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GOP lukewarm on talk of airline bailout

By Admin

As Reported By Jordain Carney, Niv Elis and Alex Gangitano for The Hill

Pressure to extend tens of billions in federal relief to the struggling airline industry is being met with grumbles from top Republicans on Capitol Hill.

GOP senators appeared lukewarm to the idea of a bailout, though they also appeared to acknowledge that airlines are likely to need government assistance to weather the storm. Carriers have largely grounded planes over growing concerns about the extent of the coronavirus outbreak.

Sen. Joni Ernst (Iowa), a member of GOP leadership, said that while companies were likely to need help, she wasn’t thrilled about initiating a bailout.

“I think we’ll have some debate over that. I am worried about a bailout, but we want to make sure that we’re supporting industry. But yes, I think we need to focus on the American worker rather than some of the large corporations,” she said.

The White House is pitching roughly $50 billion for airlines in a package that GOP senators estimated could top $1 trillion.

Republicans have been leery in recent years of the idea of tossing a financial lifeline to major industries. In 2008, the Democratic House initially rejected a more than $700 billion bailout for Wall Street, with only one-third of Republicans supporting the bill. The rejection plunged the markets deeper into chaos. The measure was later passed and signed into law.

More recently, some GOP lawmakers have been critical of President Trump’s assistance to farmers impacted by his administration’s trade wars, arguing that it represents a “bailout.”

“When it comes to grants or bailouts for big companies, especially at this stage of the game or the phase three, there are going to be many of us who harken back to 2008 and won’t be comfortable with that,” Sen. Mike Braun (R-Ind.) said. “You’re picking winners and losers, and it gets very complicated.”

Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) told reporters that “a lot of us are against a bailout.”

“I brought it up. I said loans, yes. They have a lot of collateral. Collateralize the loans, make sure they’re paid back,” he said. “As far as writing a check for bailout, I’d be totally against that.”

But other GOP leaders argued that bailouts for the hardest hit industries are needed, while also acknowledging that they are politically unpopular. It’s the latest U-turn for Republicans on fiscal policy during the Trump administration, with one-time deficit hawks supporting bills with exorbitant price tags and few ways to pay for them.

“I don’t think anybody is comfortable with the idea of bailing out anybody or any industry. But I think there is a recognition, however, that through circumstances completely out of their control … the bottom has dropped out,” said Sen. John Thune (S.D.), the No. 2 GOP senator.

He added that help for the airlines was “under consideration” with “a lot of discussions going on.”

“People are talking about things like [what] happened after 9/11 or after the Great Recession. And I’m sure there’s an inventory of things that we’ve done before under similar circumstances that we’ll be looking at and seeing where the consensus is,” said Sen. John Cornyn (R-Texas), an adviser to Senate Majority Leader Mitch McConnell (R-Ky.).

But, he added, “bailouts are never popular.”

Senators saw the impact on the travel industry first hand when they flew back to Washington this week.

Cornyn noted his plane had the capacity to carry more than 170 passengers but had only 35 or so seats filled. Sen. Todd Young (R-Ind.) said he was the only person on a plane with about 100 seats.

The administration has signaled that help for impacted industries should be included as part of upcoming stimulus packages.

“This is worse than 9/11 for the airline industry, they are almost ground to a halt,” said Treasury Secretary Steven Mnuchin.

Mnuchin discussed the need for industry help during the closed-door lunch with GOP senators Tuesday. He noted to reporters afterward that he had also discussed the issue with Speaker Nancy Pelosi (D-Calif.).

Trump added Tuesday that “the airline industry will be in good shape,” referring to the administration’s proposal that includes funding for airlines.

Republicans are expected to try to craft the “phase three” bill on their own before negotiating with Democrats, whose support they will ultimately need.

Senate Minority Leader Charles Schumer (D-N.Y.) appeared to dismiss calls for bailouts during a Senate floor speech, saying the focus for a third bill “cannot be based on bailing out airlines, cruises and other industries.”

But he also circulated a document to fellow Democrats outlining conditions for a potential bailout. Among them, requirements that rescued businesses offer sick leave and a $15 minimum wage, protections for workers and their jobs, and a clawback mechanism if workers do not benefit from the government lifeline.

Asked about the administration’s proposal for $50 billion for the airlines, Schumer added that the context for the broader package would matter.

“A lot of these airlines bought back their stock, so they have less liquidity and cushion right now. How are we going to deal with that? I don’t think the American people want to allow them to buy back their stock and then without any recompense get aid,” Schumer said.

Progressives are laying out early goal lines for any industry bailout.

Sen. Elizabeth Warren (D-Mass.) outlined 15 “priorities and requirements,” including maintaining their current payroll, providing a $15 minimum wage and guaranteeing companies give at least one board of directors seat to elected workers.

And in a sign that Pelosi could face pushback from her party’s progressive flank, Rep. Alexandria Ocasio-Cortez (D-N.Y.) took to Twitter to slam reports of an industry bailout.

“This is unacceptable. Trump is using this public health crisis as an opportunity to push tax cuts and corporate bailouts,” she wrote, saying funds should be directed toward social safety net programs and mortgage suspensions.

Many Democrats, as well as outside groups, are stressing that individuals, not major corporations, should be the focus of future legislation.

A prominent critique of the airlines was that in recent years the industry, like other sectors, used soaring profits and windfalls from the GOP tax cuts to buy back stock instead of putting the money away for a rainy day.

“The corporate windfall from the Trump tax cut went primarily to stock buyback. Now many of those corporations want taxpayers to bail them out,” said former Missouri Sen. Claire McCaskill (D). “What’s wrong with this picture?”

The Service Employees International Union (SEIU) said any airline industry bailout needs to include help for the airline workers, including cabin cleaners, customer service representatives, and wheelchair attendants.

“It is essential that we put working people at the center of any industry bailout,” SEIU President Mary Key Henry said on a call with reporters Tuesday.

She said she has spoken with Schumer this week about the needs of airport workers.

“He feels the contracted airport worker experience personally,” Henry said, adding that Schumer has met with and knows workers at the JFK, LaGuardia, and Newark airports.

Larry Willis, president of the Transportation Trades Department at the AFL-CIO, said any bailout should bar companies from using bankruptcy declarations to rewrite union contracts or slash wages, as they did in the aftermath of the 9/11 attacks.

“I think that as Congress looks at the aid request and considers these issues, we want to make sure that front line workers are considered part of the calculus here,” he said.

But criticism of potential bailouts was already mounting from both the left and the right.

Americans for Prosperity, a Koch-backed group, called on Congress to reject “taxpayer-financed bailouts” unless they were temporary and limited.

“We are troubled by recent calls to provide expansive, taxpayer-backed industry bailouts that extend far beyond any concrete and particularized injury resulting from the coronavirus,” the group said in a letter to congressional leadership.

“We are equally troubled by special interest attempts to exploit the current crisis to make controversial, long-term policy changes for their own gain and with far-reaching negative implications for the American people,” the letter continued.

U.S. PIRG, a coalition of public interest groups, said assistance should focus on direct payments to Americans and public health.

“Now is no time to give bailouts to the biggest companies with the loudest lobbyists,” the group’s tax and budget advocate R.J. Cross said.

“The conversation over the long-term future of industries such as the airlines — while important — can and should wait,” she added.