively, the CARES Act is about half the size of the entire federal budget for fiscal 2019—from October 1, 2018 to September 30, 2019—which reached $4.45 trillion. Yet another comparative measure: the 2009 bailout was about $800 billion, so only almost a third of the CARES Act. In other words, we are talking about a gigantic bailout.

The main components of the CARES Act include:

• $500 billion in government support to corporations (of which $25 billion may support passenger airlines, $4 billion cargo airlines, and $17 billion companies related to national security) (Title IV)¹⁶⁵

• $350 billion in government support to small businesses for loans to cover worker payroll and other expenses (Title I)¹⁶⁶; it seems as if these loans can be forgiven¹⁶⁷

• Another $350 billion in government support to small businesses,¹⁶⁸ plus another about $40 billion for special loans¹⁶⁹

• $150 billion in government support (“payments”) to states, tribal governments, and local governments (Title V)¹⁷⁰

• $100 billion in government support to hospitals

• $45 billion for a disaster relief fund¹⁷¹

• $32 billion in government support to airline workers for wages and benefits

• $10 billion in government support (loans) to U.S. Post Office¹⁷²

• $10 billion in government grants in aid to airports¹⁷³

• $3.5 billion in government support to states to support childcare facilities and to universities to support federal work-study jobs for students

In addition, the CARES Act provided $500 billion in government support to low-income households, which was distributed through $1,200 checks with a signed letter from President Trump. There are also lots of smaller grants in the Act, including the following: “$100 million for additional rural broadband and $150 million for arts and humanities grants to bring cultural programming to Americans stuck at home. It would increase funding for domestic violence shelters and hotlines and set aside $425 million to deal with mental health and substance abuse disorders related to the pandemic. $400 million would become available to protect and expand voting for the 2020 election cycle.”¹⁷⁴

For present purposes, let’s focus on the $500 billion in government loans to corporations—as well as the additional $25 billion for the airline industry.

According to the New York Times, the $500 billion “include $425 billion for the Federal Reserve to leverage for loans to help broad groups of distressed companies and $75 billion for industry-specific loans to airlines and other hard-hit sectors.” Of that, $25 billion in grants for the airline companies, with possible equity interests; plus $17 billion for direct loans to “companies related to America’s national security.” There are certain strings attached—but most of them can be unknotted and are temporary.¹⁷⁵

The treatment of airline companies is particularly telling.