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OpEdNews Op Eds    H2'ed 4/20/20

CEOs, not the unemployed, are America's real "moral hazard"

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From The Guardian

Many Republicans believe economic relief for those without jobs encourages slacking off. But it is corporations that are bailed out again and again

Sen. Lindsey Graham
Sen. Lindsey Graham
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The coronavirus relief enacted by Congress is barely reaching Americans in need.

This week, checks of up to $1,200 are being delivered through direct-deposit filings with the Internal Revenue Service. But low-income people who have not directly deposited their taxes won't get them for weeks or months. Worse yet, the US treasury is allowing banks to seize payments to satisfy outstanding debts.

Meanwhile, most of the promised $600 weekly extra unemployment benefits remain stuck in offices now overwhelmed with claims.

None of this seems to bother conservative Republicans, who believe all such relief creates what's called "moral hazard" the risk that government benefits will allow people to slack off.

The Republican senator Lindsey Graham, for example, says state unemployment offices are overwhelmed because the extra $600 is "incentivizing people to leave the workforce." Hello?

When it comes to big corporations and their CEOs, however, conservatives don't worry about moral hazard. They should.

Before the coronavirus outbreak, corporations were borrowing money like mad, capitalizing on the Fed's bargain-basement interest rates. Total business debt topped $16tn last year.

Corporations used much of this debt to buy back their own shares of stock. This raised the earnings of each remaining share, creating a bonanza for big investors and top executives.

Trump never tired of pointing out how spectacularly stocks had risen on his watch. But he neglected to mention those stocks were floating on a rising sea of corporate debt -- which left corporate America dangerously unprepared for any sharp downturn.

Then came Covid-19 and the sharpest downturn on record.

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Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

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