FOR PROFIT VS FOR PUBLIC GOOD

Trump's refusal to use wartime powers to direct scarce medical supplies has left states fighting it out


By Don Lee and Jennifer Haberkorn, Los Angeles Times
3/25/2020

WASHINGTON — When President Donald Trump invoked emergency war powers last week to fight the coronavirus outbreak, many were hopeful that the federal government would take charge in addressing the nation’s dire shortage of ventilators, protective masks and other critical gear for patients and medical staff.

 © Irfan Khan/Los Angeles Times/TNS Teresa Olivas prepares single face mask bags at Prep and Save store in Upland, Calif. on March 17, 2020. Customers scared of lockdown due to coronavirus cleaned out shelves carrying survival food, hand sanitizer and masks.

But Trump has not made actual use of the powers granted in the Korean War-era law known as the Defense Production Act, even though state governors, health experts and lawmakers of his own party have appealed to the administration to employ that authority to bulk up production of medical equipment and supplies, and just as critically, to ensure that they’re distributed to areas of most urgent need.

Trump’s reluctance to take a more assertive role — instead forcing states to fend for themselves and bid against one another — has created confusion and competition. And it has at times tied the hands of his own administration officials designated to lead the White House response to the pandemic.

The head of the Federal Emergency Management Agency, Peter Gaynor, said Tuesday that he was using the DPA’s allocation provision to procure about 60,000 coronavirus test kits and to take control over their distribution. He said it was the first time such a step had been taken in the battle against the coronavirus.

But later in the day, Trump seemed to disavow the actual use of the law. And by Tuesday night, a FEMA’s press secretary, Lizzie Litzow, issued a statement saying, “At the last minute we were able to procure the test kits from the private market without evoking the DPA.”

Among its provisions, the act authorizes the government to ensure that its orders for critical material get first priority from producers. While the DPA does not empower the government to take ownership of companies, it was used during the Korean War to regulate production and prices of some vital materials produced by private companies. Proponents of the act want Trump to use it now to direct factories to ramp up production of needed medical supplies and to prevent price-gouging.

Trump last week gave formal notification that he was prepared to use the law, designating ventilators and personal protective equipment as necessary, but he has since insisted his administration has not needed to use the full weight of the law, saying he didn’t want to nationalize American businesses.

“Private companies are heeding our call to produce medical equipment and supplies because they know that we will not hesitate to invoke the DPA in order to get them to do what they have to do.,” Trump said at a coronavirus briefing Tuesday.

“It’s called leverage. You don’t have to use it. … But the threat of it being there is great leverage, and companies are doing as we ask. … They’re coming through and they’re calling us.”

The status of the 60,000 test kits — a fraction of what’s needed — was unclear. Gaynor did not identify the company or companies from which FEMA was buying the kits. But he told CNN early Tuesday — before the about-face — that FEMA would be using the law “for the first time today … to get our hands on” those kits to allocate them where they’re most needed.

A growing number of lawmakers from both parties have been pushing Trump to make use of the law’s broad authority given the scarcity of ventilators, medical masks, gowns and other protective gear in areas where the need is greatest.

“I don’t want to see doctors having to make a choice of who gets to live and who has to die because they don’t have the equipment to save their lives,” said Sen. Ted Cruz, R-Texas, on his podcast.

“If we wake up two weeks from now and instead of 11,000 cases, we have 200,000 cases or a million cases, it might be too late then,” Cruz said.

Sen. Michael Bennet, D-Colo., said he was glad Trump invoked the act last week but disappointed it hasn’t been put into effect.

“Instead of using them, he’s equivocating,” he said Monday, citing Trump’s remarks that companies are voluntarily boosting production. “We don’t have 18 months. It’s literally life and death.”

Some lawmakers have become so frustrated that they’ve introduced a bill demanding the act’s usage in the hopes of expediting the production of medical equipment. The bill would require a purchase order of 300 million medical N95 masks and other personal protective equipment, and that the National Response Coordination Center conduct a national assessment on current medical supply needs and fill in missing gaps.

“The shortage of medical supplies like masks and ventilators in hospitals in California and across the nation is unacceptable. It’s past time the president ensures health care workers have the supplies and resources they need to protect themselves and combat the coronavirus pandemic,” said Sen. Kamala Harris, D-Calif., who with Tammy Baldwin, D-Wis., introduced the bill.

The administration’s strategy of invoking but not using the wartime power appears in part designed to meet its political needs. At Tuesday’s briefing, for example, Vice President Pence did not directly contradict Gaynor’s comments but said that “at this point no one said no” to federal requests or orders.

Trump’s public posture aligns with that of many conservatives and the U.S. Chamber of Commerce, the most powerful voice of corporate America, which dismisses the need for such government intervention.

Private companies have stepped up on their own to increase production and, where they can, to modify operations to make products that are needed, the chamber said.

The idea that “the government would do a better job in building all of this stuff and distributing it … is a hard claim to defend given the government’s track record,” said Neil Bradley, chief policy officer at the chamber.

“The folks who actually know how to build things are raising their hand and saying, ‘We can do it.’ That’s happening right now. Companies are doing this,” he said.

But switching from normal operations to meet a sudden emergency requires businesses to spend money on new equipment and other needs.

In the past, companies have been reluctant to make such new investments quickly and on their own when they could not be sure they could recover those expenses. The DPA permits the government to give guaranteed loans or install equipment to protect the companies financially.

It also allows the government to control sales and distribution of the new products, to set priorities and assure that supplies go where the need is greatest.

The Trump administration has highlighted a number of companies that have come forward on their own. Pence said Apple was donating 9 million N95 protective masks for health care professionals.

Others like General Motors and Ford are using their manufacturing capabilities to help boost production of medical equipment such as ventilators, respirators and face shields, although it will take two to three months for some of the products to roll out of the factory.

“I think they are responding to market needs. It’s in their financial interest to do so,” said Joshua Aguilar, a Morningstar analyst, referring to 3M’s plan to double the production of N95 masks over the next year.

But many state officials, medical experts, and economists have been skeptical that relying on volunteers and market forces would assure that production of emergency supplies were produced quickly enough or in sufficient volume to meet the need. Governors have urged the administration to take control of the distribution of vital medical supplies and stop bidding wars.

New York Gov. Andrew Cuomo has grown increasingly angry as COVID-19 cases have exceeded 26,000 in his state, about half of the infections recorded in the United States. On Tuesday he lashed out at the Trump administration’s failure to use the DPA, saying the law was made precisely for a time like now.

“When we went to war, we didn’t say, ‘Any company out there want to build a battleship? … Maybe a couple of you guys can get together and build a battleship … maybe, you think?’” he said, dripping with sarcasm. “That’s not how you did it. The president’s said it’s a war. It is a war. Well, then, act like it’s a war.”

Cuomo said that New York has received only 400 ventilators from the federal government. “FEMA says, ‘We’re sending 400 ventilators.’ Really? What am I going to do with 400 ventilators when I need 30,000?”

Jamie E. Baker, former legal adviser to the National Security Council and a professor at Syracuse University, said: “If there is a gap between voluntary production and what is needed, or anticipated to be needed, the DPA is the mechanism to close that gap.”

Before the abrupt reversal by FEMA, its chief, Gaynor, said Tuesday that the agency planned to use the wartime powers also in the production of 500 million face masks, inserting DPA provisions into contracts with companies providing the masks.

One of the companies that is waiting to sign a contract with FEMA is Los Angeles Apparel, a South-Central clothing maker that is part of a consortium, including HanesBrands and Parkdale Mills. The companies are teaming up to produce masks, though not the medical kind needed for front-line health care professionals.

Dov Charney, Los Angeles Apparel’s founder, said he has a preliminary agreement with FEMA to produce an as-yet undetermined amount of washable masks for what he expects will be about $2 apiece.

Charney said his 500-employee operation, which makes sweatshirts, T-shirts and other apparel, already has sold or given away more than 30,000 masks.

He said he expected face masks to be a long-term product line for the company. And he welcomed a contract with FEMA, with a guaranteed purchase price.

“I think there’s a profit in all this,” he said.

———

©2020 Los Angeles Times