“During this crisis, we cannot do a no-strings bailout for corporations like we did in 2008,” Ms. Warren said in an interview. “It’s got to be clear that the money will be used in ways that will help workers and strengthen the whole economy.”
Ms. Warren compared the conditions on assistance with a mortgage lender that insists that the borrowed money actually be spent on buying a house. “It’s good lending practice,” she said. “If we’re going to lend money to these guys, we ought to know how the money is going to be used, and that’s what the strings are for.”
Patrick L. Anderson, an economist in East Lansing, Mich., publicly opposed the financial bailouts in 2008. But he said there were important differences between this crisis and that one.
“That was money that was largely going to giant lenders, some of whom were irresponsible, and was going to prop up organizations that were part of the problem,” Mr. Anderson said. “This is different. It’s not a bailout if you, the government, tell a business to close, and then they ask you to help cover payroll while they’re closed. That’s not a bailout — you told them to close.”
Helping businesses survive the crisis also makes good economic sense, Mr. Anderson said. In a report published Wednesday, he estimated that more than 100 million Americans could lose significant income as a result of the outbreak, and 45 million could lose half or more of their wages.
Diane Swonk, the chief economist at Grant Thornton, said many fundamentally healthy businesses were suddenly seeing catastrophic losses in revenue — not because of any choices they made, but because of an unfathomable crisis. “You can make sure that the loss in spending doesn’t become an insolvency problem,” Ms. Swonk said. “You’re trying to keep individuals and firms solvent.”
But Joseph S. Vavra, an economist at the University of Chicago’s Booth School of Business who has studied how the policies used to fight the Great Recession worsened inequality, said any bailouts should help companies and their workers, not reward shareholders