To my knowledge the news broke with a Friday Washington Post article entitled, White House is considering tax relief for airlines, travel and cruise industries hurt by coronavirus. I’ve got a few things to say about that! Let’s explore.
I’ll start with my primary conclusion – this is another attempt to privatizing the profits and socializing the losses.
White House Economic Adviser (and the latest Trump administration version of Baghdad Bob) Larry Kudlow, confirmed that the White House is considering tax breaks and other economic aid for the travel and hospitality industry hard hit by the coronavirus.
While the entire program is under development it appears the aid will primarily take the form of tax breaks for the corporations. This is the old play of privatizing the profits while socializing the losses. When the corporations make money the right wing thinks that they should keep it because they had the “genius” to take the risk with their money and they deserve the profits. However when they lose it isn’t their fault and we collectively should bail them out. Am I the only one who has a problem with that type of thinking?
It appears the aid will be primarily aimed at the major travel and hospitality entities. What about the “little guy” and the employee? It appears they may be able to get low interest loans. The reality is that low interest loans are not a good as the handouts the majors will receive and in many cases will be too little and/or too late.
Major corporations can lay off and should have business interruption insurance that will help them weather the storm. Mom and pop operations, along with workers, largely deal with fixed costs and don’t have the reserves majors should have. Especially for individuals, there simply aren’t that many variable costs. The mortgage and car payment are due whether you had extra hours or not. You can’t lay off your school age kids. It starts out unequal and only gets worse.
Here is another consideration: are we going to subsidize majors for losses from their foreign operations? If so why? What happened to America first?
What about the conflict of interest presented by President Trump himself? Are we going to subsidize his hotels and resorts? What about his foreign business interests? If a bunch of fat cats decide not to fly to Scotland to play golf at a Trump property are Americans collectively to make it up to Trump?
I’m not very concerned about a major hotel chain. If they fail due to a downturn it is in large part because of bad management. Investment is a risk and good investors/managers make risk/reward decisions. I’m much more concerned about someone who was trying to make or supplement a living by working as wait staff in Austin, Texas and was counting on the extra tips they would receive during South by Southwest which has prudently been cancelled; or the kid partially working their way through school at a now shuttered cinema.
I’m not as much worried about the major hotel chain or tourist attraction owned by a large corporation as I am about the mom and pop restaurant down the street that needed those customers to stay afloat and provide first jobs to high school kids in the neighborhood.
There are a lot of shinny objects in the air today. Some of them need to be paid attention to but don’t let them distract you to the point that Trump slips another benefit program for him and his buddies past you and leaves you picking up the tab. The far right establishment hates socialism until it bails them out of a situation made worse by Trump’s incompetence and their greed.
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