Sen. Cory Booker on government response to coronavirus outbreak

Senator Cory Booker joins Yahoo Finance Live and discusses President Trump's response to COVID-19, the economic impact business owners and workers are facing, and the proposed stimulus package.

Video Transcript

- Certainly something that Wall Street investors are looking for is action out of Washington DC and what a relief package for consumers might look like. We are privileged now to be joined by Senator Cory Booker in the state of New Jersey for more on where discussions in the Senate stand. And Senator, thank you so much for joining the program today. And I want to talk to you just about how you see things evolving in DC, what you think the most urgent kind of matters that you and your colleagues need to address are as we look to next week, which I think many in markets believe is critical for Washington to come through with a large package and a large relief effort for a lot of Americans.

Senator, I think you may have to unmute your device there to join the Hang Out.

CORY BOOKER: Yes.

- All right.

CORY BOOKER: All right, modern technology. So what I was saying is that the challenge we have before us in this country is that millions of Americans are losing their jobs, having their hours reduced. And small businesses, the backbone of jobs in this country, are being crippled, from the mom and pop pizza shop, all the way to parking lot owners. And so we are focusing, especially on the Democratic side right now, in getting resources directly towards people. And that ranges from everything from unemployment insurance, direct cash payments, looking at small business supports. It can be everything from having grant money available to low, to no interest loans. So this is really how the sausage is being made.

I've been in numerous discussions and negotiations today with my colleagues trying to put together this large package that's going to be between a trillion and $2 trillion. In addition to that, you notice there's a lot of those major businesses from the airlines, to other industries, that are looking for some real support as they see their revenues dramatically decline as well.

- And Senator, I want to ask about those major companies. And a specific idea that the President actually put out today, that perhaps companies that get relief from the government could be banned from buying back their own stock. It's certainly been a large topic of conversation. You've proposed bills on it before. It's been in the air for quite some time, but it seems like there is a movement towards that being a condition of companies receiving some sort of assistance here from the government.

CORY BOOKER: Yeah, look over roughly the last five years. The airline industry has done over $42 billion of stock buybacks. They got big windfalls from Donald Trump's tax plan. And as opposed to doing what they said it was going to do, which was to spur more economic activity that would generate more revenue for the government, help their employees, we just didn't see that. Actually, we ended up blowing trillion annual polls in our federal budget deficit. And so the challenge now is, what do we learn from all of that?

And I'm hoping that whatever larger industry efforts that we do as we begin to put the kind of conditions on them that are going to ensure that workers are the ones that really benefit, I have definitive proposals on that. It's nice to hear this coming from the President of the United States, who really ushered in through his policies one of the largest periods of stock buybacks that I've seen in my adult life. And by the way, as you all know, that practice was illegal back in the 1980s.

And so this kind of short-termism stock manipulation is not something we want to be feeding right now. What we want to be doing is trying to create a overall healthy economy that's going to unnerve to the benefit of the average American.

- So for the average American, a lot of them feel like they were left out in 2008. I know you know that, Senator Booker, from the last time we've been in a crisis, at looking out for the worker right now. How would this work exactly? What other instruments would you put in place?

So are buybacks going to be banned for ever? Is it for 20 years? What do you do about CEO salaries? How does this all actually work?

CORY BOOKER: Well, I appreciate you saying that. And back in the 2008-2009 recession, I was the mayor of New Jersey's largest city. And while banks and insurance companies were getting bailouts, I saw the most devastating economic crisis of my lifetime. You know, the mortgage payments that were being missed. The rent payments that were being missed. The foreclosure crisis in my state.

We just saw the collapse in many areas of our New Jersey economy. And people couldn't understand and felt frustrated that banks got bailouts, but we did not. And people talked about the moral crisis that might come if you were going directly to people. Well, that's out the door.

And the biggest instrument-- and I just got off the phone with Josh Hawley talking about this literally right before I got on this interview, where we were talking about this idea of direct cash payments to Americans. I came out with a number of my senate colleagues on a large proposal to set up a three tranche approach to this. In other words, if the economy stays in a bad position, it would activate later tranches. In this quarter, $2,000 to every American under a certain income level that includes kids, seniors, adults. In the next tranche if the economy is still suffering, we trigger the next one. And that would be $1,500. A final one towards the end of the year would be $1,000.

That would take a family of four in the United States of America and give them $18,000. In addition to the other measures that we're taking from expanding unemployment insurance, we're working to help the gig economy workers, self-employed workers, small businesses. This is a time that we are treating an economic crisis of a proportion that I don't think any of us have seen in our lifetime. And we have to act big as the United States Senate right now not in a half step measure or anemic way where we're just going to have to come back here to do more later. It's a time to be proactive and structure things in to legislation that will be triggered should the economy stay in a dire strait.

RICK NEWMAN: Senator Booker, it's Rick Newman here. So for bailouts that go to big companies, what can you do to keep payrolls intact? How would you structure the terms of that aid so that companies need to keep people on the payroll and need to keep providing those benefits? How do you do that?

CORY BOOKER: Well, look, I've actually had some conversations with some of the leaders in certain industries and had very candid conversations about this is something that's got a benefit your employees and how would we do that? And I've had some good conversations about concerns they have about it's just a money in, money out idea. How long can they go without having to reduce employees?

United Airlines, for example, announced 60% reductions. And if they don't see something from the federal government, then they'd have to make decisions to reduce their workforce in a commensurate fashion. And so can we design something? I think it's actually not that hard to do, which is about preserving employees, going directly to employee benefits, preserving them as well. So that's the level of the conversations that we're having right now.

We saw situations with TARP in the past, where we actually got stakes in certain companies, actually made profit for the federal government. So there's a lot of these conversations about the intelligent way to do this that actually creates reforms in certain industries. I'm one that's saying, hey, if we have this leverage, let's look for environmental reforms that are necessary. Let's do something about the crisis of short-termism that you see the biggest bank leaders also talking about. CEOs, over 80% in one study, said that they've made decisions that were against the long-term interests of their companies in order to gin their short-term stock prices, because that's where their salaries, and benefits, and incentives are based.

So I do look at this as an opportunity to help to make our system of capitalism frankly more competitive and more responsive to the larger ideals of our markets, which is the far more equal distribution of goods, services, and opportunity.

- Senator, I have a question on some of the headlines we've gotten over the last 24 hours in terms of some of the senators that may possibly have cashed out based on some of the information they had on the coronavirus. Those like Senator Burr, as well as Senator Loeffler. And I guess a two-part question here, because I think there are a lot of people who are outraged reading this. And I'm wondering how much senators had visibility on the severity of this crisis back in January, which is kind of the timeline we're looking at right now. And number two, you know given what we've learned over the last 24 hours, is it time to maybe consider banning senators from being able to own individual stocks?

CORY BOOKER: So again, I don't know all the particulars of this case. I know Senator Burr has now invited an ethics investigation. That was the right thing to do. And there should be one. But I think the better question is what you've asked at the end of that, which is what is right in terms of this? What should the rules be down here? And I'm one that's a big believer there was just too much insider information down here.

No senator should own individual stocks. I am fully against that. If you want to be somebody whose playing in the stock market, don't run for the United States Senate, don't run for Congress. I think that we should be limited to index funds and more. And I just think that this is one of the many things that we should do to reform this process. Frankly, I think the way that campaigns are financed-- I was a fourth senator, I think, that took a pledge that, you know, these corporations that come down here and offer you corporate pact checks and the like, enough of that kind of stuff.

We need to start returning our institutions to really be beyond the appearance even of impropriety. It weakens our democracy. It undermines trust in our institutions. And we should just ban a lot of these practices.

- Senator Booker, I want to ask you a little bit about your home state and the state of things in New Jersey. You know here in New York City, where many of us are based, we're seeing obviously huge numbers of positive tests. And it feels like the Tri-State area is probably the hotspot in the country in terms of coronavirus cases. I just want to know what you can tell us about your conversations with Governor Murphy, with Senator Menendez, and what the state of New Jersey needs, what it's getting, and what your conversations are like on that front?

CORY BOOKER: Sure. We are an integrated region. Hundreds of thousands of New Jerseyans go into Manhattan on normal days to help fuel it. And so a crisis for Manhattan, a crisis for New York is a crisis for New Jersey and Connecticut. And so I'm in ongoing work very closely with the governor's team.

First of all, I think our state governors deserve a lot of applause for how they are making the best out of a bad situation. We did not have a federal government that was preparing for such a pandemic. In fact, we had an Administration that ripped down a lot of our pandemic preparedness. We did not have an Administration that took this threat seriously in the run up to the crisis where we could have prepositioned resources. We could have taken earlier actions that could have reduced the spread, or at least the severity of this. But yet amidst it all, we've had governors that are taking proactive steps, that are acting in ways that I think are important especially when it comes to what is still the impending real crisis for our region, which is a supply and demand problem.

Will the demand, will the curve of increased cases get to a point where it overwhelms our supply, our medical workers overwhelms our ICU beds, overwhelms our ventilators. That is the threat to the region we have right now. And it threatens us all. Because even if you're one of those folks that doesn't have the coronavirus or hasn't affected you in a small way, if you get so much as an allergic reaction to something you eat, or an injury through a fall, or a diabetic crisis, or a heart condition, if you're going into a hospital at a time that that hospital is already overwhelmed, it's going to affect us all.

So the biggest crisis we have in my conversations with the governor right now, beyond doing constructive things to help with the economic crisis, is to stop this wave that's coming to us, it's find a way to bend that curve, as they say, before our hospitals become overrun and do not have the capacity to meet the demand.

- All right Senator Cory Booker of New Jersey, thank you so much for the time. I really appreciate it today.

CORY BOOKER: You know, this was a really interesting interview. Each of you taken a shot. I feel like you ganged up on me. Next time, I'm bringing Senator Menendez, I'm bringing Senator Schumer. There should be sort of an equal sort of weight to all of this.

- Well, I know that we have people from all three states in the Tri-State area on the call. So maybe we can get some Connecticut senators in your--

CORY BOOKER: I have New Jersey pride on this call. We fuel Manhattan. New York sports teams are actually New Jersey sports teams. I can go on. But the one thing I know, as much as we might have divisions of state lines and allegiances, in a crisis like this we know from 9/11, Hurricane Sandy, our region, we pull together, we stand strong. That's where our strength is. That's how we're going to endure. And that's how we're going to come out of this on the other end as the greatest economic region in the entire nation.

- All right, Millburn High School class of 08 appreciates your work in Essex County. Senator Cory Booker, thanks so much.

CORY BOOKER: Thank you all very much