In Talking About Economic Recovery, Washington Shuns the B-Word

In Talking About Economic Recovery, Washington Shuns the B-Word

WASHINGTON — When it comes to the term bailout, lawmakers and Trump administration officials would just as soon bail out and avoid it altogether. Same goes for stimulus; many don’t find the word politically stimulating at all. And don’t even dare to mention troubled assets.

Those phrases are remnants of the last major congressional economic recovery effort, in 2008 and 2009, and they still carry unhappy political connotations for many lawmakers. The bipartisan TARP, or Troubled Asset Relief Program, of 2008 was labeled a bank bailout and helped incite backlashes in the form of the conservative Tea Party and progressive Occupy Wall Street movements, demonstrating the power of federal rescue programs to anger voters at both ends of the ideological spectrum.

Lawmakers now scrambling to bolster the economy in light of the coronavirus crisis don’t want to stir those kinds of resentments again. Republicans, having successfully capitalized both at the presidential and congressional levels on populist anger over federal largess, are especially leery of the b-word.

“Words matter,” Representative Michael Waltz, Republican of Florida, said on Twitter on Tuesday. “This is a ‘rescue,’ not a ‘bailout.’ ”

To many Americans, a bailout has come to signify the idea that some undeserving corporate entity that has preyed on the public and profited from doing so is getting taxpayer help while the taxpayer himself is not. Twitter is already awash in criticism of the impending rescue of the airline and cruise ship industries as a form of corporate socialism.

“Bailouts are never popular,” Senator John Cornyn, Republican of Texas, said Monday as the Senate began to ponder the extent of its coming economic program.

The Trump administration has gone to extraordinary lengths to eschew the term. Last week, Treasury Secretary Steven Mnuchin told a House panel that while “specific industries” might be in line for substantial government assistance, he did not want to apply any bothersome buzzword.

“I want to be clear: This is not bailouts,” he said. “We are not looking for bailouts, but there may be specific industries that are highly impacted by travel, that have issues with lending.”

The secretary avoided talk of 2008 and instead compared the current situation more to the aftermath of the Sept. 11 attacks, when the economy was affected by an unforeseen event rather than when risky practices by bankers contributed to their own downfall and the need for a $700 billion infusion.

On Monday, Larry Kudlow, the director of the National Economic Council, also pushed back against the notion that the Trump administration was considering a bailout for the airline industry.

“We don’t see the airlines failing, but if they get into a cash crunch, we’re going to try to help them,” Mr. Kudlow said, describing it as “more of a short-term liquidity issue” — not exactly the catchy sort of phrase likely to stir political unrest.

As Mr. Kudlow arrived on Capitol Hill on Monday night to brief Republican senators on the administration’s economic plans, he smiled knowingly but did not respond when asked if the White House was trying to bend the curve downward when it came to the use of “bailout.”

On a conference call on Monday, Neil Bradley, the executive vice president and chief policy officer at the U.S. Chamber of Commerce, also tried to discourage the use of the word as he described his organization’s proposals for small business loans and other emergency aid.

“These are loans to help businesses traverse a period when they have little to no revenue,” Mr. Bradley said in an interview, explaining his stance.

Mr. Bradley, who was a top aide for the House Republican leadership during the 2008 crisis and helped negotiate the recovery package, said that the term bailout gets carelessly thrown around when it shouldn’t. He noted that banks ultimately paid back the funds they were allocated in 2008.

“A program where the government doesn’t lose money is difficult to describe as a bailout,” Mr. Bradley said. “It is a loaded term, and opponents use it indiscriminately to apply to things that don’t even meet the textbook definition.”

Jim Manley, a Democratic strategist and former top aide to Harry Reid, the Senate Democratic leader during the 2008 debate over the financial rescue package, said the value of government relief was sometimes in the partisan eye of the beholder.

“If you are a Democrat, assistance to families is much needed economic relief or an economic stimulus, and some will call aid to businesses a bailout,” Mr. Manley said. “If you are a Republican, aid to businesses will be much needed relief or a stimulus, and some will call aid to families wasteful spending.”

The bank bailout came in the final months of the George W. Bush administration, though it is often associated with President Barack Obama, who took office in January 2009. It passed on bipartisan votes in both the House and Senate, though blocs of Republicans in both chambers opposed it.

While its real political effect was in the future, it still became something of an issue in the 2008 election. Democrats ran ads against Senator Mitch McConnell, the Republican leader who was up for re-election in Kentucky that year, hitting him for supporting TARP even though Democrats backed the bill. It infuriated Mr. McConnell.

By 2009, Mr. Obama was in charge, and Republicans had determined that they would unite against his economic program, including a $787 billion stimulus package that not a single House Republican supported and just three senators stepped across the aisle to back. Republicans ridiculed it as wasteful and insufficient. For some Republicans, voting against TARP and the stimulus measure remain proud political moments, despite the fact that the programs fueled an economic comeback.

By 2010, the Tea Party movement was raging, and the bailout was a huge issue as conservatives sought to knock off Obama allies in both parties. Senator Arlen Specter of Pennsylvania, one of the three Republicans who backed the stimulus plan, had to switch parties and still went down in defeat.

In Utah, Senator Robert F. Bennett, a close Republican ally of Mr. McConnell, was met at the state Republican convention with angry chants of “TARP, TARP, TARP!” He lost his party’s nomination to Mike Lee, who was backed by the Tea Party and remains in the Senate today.

Democrats lost their House majority and six seats in the Senate. In politics, bailout remains a dirty word, which could complicate economic recovery efforts if lawmakers worry that voters might punish them for going too far in bucking up struggling industries.

“I think ‘bailout’ is not a helpful term,” said Representative Katie Porter, Democrat of California. “I think what we are really trying to do is stabilization, and stabilization at the household level, in particular, that will help stabilize the economy as a whole.”

As he pushed on the Senate floor on Tuesday for an expansive package, Mr. McConnell emphasized that businesses need help “not due to any business decision they made, but because of appropriate directives from public health experts.”

Mr. Waltz, the Republican congressman from Florida, sought to drive home a similar point in his tweet.

“The 2008 bailout pulled financial institutions out of a crisis of their own making,” he said. “This rescue will be a lifeline to critical jobs-producing businesses that did nothing wrong.”

Nicholas Fandos contributed reporting.

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