As the airline industry continues to struggle, the government is using a controversial bailout program to prop it up. While there are many reasons why an airline should receive a bailout, the latest issue is the fact that the Treasury insists on full repayments of its grants, which the company has yet to agree to. Executives at airlines are expressing concern about Trump’s decision to make these grants into loans.
After complaints from farmers and agricultural groups, the bailout program was established last year. In response to the tariffs, China stopped buying American crops and other agricultural products. Trump directed that billions of dollars be paid directly to farmers by the taxpayer, and Congress now requires the bailout program. But lawmakers are divided on whether the program should continue or not. The bailout money will likely flow to farmers regardless.
Steele’s story focuses on the TARP bailout program, but many of the same issues apply to the COVID stimulus program and other government bailout programs. Congress is dumping money like hotcakes and rules are constantly changing. It is not clear how much oversight the government has on the program. It is not a political issue whether the money is being used responsibly. Even if the government follows the law, the money is being distributed across many sectors.
The Troubled Asset Relief Program was designed to stabilize the financial system, mitigate foreclosures, and restore economic growth. The purpose of the T.RAP was to purchase assets that were difficult to value. These assets include bank stocks and mortgage-backed securities. These assets were bought during a boom, but they were later hit by widespread foreclosures of underlying loans. By purchasing these assets, the government helped these companies stabilize their balance sheets and avoid further losses.
The White House has outlined the bailout program, but one top Democrat has rejected it. This is a critical time in American agriculture’s history, and Democrats may try to get the White House to change the program. In the meantime, the government could shut down. The crisis will only get worse if that happens. If the White House does not act, the bailout program could lead to another recession and severe economic decline.