Who gets saved and who collapses?

9-12 minutes

President Donald Trump holds a news conference about the ongoing global coronavirus pandemic at the White House on Friday. | Drew Angerer/Getty Images

As Americans brace for the rapid spread of the novel coronavirus across the U.S., once-booming industries are already suffering from deadly symptoms of an economic downturn.
Consumers, after panic-buying, are expected to hunker down and limit their spending. Sporting events, concerts and other entertainment are now suspended. Businesses are canceling travel and conferences. Airlines and trains are slashing schedules.
The sudden and precipitous shutdowns across the economy are forcing the Trump administration and lawmakers to contemplate which industries need targeted rescues — to keep them from collapsing entirely — and which can get by with broader support for struggling workers across the nation.

While lawmakers consider an immediate aid package for workers hashed out by Democratic leaders and the White House, Trump and his aides have been meeting with business leaders and industry groups to design an aid package — through tax relief and emergency loans — for the corporate sector.

Core to their challenge: Everyone can’t get special help, so the government must pick winners and losers from a downturn — with a focus on industries whose collapse could ripple through the system most. It’s a debate that will accelerate in the coming days as the economic consequences of the crisis become clearer.

Airlines were the first industry that came to mind for Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank.

While strong employment insurance systems and social safety net programs will take care of workers, he said it’s important to think about “what industries have a spillover value to the rest of the economy.”

“I think of transport — whether it’s trains or trucks or airplanes. You want to look at those and where there’s distress that you can help, you want to go in and do that because it spills over to every part of the economy,” said Holtz-Eakin, a former director of the Congressional Budget Office. “I don’t think the same case can be made for restaurants and hotels. I care about the workers and employees, but you know when you build restaurants and invest in hotels, you take business risk. And this will be a bad year for them.”

President Donald Trump has already vowed to help both the cruise line industry and the airline industry, and in a White House sit-down with top health insurance executives, said his administration is already “working very closely” with both.
Treasury Secretary Steven Mnuchin told lawmakers this week that the administration was considering loan guarantees and other measures to aid the airline industry amid the pandemic.
“I want to be clear: This is not bailouts. We are not looking for bailouts,” he said. Mnuchin added, “There may be specific industries that are highly impacted by travel that have issues with lending” — and “I would assume the airlines would be on the top of the list,” as well as hotels and cruise lines.
Josh Bivens, director of research at the Economic Policy Institute, a liberal think tank, said industry-focused measures aren’t the solution, yet.
Instead, he said the administration should focus on people and workers to attack the crisis. “If we don’t do much to respond to it, I think it’s very likely to cause a recession,” Bivens said.
If the administration does move to bail out industries such as airlines, Bivens said it should be done through loans — leaving direct fiscal aid for individuals.

“It’s really bad to have a recession, and so doing things that will actually be effective is attractive,” Bivens said. “And I think aid to people and individuals is just more effective, and behind closed doors, their own economic experts will tell them that. And I think in the case of direct cash payments to people and households, how can that not be good politics as well?”

Bivens continued, “I feel like there are some incentives pushing it potentially in the right direction on this stuff, but I think a lot of aid to industries is going to be attempted to be attached to this as well.”
Here’s a look at some of the key industries experiencing the most pain in the early stages of the crisis:
Airlines
Flights are being canceled across the board as vacationers halt trips and businesses slash travel. As airlines brace for the downturn, some are comparing the impact to the aftermath of 9/11. The International Air Transport Association says the global industry could lose upwards of $113 billion in 2020. And with another travel ban, this time for foreign travelers coming from Europe, airline stocks plummeted and some companies announced temporary employee layoffs to protect themselves from insolvency.
Cruise lines
Social distancing does not work on giant cruise ships — especially after passengers were stranded on virus-ridden boats. Carnival stopped voyages on its Princess Cruise lines for two months and cruise ship operator Viking halted operations until May 1, actions that will hit employees and devastate the companies‘ bottom lines.

After the Trump administration pushed for a temporary cruise ship shutdown, the president tweeted late Friday: “At my request, effective midnight tonight, Carnival, Royal Caribbean, Norwegian, and MSC have all agreed to suspend outbound cruises for thirty days. It is a great and important industry — it will be kept that way!”

Sports and entertainment

The sports entertainment industry has shut down as lucrative tournaments and sports seasons like March Madness, NBA, MLB and others have been canceled or put on hold. Hundreds of thousands of workers, including vendors, referees and other staff members work events across the country in addition to the athletes.
Other key entertainment industries like film, music and theme parks will be slammed as America shuts down. From Disney World to music festivals, the entertainment industry and its workers will be among those taking the hardest hit as Americans hunker down in their homes.
Hotels
Hotel operators have projected major losses as travel plans are canceled across the nation and around the world. With postponed or canceled events, hotels will suffer from fewer overnight visitors. And with a slower pace of bookings, workers will feel the pain as well as companies cut their payrolls.
Restaurants
Restaurants across the country are struggling to respond to the fast-paced spread of coronavirus. Bars and restaurants in hot spots like New York and Washington have had to adjust to new state orders for social distancing and lower customer traffic, forcing some to close their doors entirely for the time being — leaving employees without work.
Manufacturing
Coronavirus has disrupted the supply chains for nearly three-quarters of U.S. companies, setting up many for lower annual revenue projections, according to a survey by the leading group for purchasing managers. Companies ranging from retail to technology are sure to feel the losses because of delays in key goods from China, the world’s hub for manufacturing, as the virus kept workers there at home.
Energy
Oil and natural gas producers were hit by plummeting oil prices amid the outbreak. A price war between Saudi Arabia and Russia drove oil prices this week to their steepest intraday tumble in nearly 30 years, and numerous U.S. shale companie — already in deep debt — could be pushed out of business if the collapse becomes a prolonged crisis.
While a bailout for the industry seems unlikely, Trump gave oil prices a small lift on Friday when he announced that the U.S. would buy additional oil for the U.S. Strategic Petroleum Reserve. “The price of oil went down quite a bit, so we're going to fill it up,” Trump said. “This is a good time to fill it up.”

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