“We cannot let cruise lines go bankrupt,” President Trump said on March 22 as Congress worked out the final details of the coronavirus relief program that would become the CARES Law. But when he signed the bill days later, it was drafted to exclude cruise lines from its lending programs by requiring borrowers to be U.S.-incorporated and their employees primarily located here. Critics on both sides of the aisle have pointed out that foreign-flagged cruise ships and cruise lines do not pay US income tax; why, they asked, should we bail them out? This argument has won, for now.

It should be noted that the cruise lines have not actually called for a bailout, at least not publicly. Carnival Corporation CEO Arnold Donald told Axios last month he didn’t want a bailout. But the president has good feelings towards the industry and, as he pointed out, there are American companies like suppliers who rely on the cruise lines as customers. And how easily the cruise industry can weather this crisis without direct government assistance will depend on how long it lasts and how long it has to wait before setting off again. Further phases of coronavirus relief are inevitable, and the question of whether cruise lines get a specific piece may arise again.

I think the arguments against a cruise specific rescue are even stronger than the argument about foreign flags implies. Cruise lines do not claim to be offshore for tax purposes; they are, in fact, literally offshore. Sixty percent of the world’s cruise passenger volume is outside of North America; the Caribbean, by far the world’s largest cruise market, accounts for only about a third of global cruises. Even when cruises depart from the United States, they mainly call at foreign ports, promoting economic development in other countries. And not only do cruises operate outside of restrictions imposed by U.S. labor law, they rely primarily on foreign workers doing business in foreign countries or in international waters. Cruise lines are a truly global industry, which in part justifies the choice of these companies to avoid US jurisdiction. But the industry’s true global nature further weakens the argument that U.S. taxpayers should specifically fund its bailout.

I asked Mark Muro, who heads the Metropolitan Policy Program at the Brookings Institution, to examine the domestic employment footprint of the cruise industry for me. He pointed to data from the Bureau of Labor Statistics showing 10,300 jobs in the “high seas passenger transport” industry; of these, just over 6,000 are located in the Miami-Fort Lauderdale metro area, where some of the major cruise lines are headquartered. Compare that to total global cruise employment, which was just over 530,000 full-time equivalent jobs, according to 2018 data from the Cruise Line Industry Association and you see how physically present the industry is. here.

Of course, there are American jobs not directly in the cruise industry that depend on the cruise industry. Any blow to the cruise industry is also a blow to the cruise ports that handle departing and arriving passengers. These port jobs are also highly concentrated in Florida, with more than half of cruise passengers from the United States departing from ports in the Miami-Fort Lauderdale area or Port Canaveral, near Orlando. The CARES Act contained significant bailout funds for airports and transit agencies which will lose revenue due to the shutdown of many commercial and leisure activities; these cruise ports could be good candidates for help in the upcoming relief bill, which will also have to meet the general financial needs of state and local governments and many other public authorities.

There are other specific regional impacts. Alaska cruises account for nearly 5% of the global cruise market, and many cities in Southeast Alaska are only accessible by sea or air and rely heavily on cruise tourism. Cruises are also economically important to Puerto Rico and the US Virgin Islands. In these locations, many people who are not directly employed by cruise lines will be negatively impacted by the discontinuation of cruises and any reduction in cruise volume once the crisis is over. But the most acute effects in these places may be when the cruise abruptly halted during the virus itself, and direct aid to the cruise industry will not help ports during this shutdown.

Cruises also generate business for airlines (which carry passengers to and from their cruises) and hotels and restaurants (which cruise passengers frequent in port cities before or after cruises). These companies are also affected by the closure of cruises. It is less obvious that they would be affected by a persistent slowdown in the cruise industry after the end of the acute pandemic. If consumer demand for vacations returns but cruise volume is still drastically reduced – for example, because people are afraid to board cruise ships – then alternative vacation activities may actually generate more. onshore economic activity in the United States and more tax revenue for governments. After all, if you are going on a cruise from Fort Lauderdale, you could stay overnight at the hotel; if you take a beach vacation in Fort Lauderdale, you stay in a hotel for many nights.

One thing that, in my opinion, has not been mentioned enough in the cruise line debate is that they should already benefit a lot from the coronavirus relief policies, even if they are not eligible for get money directly. Many US-based businesses that do business with cruise lines, such as travel agents, are eligible to directly benefit from the CARES Act, and policies to preserve these businesses will help cruise lines recover. on foot when they can sail again. . If these companies have less than 500 employees, they can even participate in programs aimed at small businesses which are much more generous than the support offered to large companies, as they involve loans which are converted into grants if these companies keep their employees on. pays it. The bailout is also helping cruise passengers by broadly supporting the U.S. economy and protecting household balance sheets, increasing the likelihood that consumers will feel financially able to purchase cruise vacations after the crisis ends.

Perhaps more importantly, cruise lines benefit from Federal Reserve lending programs, including those established under the CARES Act, which aim to stabilize financial markets overall. Even though entities overseen by the Fed will not be able to lend directly to cruise passengers, their actions to lower corporate bond interest rates and expand the supply of available credit should allow cruise passengers to borrow money. more easily and at a lower cost. private lenders. Essentially, when the government buys bonds from other large corporations, it leaves more private capital for cruise lines to borrow.

In this Axios interview, Carnival CEO Donald called the capital markets “constrained.” During the crisis, corporate bond yields rose and it became more difficult, even for financially strong companies, to borrow. But the CARES Act and previous Federal Reserve actions have gone a long way in easing this market constraint. It’s a good thing that these positive effects are spreading throughout the corporate sector, even for companies that are not allowed to participate directly and even for non-US companies. But if this ease does not trickle down to cruise lines, it would reflect investor concern about the creditworthiness of cruise lines in particular, perhaps because they wonder if this shutdown will last long or because they worry all reports of stranded cruise ships will result in consumers’ lingering distaste for cruising. Because cruising is not essential, and because cruise lines have only a tenuous connection to the United States, there would be no reason for the government to step in to fix this problem, if it happened, with taxpayers’ money.