Free-market principles in Washington have run smack into the election-year coronavirus pandemic.
President Trump and Senate Republicans were trying hard on Thursday to portray the biggest economic rescue plan in history, including proposals of $500 billion in cash payouts to families and the possibility of the government becoming temporary part owner of private corporations, as something other than the bailouts of the financial crisis in 2008 or the Obama administration’s much-mocked “stimulus” plan of 2009.
That stimulus plan cost taxpayers roughly $820 billion. The TARP aid for banks and auto companies, plus bailouts for Fannie Mae and Freddie Mac, was about $634 billion, although the companies eventually paid back the loans.
The proposal being negotiated by the White House and Senate Republicans is in the neighborhood of $1.3 trillion.
“We are not talking about so-called ‘bailouts’ for firms that made reckless decisions,” said Senate Majority Leader Mitch McConnell, Kentucky Republican. “We are talking about loans, which must be repaid, for American employers whom the government itself is temporarily crushing for the sake of public health.”
The idea of throwing hundreds of billions of dollars at corporate America, even in an unprecedented crisis, is making some conservatives squirm.
“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,” said Sen. Mike Braun, Indiana Republican. “You’re picking winners and losers, and it gets very complicated.”
As unemployment claims rose 33% last week to 281,000, the president said he’s trying to keep people from losing their jobs and companies from going under. In Ohio, jobless claims rose 48,000 in the first two days of this week, compared to 1,825 for the same two days last week.
“We don’t want to pick winners and losers,” Mr. Trump said. “We want everybody to benefit. We want, I think more than anything else, the workers to benefit. If the company goes out of business, no fault of their own, those workers aren’t going to be able to receive a check.”
Mr. Trump also said he supports having the federal government take equity stakes in private companies that receive coronavirus aid.
“I do, I really do,” he said when asked whether he would approve of the government owning a stake in private companies.
But he said he might take a less charitable approach with companies that have used excess cash for stock buybacks to boost the price of their own shares, instead of investing in new equipment.
“In some cases, where they did certain things over the course of the years, including by buying back stock, you know, they bought back stock and they paid a high price for it,” Mr. Trump said. “Maybe I view that as a little bit differently than somebody that didn’t, and somebody that built plants all over the United States.”
He also said barring companies from using the aid for executive bonuses or stock buybacks “would be OK with me.”
The administration’s proposal also would provide hundreds of billions for sectors of the economy that have come to a virtual standstill, such as airlines and hotels.
“We will be helping the airline industry. We will be helping the cruise ship industry. We probably will be helping the hotel industry,” Mr. Trump said. “You don’t want to lose industries like this. These are incredible industries. You can’t lose them. So we’ll be focused on many industries.”
Treasury Secretary Steven T. Mnuchin said Thursday that many of the companies will pay back any loans.
“This isn’t about bailing out bad businesses. This isn’t about banks that made bad loans,” Mr. Mnuchin told Fox Business host Maria Bartiromo. “These are about very, very good companies that have been instructed to shut down, so they need liquidity. That’s what they need. In most cases, my expectation is they will be able to pay back these loans.”
In the case of small businesses, he said, “if they can’t afford to pay back those loans, we’ll forgive them. I don’t consider that a bailout. I consider that an incentive to keep workers hired.”
The U.S. Travel Association, which represents mostly small businesses, said companies in the non-airline travel sector will lose 4.6 million jobs by the end of April.
“The only thing that’s going to protect them is aggressive financial relief right now,” said U.S. Travel President and CEO Roger Dow, who spoke with Mr. Trump Tuesday. “We’re witnessing the shutdown of travel.”
He said numerous companies are trying to help their employees, but added, “the cold reality is they can’t support their employees if they don’t have any customers, and they don’t have any customers because of the actions needed to halt the spread of coronavirus.”
Mr. McConnell outlined Senate Republicans’ four-part plan: $300 billion in loans to small businesses, checks to the American public, major support to hard-hit industries, and more funds to the overly strained healthcare system. The small business relief would give loans to qualifying companies for payroll and other operating expenses.
“No massive new bureaucracy. We want to let qualified small businesses get liquidity through familiar institutions — their own community banks, credit unions or nationwide lenders,” Mr. McConnell said.
The average family of four would receive $3,000 from the government next month under the economic relief plan proposed by the White House. Mr. Mnuchin said the direct payments in April would include $1,000 per adult and $500 per child, to be delivered three weeks after Congress approves the plan.
A second round of payments would go out in May if the president hasn’t lifted his national disaster declaration.
“We’ve told the House and the Senate we need to get this done quickly,” Mr. Mnuchin said. “This needs to be done by the beginning of next week.”
Under the plan introduced by Senate Republicans late Thursday, the government would provide about $1,200 to Americans making up to $75,000, with another $500 per child. The handouts would then be scaled down between $75,000 and $99,000.
It includes a $230 billion loan plan for eligible small businesses to go toward payrolls and other operating expenses to help the companies stay afloat and keep their employees.
To aid sectors of the economy devastated by the virus, the package includes $208 billion in loans: $50 billion for airlines, $8 billion for cargo air carriers and $150 billion for other eligible entities.
The president sounded unconcerned about the short-term costs to the government, emphasizing the need to get beyond the crisis.
“We’re paying a lot of money to stop things [commerce and activities], because we don’t want people to be together,” he said. “But we’re doing the right thing. It’s not a financial war, it’s a medical war.”
Mr. Trump also showed some impatience for those dwelling on the harm being inflicted on the economy.
When a reporter prefaced his question by pointing out that the economy has “essentially ground to a halt,” Mr. Trump cut in, “Thanks for telling us. We appreciate it.”
The reporter continued, “Stores have closed, travel has slowed down …” The president jumped in again.
“What’s the rest of your question? Everybody in the room knows that,” he snapped.
Stocks posted modest gains on Thursday, recovering from a three-year low as cheap oil prices jumped the highest ever in a single day and Mr. Trump highlighted possible coronavirus therapies.
The Dow Jones Industrial Average rose 188 points, or 0.9%, to close at 20,087. The tech-heavy Nasdaq climbed 2.3%, and the S&P 500 rose 0.47%.
U.S. oil prices surged 23%, posting its best day ever and recovering about half of Wednesday’s losses.
The Fed also said late Wednesday it would start a new lending facility to support U.S. money-market mutual funds. Mr. Mnuchin said the move “will enhance the liquidity and smooth functioning of money markets, support the flow of credit to hard-working Americans, and help stabilize the broader financial system.”
• Gabriella Muñoz contributed to this article, which is based in part on wire service reports.