This is why one Main Street solution floating around, a “Jubilee”-type mandate where the government suspends all payments on mortgages and rent and other loans for a couple months, could freak out creditors and destabilize the financial system yet again. "That. Would. Be. Crazy!" another crisis veteran told me. When governments tell creditors their secured loans are no longer secure, credit can dry up in a hurry. That’s why the Fed is starting to revive many of the lending programs it used to backstop the credit markets in 2008—including one guaranteeing private financing for creditworthy corporations outside the financial industry.

The problem, of course, is that if the pandemic drags on too long, few financial or non-financial corporations will remain creditworthy. This is why the best way to make sure there’s no need for another financial bailout, and to minimize the need for other business bailouts, would be to contain the coronavirus so that the non-financial economy can recover.

Still, it does look like the government will bail out some industries. The next questions to ask are: What kind of terms should the government impose, and what should it get in return?

Conditional Love

The three big myths about the bank bailout is that it cost taxpayers a mint, gave the banks blank checks with no conditions, and made sure no one on Wall Street lost money. In fact, taxpayers got their money back with interest, banks faced limits on executive pay—although those modest limits were lifted once the government was repaid—and most bank investors absorbed gigantic losses, while gigantic firms like Bear Stearns, Lehman Brothers and Wachovia were wiped out. And because there were real dangers to imposing onerous conditions on financial firms during a financial panic that would not apply to non-financial companies during a pandemic, Washington can be much tougher about its bailouts this time.

The first principle for any industry-specific emergency aid is that the main goal should be to get the industry through the emergency, not to bail out its investors or executives.

The government is about to blast unprecedented amounts of money into the economy, but that money ultimately comes out of the pockets of taxpayers, so it’s reasonable to ask bailed-out industries to repay the government once the emergency has passed. That means the bulk of the aid being delivered through loans or perhaps, as in 2008, government purchases of non-voting stock that avoid saddling the firms with excessive debt without subjecting them to operational control by Washington bureaucrats.

Either way, the beneficiaries of the aid should not be stockholders. There are good arguments for keeping vital industries afloat—even if they were mismanaged before the pandemic, even if they blew their cash reserves on stock buybacks. There might even be a case for government to protect their senior creditors, because financial markets can implode when it starts to look like Corporate America’s credit is no longer good. But there’s no reason to bail out their investors, who simply made bets in the financial casino that didn’t pan out. If you have money in the stock market, and you’re not a Republican senator who dumped equities after a scary intelligence briefing, you’re probably getting hammered right now; you don’t deserve special help if you happen to be invested in airlines.

Because this economic calamity is looking even worse than 2008, it’s unrealistic to expect the government to be as successful getting its money back this time. But the government actually has more leverage to impose harsh conditions on its bailouts than it had in 2008, when it was desperate for every bank to participate in the program despite the stigma.

“The banks had a gun to our head,” another former financial first responder told me. “That’s somewhat less true when the bailouts are of, say, airlines.”

Now that Washington can force bailout recipients to meet just about any demands, what should those demands be?

At the very least, Congress has leverage can demand full transparency and powerful oversight over every dollar of federal aid. The Trump administration is reportedly pushing for a $500 billion bailout fund that would not even require immediate disclosure of the bailout recipients, which ought to be a non-starter.

Meanwhile, the airlines have already volunteered to rein in executive compensation, stop paying dividends and refrain from stock buybacks over the life of their loans, a good indication that Congress could ask for more, like limiting those activities even after the loans are repaid. America’s top five airlines indulged in $45 billion worth of stock buybacks that drained their reserves before the pandemic, and it makes sense to ensure that any industry “vital” enough to get bailed out is also required to take its own survival seriously. Senator Elizabeth Warren has called for a permanent ban on stock buybacks for any bailed-out firm, as well as a $15-an-hour minimum wage and a worker representative on its board. Trump’s proposal suggested that bailed out airlines should face “continuation of service requirements.”

But it’s worth thinking about when punitive conditions can be too punitive, since the goal is to make sure these vital industries are healthy in the future. Trump’s notion of service requirements sounds like a plan to force airlines to keep flying planes with hardly any passengers, a recipe for bigger losses and bigger bailouts. Warren and other Democrats support a $15 minimum wage for everyone, but until they can pass it in Congress, does it make sense to saddle vital industries with higher labor costs than non-vital industries? Even limits on executive compensation, while clearly sensible as long as firms remain wards of the state, could make it harder for them to attract better leaders after they repay their loans.

Then again, requirements that bailed-out companies keep their workers on payroll can be onerous, too, but it’s unlikely that Washington will hand out hundreds of billions of dollars to businesses again without some kind of limits on layoffs. Bailouts aren’t only supposed to save vital industries. They’re also supposed to help the people who work in those industries.

Bailouts for the People

The easiest way to get money to ordinary Americans in an emergency is for the government to give it to them. The Republican and Democratic stimulus plans all envision sending checks to taxpayers. Democrats are also pushing for major increases in antipoverty payments like unemployment insurance, which many Republicans seem willing to accept. But there is also a powerful argument for giving aid to businesses, especially small businesses, if they use the aid to keep paying workers who would otherwise be laid off.

“We don’t want millions of people dropping onto the unemployment rolls, because once they’re on it’s hard to get off,” says one GOP congressional aide. “It’s important to keep people connected to their employers, and there’s also inherent dignity in having a job.”

That makes sense, and it would be great to limit the disruption from a near-total shutdown of the economy. But it would also be extremely difficult to do in a triage moment.

A gym, a café, a store, or any other business depending on customers who are no longer leaving their homes won’t be able to pay its employees until the virus is contained, and probably won’t be able to pay back a loan even after the virus is contained. This is why the leaders of the small business committees in the House and Senate drafted a bipartisan $300 billion plan to have the government guarantee loans covering payroll costs during the crisis, understanding that it might eventually cost much more. Americans make about $1 trillion a month, so a lot would depend on the boundaries set by Washington: Would all businesses be covered, no matter how big? Would all salaries be covered, no matter how high?

Again, there’s what Liang calls an “adverse selection problem” in essentially forgiving loans like this during a crisis; businesses that need them probably won’t be able to pay them back, while businesses that can pay them back probably don’t need them. And once the government decides to stand behind a business, there’s a natural tendency to do whatever it takes to keep it afloat. The Senate Republican stimulus proposal included that bipartisan payroll idea but expanded it to cover lease and mortgage payments for small businesses as well. And Democrats have said the latest GOP version would only require bailed-out businesses to maintain their workforce “to the extent possible,” which these days could be a pretty minimal extent.

This is all uncharted territory, because Washington is really dealing with two crises. One is the current nightmare of a nation in lockdown, a situation that is going to make it just about impossible for any bricks-and-mortar business that isn't selling groceries or hand sanitizer to stay afloat for long without government help. And then there’s the question of what the economy will need after the lockdown is over, which is even harder to answer when nobody knows how long the pandemic will last, or which kinds of businesses will be best suited to survive in a post-pandemic economy. That’s why ending the pandemic is almost infinitely more important than any other economic priority.

Keeping businesses alive is important, too, even though some of the firms that receive government medicine are going to die anyway. But that’s why the triage analogy only goes so far. Government doesn’t have the power to save every business, just as the Italian doctors don’t have the power to save every patient, but government does have the power to make sure every American has enough cash to buy essentials during the crisis. And as they spend that cash, they’ll help lay the groundwork for a recovery.

Before Washington even thinks about giving the Trump Administration a $500 billion bailout fund for businesses, it can start by bailing out the ordinary taxpayers who send money to Washington every year. Even if they aren’t too big to fail.