The $1,200 stimulus checks sent to Americans in April was not the best idea, Kevin O’Leary, celebrity investor and chairman of O’Shares ETFs, believes.
“No, they’re not” useful, O’Leary, a judge on ABC’s “Shark Tank,” told CNBC’s “Capital Connection” on Wednesday.
Elaborating, O’Leary described the U.S. as having “have and have not” sectors, with some currently at a severe disadvantage, particularly airlines.
“They are very blunt instruments, and there is no means test… Even if tomorrow there’s a vaccine and you could inoculate the entire population, most businesses have figured out they can spend 20% less on business travel. This reason is because they have technologies like the one we’re using right now to communicate with customers… And so the airline industry is very under favor. Why bail out a zombie business? Airlines go out of business all the time. Let them go bankrupt and let the weaker airlines be managed by, the stronger ones after the asset transfer.”Kevin O’Leary
He emphasized that there should be given stimulus checks to people who need it, like those who are unemployed.
“It’s better to pay the employees a 14 month, call it $400 unemployment check, as opposed to just sending out $1,200 once or twice to everybody when you know 80% of the population still has a job… All of this stimulus money at the end of the day should be towards this transition that’s occurring in the U.S. and everywhere else in the world — a giant digital pivot.”Kevin O’Leary
Airline CEOs are now imploring with their governments for bigger bailouts. Several commercial airlines around the world have received massive bailout packages while reducing services and laying off workers.
After receiving a $25 billion industry-wide bailout in March under the CARES Act, commercial airlines in the U.S. are now demanding both the Congress and the White House for renewed funding of the same amount. However, many economists disagree with more bailouts, highlighting that it is pointless to spend taxpayer money to keep airlines running at pre-pandemic capacity when travel demand decreases. They want the airline industry to face the situation and adapt to the current reality.
It is still questionable as to what should the stimulus funding ultimately accomplish? For O’Leary, it’s whatever makes the economy more adaptive and ensures a work-from-home boom.
“Businesses that can work online, sell direct to their customers, the Nikes of the world … are very successful. Why should the government be providing capital to them when they don’t have to? Just the sectors like travel, like entertainment, like food services, like cruise lines, like the wedding industry — they’re all wiped out. That’s 20% of the economy. Give them unemployment checks while those employees figure out where to go next.”O’Leary