Amid Coronavirus’ horrific impacts across humanity (from illnesses and deaths to economic devastation) are glimmers of how to seize a better path forward and what could result from a concerted global impact. From countries restructuring economies to emphasize assuring basic needs and human dignity (such as South Korea launching a Green New Deal as its path forward) to clear skies and breathable air in some of the typically most polluting places in the world, an opportunity for betterment is before US.
Regretfully, destructive special interests have their maws deeply into government processes, shamelessly and greedily exploiting urgent needs for massive programs to keep people from starving, maintain basic services, and bridge economies through an ‘induced coma’.
Poster Child #1: CARES’ Act Couldn’t Care Less Provision
Within the United States, the advertising slogan CARES Act is, in all too many ways, a poster child of exploitative interests securing much larger benefits than what is going to critical services and to Main Street. Within the CARES Act, with little more than a few sentences buried in hundreds of pages, a $170 billion (with a capital B) tax giveaway of primary benefit to hedge fund investors and real-estate business owners. Hmm, any surprise that this that will overwhelmingly (well over 80%) go to the 43,000 households with over $1M/year in income? Senate Majority Leader McConnell snuck this into the CARES Act and, amid the pressure for quick action, Democrats didn’t begin to understand fully the implications of McConnell’s insertion until the bill was already out of the Senate. Why let a crisis go to waste when you can, instead, exploit it for $Bs in tax breaks for Donald Trump, Jared Kushner, and other equally ethical and ever-so needy individuals.
Now, there were other McConnell couldn’t care less for the future wish-list items that didn’t make it into the CARES Act including many billions for oil, natural gas, and coal interests which he sacrificed in a trade to stop renewal of renewable energy tax credits.
Never fear, Mitch, as the Fed is here to help.
Poster child #2: Federal Reserve Polluters’ Benefits Fund
The Federal Reserves’ moves to steady the economy are also filled with special interest plays. On 9 April, the Federal Reserve announced the rules for $750 billion (and, well, with a BOLDLY CAPITAL B BILLION) in corporate debt purchases. As a Friends of the Earth research team has documented in a new report, the benefits that many fossil fuel interests will receive under the convoluted rule set could well be an order of magnitude larger than what Mitch and the rest of couldn’t care less for humanity Congressional Republicans couldn’t deliver for them.
Let’s take a moment for context. While the image of the industry are excess Exxon profits and enviable Jed Clampett-like millionaires, the truth across much of the U.S. oil and natural gas industry for the past decade has been financially questionable operations leveraging privileged financial debt access. Even before Coronavirus-driven collapse in demand and prices, sophisticated observers have long-laid out how this fossil-foolish deck-of-cards was unsustainable with revenue not even keeping up with operating costs, debt servicing, and shareholder payouts — flipping debt has been more critical for many operator and investor fortunes than hitting an oil gusher. As per a 2018 discussion
The U.S. shale oil industry hailed as a “revolution” has burned through a quarter trillion dollars more than it has brought in over the last decade. It has been a money-losing endeavor of epic proportions.
As these over-leveraged firms, surviving via unsustainable financial practices in an unsustainable climate-destroying industry, hit the wall of Cronavirus demand and price collapses, more than a few said: Let them eat bankruptcy!
Sadly, it seems that the Federal Reserve doesn’t truly believe in capitalism — at least when it comes for politically connected industries. As FOE has documented, there is likely in the range of at least $50B in fossil-foolish debt buyout with much of this actually junk-status bonds that slip through the cracks of Fed rule sets.
- “ExxonMobil, Chevron and Conoco are together eligible for up to $19.4 billion in potential benefits, based on their credit ratings and outstanding long-term debt,
- “There are 12 fracking-focused oil and gas companies that could potentially qualify for the new program. Together, they may be eligible for over $24.1 billion in potential benefits.
- “Major fracking company Continental Resources, whose debt was recently downgraded to below investment grade by S&P, is potentially eligible for as much as $1.5 billion under new, weaker standards announced by the Federal Reserve.
- “As BlackRock begins purchasing “high yield” exchange-traded funds (ETFs) to bolster corporate debt markets, energy companies (predominantly oil and gas) stand to benefit disproportionately as the largest single issuer of junk bonds, at 11% of the entire US market.”
The Fed’s program is, in all too many ways, far looser than the CARES Act. Unsustainable firms, teetering on the edge of financial insolvency even before Coronavirus, are going to be able to issue additional debt that the Fed will buy at incredibly low interest rates. Not only will taxpayers being keeping poorly run firms in polluting industries afloat, but these firms will be able to use the Fed’s money (hint: taxpayer money) for stock buybacks and executive bonuses. What a dirty f—king bailout, indeed.
Lemon Socialism in action
While Republicans like to moan about “socialism”, they these measures are heavily polluted versions of the Grand Oil Parties’ real lemon socialist motto: