The past few weeks have felt more like months to many of us. Each day brings multiple, extraordinary headlines about the various impacts from and reactions to the spread of the coronavirus. Empty stadiums, shuttered museums, motionless cruise ships and now quarantined policymakers have jarred the public and laid a foundation for panic that will likely lead to significant and immediate action by Congress and the administration. But these seemingly new waters are not unchartered as there are moments in recent history that have defined how to seek assistance for affected employees, businesses and industries.
The response to major events such as the 9/11 terrorist attacks and the 2008 financial crisis are perhaps the best place to start. In those instances, the public support for government intervention into the economy was both widespread and deep – something had to be done and had to be done quickly. Companies and their associations made the pitch to the administration and Congress, and got relief through the tax-code, fiscal stimulus, capital injections, or through the temporary forbearance of regulations. These interventions, however, came at a cost.
Working for the Financial Services Committee during the TARP negotiations and later for the financial services industry, I can say that the banks still struggle to shed the baggage of the government bailouts and the most aggressive regulatory reform effort of the past century (Dodd-Frank). So for those looking for relief amid current crisis conditions, it is important to remember that words like “temporary,” “targeted,” “need-based” and “forbearance” can very quickly turn into a “bailout” in the mind of those Americans who don’t perceive a direct benefit. Without widespread and sustained acknowledgment that meaningful government intervention is the only action that can prevent or mitigate a total collapse of the system, it is just a bailout with both winners and losers. Intervention without established facts, sustained messaging and a focus on the everyday American can easily give the public the impression of chaos or randomness as to the decisions behind who is being helped and who is not. Bailout Bingo.
In what feels like the early days of the American coronavirus experience, companies and trade associations have already begun to push for assistance at the highest levels of government. This has resulted in daily press conferences by the administration and members of Congress on what can be done to help. Some of the requests for aid appear opportunistic on their face while others seem truly desperate. Those stakeholders looking to press the case will have their best chance at success if they do their homework before engaging and focus on the impact to the general public and those less fortunate. Data analysis and forecasting will be the foundation policymakers use to consider any relief package. Who is affected? For how long? At what cost? Is this a temporary loss of revenue or will businesses shutter permanently due to the crisis? Can relief be provided through administrative action or does it require an act of Congress? Beyond all those answers, what truly helps policymakers evaluate the request is a sense that the petitioners for relief understand the cost of intervention and are willing to defend the potential actions and assist with messaging.
The 2008 bailouts of the auto and banking industries may have forever altered the political landscape. While the pendulum has swung toward action during this current crisis, it may come at a cost difficult to measure for years to come.
Dave Oxner is a managing director at Cogent Strategies. He joined the firm after serving as head of federal government relations for the Securities Industry and Financial Markets Association (SIFMA). Prior to SIFMA, Dave spent a decade on Capitol Hill working on issues before the Senate Banking Committee and House Financial Services Committee including the bipartisan subprime lending reform measure, the Troubled Asset Relief Program (TARP), and the Dodd-Frank Act. For a complete bio, click here.