Wealthy investors were privately warned about the potential economic devastation of the COVID pandemic. Ordinary Americans were not, and at least 8 million have fallen into poverty.
On Feb. 24, just hours before President Trump declared on Twitter that the coronavirus was “very much under control” in the United States, his own economic advisors contradicted his message, privately warning members of a conservative think tank that they could not determine how severe the economic impacts would be. That message was interpreted as a heads-up regarding the potential dangers of a virus that has since gone on to kill at least 216,000 Americans and plunged millions more into poverty.
The warning, delivered over the course of three days by Trump’s economic adviser Tomas Philipson and Larry Kudlow, director of the National Economic Council, spurred concern among board members of the Hoover Institution—many of whom are major Republican donors—and spread to other elite traders in the investment world, sparking further turmoil in an already rocky stock market.
Sorting Fact From Fiction: Sign Up for COURIER’s newsletter.
The New York Times first reported Philipson and Kudlow’s comments, based on a document they obtained that described the meetings. Written by William Callanan, a hedge fund consultant who attended the three-day gathering of Hoover’s board, the memo conveyed a general message that a devastating outbreak in the US was likely and that government officials were more aware of the dangers than they were admitting to the public.
One investor who received the memo told the Times his reaction was to “Short everything,” or to bet against the market and profit off of falling stock prices of companies. According to the Times, others who read or heard about the memo used their knowledge to stock up on household essentials such as toilet paper weeks ahead of the general public. By the late afternoon of Feb. 26, Callanan’s memo had circulated throughout many trading firms and the stock markets had fallen by nearly 300 points from their high the previous week.
Ordinary Americans Lost Jobs Within Months of Trump Administration’s Private Event for Wealthy Investors
While wealthy investors—and journalist Bob Woodward—received a heads up about the potential severity of the virus, the Trump administration continued to downplay the virus in public. The president argued that it would simply “disappear” and falsely stated that it was comparable to the flu.
This misinformation left ordinary Americans scrambling as they lost jobs by the tens of millions in the months of March and April. The $1,200 stimulus checks and $600-a-week federal unemployment benefits passed as part of the CARES Act in March staved off economic suffering for many Americans. But that help has long since ended and an estimated 8 million people have fallen into poverty since May, according to researchers at Columbia University. The monthly poverty rate in September is now significantly higher than it was in April, May, or before the pandemic began in the United States, in February.
Black and Latino Americans have been hit especially hard, as more than 25% of each demographic was living in poverty in September, compared to only 12% of white Americans. Children have also been disproportionately impacted. By September, the monthly poverty rate among children had increased to over 20%.
The soaring poverty rate has been mirrored by a burgeoning hunger epidemic that is also disproportionately harming people of color and children, and an eviction crisis that could see as many as 40 million Americans kicked out of their homes.
Trump Still Pretends the Stock Market Helps the 8 MillionAmericans Who Have Fallen Into Poverty
The president has paid only minimal lip service to these growing crises, instead focusing on the resurgence of the stock market as a sign of economic recovery. While the market has recovered from its freefall in February and March and is now where it was at the beginning of the year, that has done next to nothing to help most Americans.
As of the second quarter of 2020, the wealthiest 10% of American households owned 88% of all stocks and mutual funds, according to data from the Federal Reserve. In contrast, the middle class owned less than 7% of stocks, according to research from Edward Wolff, an NYU professor who has studied stock ownership and inequality.
“The performance of the stock market is so disassociated with the economic experience of the vast majority of Americans—particularly the middle class,” Wolff told CNN Business last month. “Most Americans don’t really have much of a stake in the stock market.”
On the other hand, the wealthy elite have benefited enormously from the pandemic. According to the Swiss bank UBS, the stock market’s turnaround helped the world’s billionaires increase their wealth by 28% between April and July—the same months that tens of millions of Americans struggled to survive.
Democrats Have Passed Several Economic Aid Plans, Yet Trump and GOP Refuse to Offer Meaningful Help
Democrats in the House passed legislation all the way back in May to extend the $600 unemployment benefits and provide additional stimulus checks, but Senate Republicans have been steadfastly opposed to the Democrats’ efforts. House Democrats passed yet another bill earlier this month, but the Republican-led Senate has once again refused to budge.
Trump himself has flip-flopped repeatedly on whether he supports another relief bill, stating just last week that he was ending negotiations before reversing himself hours later with a call for additional stimulus checks. Treasury Secretary Steven Mncuhin has done most of the negotiating on Trump’s behalf and has offered a $1.8 billion package, including $400 per week in federal unemployment benefits. But House Speaker Nancy Pelosi continues to call for $600 per week.
On Thursday, Trump attempted to blame Pelosi for the impasse and said he was happy to increase his offer from $1.8 trillion, closer to the $2.2 trillion package that House Democrats passed this month.
“I would. Absolutely I would. I would say more. I would go higher. Go big or go home, I said it yesterday,” the president told Fox Business.
In reality, though, Senate Republicans have balked even at the $1.8 trillion figure, saying they support only up to $500 billion, with most of it targeted towards small businesses loans rather than direct aid to the American people.
While negotiations remain ongoing, tens of millions of Americans are left to wait and pray for help that may not be coming. And unlike the wealthy members of the Hoover Institution, it is unlikely they will benefit from a heads-up delivered by the president’s economic advisers.