Wednesday, February 26, 2020
'Anti-Greta' teen activist to speak at biggest US conservatives conference
David Smith in Washington,
The Guardian•February 26, 2020
'Anti-Greta' teen activist to speak at CPAC conference
Seibt is in the pay of the Heartland Institute, a think tank closely allied with the White House that denies...
A German teenager dubbed the “anti-Greta” – climate sceptics’ answer to the schoolgirl activist Greta Thunberg – is set to address the biggest annual gathering of US grassroots conservatives.
Related: Greta Thunberg and Malala Yousafzai meet at Oxford University
Naomi Seibt, 19, who styles herself as a “climate sceptic” or “climate realist”, will this week address the Conservative Political Action Conference (CPAC) near Washington, joining speakers including Donald Trump and Vice-President Mike Pence.
Seibt is in the pay of the Heartland Institute, a thinktank closely allied with the White House that denies established science showing humans are heating the planet with dangerous consequences.
CPAC will be the biggest stage yet for Seibt, a so-called “YouTube influencer” who tells her followers Thunberg and other activists are whipping up unnecessary hysteria by exaggerating the climate crisis.
“Climate change alarmism at its very core is a despicably anti-human ideology,” she has said.
The teenager, from Münster in western Germany, claims she is “without an agenda, without an ideology”. But she was pushed into the limelight by leading figures on the German far right and her mother, a lawyer, has represented politicians from the Alternative für Deutschland (AfD) party in court.
Seibt had her first essay published by the “anti-Islamisation” blog Philosophia Perennis and was championed by Martin Sellner, leader of the Austrian Identitarian Movement, who has been denied entry to the UK and US because of his political activism.
A Facebook post by the AfD youth wing names Seibt as a member and she spoke at a recent AfD event, though she has denied membership of the party.
In May 2019 she posted her first video on YouTube, reading out verses submitted for a poetry slam competition organised by the AfD.
The impact of the clip and its follow-ups put her on the radar of the Heartland Institute, which is based in Chicago. It has lobbied on behalf of the tobacco and coal industries but recently concentrated its efforts on challenging the scientific consensus on climate change.
Last December, as Thunberg addressed the United Nations’ Cop25 global warming summit in Madrid, Seibt gave the keynote speech at a rival conference organised by the Heartland Institute a few miles away.
In a sting operation carried out for German broadcaster ZDF and investigative outlet Correctiv, the Heartland Institute strategist James Taylor told journalists posing as potential donors his thinktank had signed up Seibt to record climate change sceptic videos for young people.
Seibt has admitted that she receives “an average monthly wage” from the institute. According to official figures, the average net monthly income in Germany is just under €1,900 (£1,590, $2,066).
The Heartland website features a low-budget video introducing Seibt, who speaks to the camera from what appears to be a home.
“I’ve got very good news for you,” she says. “The world is not ending because of climate change. In fact, 12 years from now we will still be around, casually taking photos on our iPhone 18s
“We are currently being force-fed a very dystopian agenda of climate alarmism that tells us that we as humans are destroying the planet. And that the young people, especially, have no future – that the animals are dying, that we are ruining nature.”
In another film, Naomi Seibt vs Greta Thunberg: Whom Should We Trust?, Seibt says: “Science is entirely based on intellectual humility and it is important that we keep questioning the narrative that is out there instead of promoting it, and these days climate change science really isn’t science at all.”
Seibt has also uploaded a video with the title Message to the Media – HOW DARE YOU – an obvious reference to a speech by Thunberg at the UN in which she rebuked world leaders: “We are in the beginning of a mass extinction, and all you can talk about is money, and fairytales of eternal economic growth. How dare you!”
Thunberg began her activism at 15 by missing school and camping outside the Swedish parliament. She has since met the pope, addressed members of Congress in Washington and heads of state at the UN and helped inspire 4 million people to join a global climate strike. Last year she became the youngest Time magazine Person of the Year, much to Trump’s chagrin.
The Washington Post observed: “If imitation is the highest form of flattery, Heartland’s tactics amount to an acknowledgment that Greta has touched a nerve, especially among teens and young adults.”
Related: Malena Ernman on daughter Greta Thunberg: ‘She was slowly disappearing into some kind of darkness’
Since Trump’s election, CPAC has paraded hard-right figures such as the former White House officials Steve Bannon and Sebastian Gorka as well as numerous climate sceptics.
In his speech there last year, the president mocked the Green New Deal, proposals championed by Democrats including Alexandria Ocasio-Cortez.
“No planes,” the president said. “No energy. When the wind stops blowing, that’s the end of your electric. ‘Let’s hurry up. Darling, darling, is the wind blowing today? I’d like to watch television, darling.’”
Connor Gibson, a researcher for Greenpeace USA, said: “Climate science is understood by a majority of Americans, liberal and conservative alike. Unfortunately, you won’t meet any of those people, or any climate scientists, at an event like CPAC.
“The Heartland Institute is funnelling anonymous money from the US to climate denial in other countries. It relies on the media to advance false equivalence strategies to attempt to normalise fringe beliefs. Climate denial is not a victimless crime, and it’s time for the perpetrators to be held accountable.”
Ann Coulter may have just given the American people ‘the best reason to vote for Elizabeth Warren’ yet
Published: Feb 26, 2020
Did Ann Coulter just endorse Elizabeth Warren?
By
SHAWNLANGLOIS
SOCIAL-MEDIA EDITOR
Right-wing lightning rod Ann Coulter surely is not endorsing Sen. Elizabeth Warren, but don’t tell that to supporters of the Massachusetts Democrat.
‘Sen. Warren has convinced me that Bernie isn’t that worrisome. He’ll never get anything done. SHE’S the freak who will show up with 17 idiotic plans every day and keep everyone up until it gets done.’
That is the tweet that sent Coulter flying up Twitter’s TWTR, -1.65% trending list in the wake of the latest Democratic presidential debate Tuesday night. Judging from the spirited response, her comment probably didn’t strike its intended note:
This might be the best reason to vote for @ewarren I’ve seen yet. She’ll get stuff done that people like Ann Coulter find idiotic. pic.twitter.com/7I9ycfrvc1— Veronica Miron (@veronicamiron) February 26, 2020
Ann Coulter just endorsed Warren, I think https://t.co/ncLlJggOTo— Paul Krugman (@paulkrugman) February 26, 2020
Elizabeth Warren’s competence frightens both Ann Coulter and Peter Thiel. That’s reassuring as hell. When both white nationalists and diabolical billionaires fear your ability to usher in progress, you’re doing something right.— Adam Best (@adamcbest) February 26, 2020
I was not sure about Elizabeth Warren.
Ann Coulter said that she is "afraid" of her.
Thanks, Ann.
Warren it is.— Robert People (@PeoplesCourt79) February 26, 2020
I don’t think Ann *intended* this as an endorsement but it wouldn’t surprise me if Warren HQ decided to blow the tweet up and put it on a poster. https://t.co/bue6QVe334— Sahil Kapur (@sahilkapur) February 26, 2020
Apparently, the Boston Globe editorial board agrees — sort of — with Coulter.
The paper endorsed Warren on Wednesday for basically the very same “worrisome” reason inspiring the Coulter tweet: that Bernie Sanders is “less likely to deliver” the “profound changes” that both candidates are pushing to enact.
“Warren is uniquely poised to accomplish serious reform without sacrificing what’s working in our economy and innovation ecosystem,” the Globe editorial argued. “She would get under the hood to fix the engine — not drive off a cliff, but also not just kick the tires.”
The newspaper announced its endorsement via this video:
The @GlobeOpinion editorial board endorses Elizabeth Warren as the Democratic nominee for president. Read the full endorsement: https://t.co/cRY0braMoQ pic.twitter.com/mQXFwfhkXH— The Boston Globe (@BostonGlobe) February 26, 2020
Wells Fargo executives are getting the treatment Wall Street deserved after 2008
Jeff Spross
Illustrated | Ashva73/iStock, kimiko/iStock, Wells Fargo
January 27, 2020
After the 2008 financial crisis, American lawmakers set a terrible precedent. The big banks faced billions in fines, and new regulations were imposed on them. But for the individuals in charge of the banks when they almost destroyed the global economy, there were virtually no consequences: Few fines, and even fewer prosecutions. The executives basically skated, and many of them remain in their positions today.
But it looks like things may actually go differently for the people who were in charge of Wells Fargo.
You might recall how, back in 2016, a scandal suddenly exploded around the bank. Wells Fargo employees had defrauded customers on a massive and industrial scale by opening accounts they didn't ask for, signing them up for products they didn't want, and charging them fees they shouldn't have had to pay. Public outrage ensued, the bank was raked over the coals by Congress, and the CEO who presided over the debacle, John Stumpf, stepped down. (Amazingly, Stumpf's successor, Tim Sloan, also dropped out as CEO last year, after failing to clean up Wells Fargo's act to everyone's satisfaction.) The bank's board also clawed back $69 million worth of stock payouts it had given Stumpf on his way out the door.
As welcome as those repercussions were, they were basically compensation losses. They were not society at large demanding accountability. That changed last week, when the Office of the Comptroller of the Currency (OCC) brought the hammer down: In an announced settlement with the office, Stumpf will pay a $17.5 million fine and agree to a lifetime ban from the banking industry.
It's unclear how large Stumpf's personal fortune is now, but it was around $200 million before the scandal broke in 2016. That $17.5 million could be a decent chunk of what's left, but you could also argue it should be even larger to really act as a deterrence to others. But $17.5 million is also the biggest penalty the OCC has ever leveled against an individual. And it wants to impose an even bigger $25 million penalty on Carrie Tolstedt, who ran the division where most of the abuses occurred. (Tolstedt retired from Wells Fargo in 2016, a few months before the scandal broke.) The lifetime ban is striking too — one should never underestimate how much pride and hubris these sorts of financial titans derive from their position.
Two other lower-level former executives from Wells Fargo have agreed to lesser fines and punishments. Five others, including Tolstedt, have also been charged by the OCC, but are fighting it in court. And everyone could still face criminal charges from the Justice Department.
This is already a remarkable outcome compared to how the 2008 financial crisis was handled, not to mention other scandals, as multiple outlets noted. "Even though the biggest American banks paid billions of dollars to settle civil cases stemming from their mortgage activities in the lead-up to the 2008 financial crisis, their chief executives have not given up a penny to federal bank regulators," The New York Times wrote. Kenneth Lewis, CEO of Bank of America during the crisis, paid no fines to federal regulators, to take one example. (He did have to fork over some money to New York State prosecutors.) JPMorgan Chase CEO Jamie Dimon led the bank through the $6 billion London Whale scandal, and the bank has paid $44 million in fines since 2008, but none of that came out of Dimon's own pocket.
The differences in treatment are all the more infuriating when you consider how the same system-wide mad scramble for profits drove both scandals.
The OCC released a massive 100-page legal brief detailing how Wells Fargo's demands and sales goals, imposed by the higher-ups, turned the bank into a thunderdome for "hundreds of thousands" of mid- and low-level employees. They basically had to either rip off customers, or be fired. An employee wrote directly to Stumpf's office, admitting that "I had less stress in the 1991 Gulf War than working for Wells Fargo." Workers at one Wells Fargo branch were told they would be "transferred to a store where someone had been shot and killed" if they didn't hit their sales targets. The OCC's brief includes a cascade of emails and memos and other evidence showing Stumpf and the rest of Wells Fargo's executive hierarchy either approved of what was going on, or were grossly negligent. The agency sensibly concluded that Stumpf should be held personally accountable for overseeing the ecosystem that created this whole mess; the buck, after all, stops with him.
When it came to the housing bubble, junk financial engineering allowed bad mortgages to be passed off as super-safe investments, sliced and diced into numerous instruments, then sold off throughout the system. This ability to essentially launder bad investments opened up a world of profit possibilities, but it also meant tons of bad mortgages had to be created to fuel the money grab. And that led to a massive effort throughout the banking industry to sucker customers into taking on shoddy loans and poorly-designed mortgages. Necessary paperwork was flubbed or falsified, and millions of families were shoveled though inappropriate and straight-up illegal foreclosures to protect the banks' bottom line once the housing bubble popped.
Again, the people in charge of the banks were either completely complicit, or criminally incompetent. But in the latter case, federal lawmakers and regulators essentially lost their nerve, refusing to go after the executives out of fear of creating a panic.
It's worth wondering how American politics might have evolved differently over the last decade if all the C-suite occupants on Wall Street had gotten the same treatment as Stumpf. Would the country have suffered from the same simmering populist resentment that ultimately gave us President Trump? Maybe not.
Finally, the other striking aspect of this is that it's Trump's regulators who decided to throw the book at Stumpf and his lieutenants. Trump's man in charge of the OCC, John Otting, is a textbook case of putting the fox in charge of the henhouse: Before taking over the OCC, he was in charge at OneWest Bank, which was neck deep in the mortgage abuses of the crisis. And in other instances, Otting has happily pushed Trump's kid gloves approach to Wall Street. Yet it was the Obama administration, supposedly a sober and technocratic operation by comparison, that basically let all the titans of Wall Street off the hook after 2008.
It's no secret that Trump's White House is basically a grift machine. But perhaps there's a paradoxical lesson in that: Having dismissed the demands of technocratic sobriety, Trump's people are both more willing to hand the big bank executives their heart's desire, and more willing to throw them under the bus if popular anger demands it. Something to think about there
Jeff Spross
Illustrated | Ashva73/iStock, kimiko/iStock, Wells Fargo
January 27, 2020
After the 2008 financial crisis, American lawmakers set a terrible precedent. The big banks faced billions in fines, and new regulations were imposed on them. But for the individuals in charge of the banks when they almost destroyed the global economy, there were virtually no consequences: Few fines, and even fewer prosecutions. The executives basically skated, and many of them remain in their positions today.
But it looks like things may actually go differently for the people who were in charge of Wells Fargo.
You might recall how, back in 2016, a scandal suddenly exploded around the bank. Wells Fargo employees had defrauded customers on a massive and industrial scale by opening accounts they didn't ask for, signing them up for products they didn't want, and charging them fees they shouldn't have had to pay. Public outrage ensued, the bank was raked over the coals by Congress, and the CEO who presided over the debacle, John Stumpf, stepped down. (Amazingly, Stumpf's successor, Tim Sloan, also dropped out as CEO last year, after failing to clean up Wells Fargo's act to everyone's satisfaction.) The bank's board also clawed back $69 million worth of stock payouts it had given Stumpf on his way out the door.
As welcome as those repercussions were, they were basically compensation losses. They were not society at large demanding accountability. That changed last week, when the Office of the Comptroller of the Currency (OCC) brought the hammer down: In an announced settlement with the office, Stumpf will pay a $17.5 million fine and agree to a lifetime ban from the banking industry.
It's unclear how large Stumpf's personal fortune is now, but it was around $200 million before the scandal broke in 2016. That $17.5 million could be a decent chunk of what's left, but you could also argue it should be even larger to really act as a deterrence to others. But $17.5 million is also the biggest penalty the OCC has ever leveled against an individual. And it wants to impose an even bigger $25 million penalty on Carrie Tolstedt, who ran the division where most of the abuses occurred. (Tolstedt retired from Wells Fargo in 2016, a few months before the scandal broke.) The lifetime ban is striking too — one should never underestimate how much pride and hubris these sorts of financial titans derive from their position.
Two other lower-level former executives from Wells Fargo have agreed to lesser fines and punishments. Five others, including Tolstedt, have also been charged by the OCC, but are fighting it in court. And everyone could still face criminal charges from the Justice Department.
This is already a remarkable outcome compared to how the 2008 financial crisis was handled, not to mention other scandals, as multiple outlets noted. "Even though the biggest American banks paid billions of dollars to settle civil cases stemming from their mortgage activities in the lead-up to the 2008 financial crisis, their chief executives have not given up a penny to federal bank regulators," The New York Times wrote. Kenneth Lewis, CEO of Bank of America during the crisis, paid no fines to federal regulators, to take one example. (He did have to fork over some money to New York State prosecutors.) JPMorgan Chase CEO Jamie Dimon led the bank through the $6 billion London Whale scandal, and the bank has paid $44 million in fines since 2008, but none of that came out of Dimon's own pocket.
The differences in treatment are all the more infuriating when you consider how the same system-wide mad scramble for profits drove both scandals.
The OCC released a massive 100-page legal brief detailing how Wells Fargo's demands and sales goals, imposed by the higher-ups, turned the bank into a thunderdome for "hundreds of thousands" of mid- and low-level employees. They basically had to either rip off customers, or be fired. An employee wrote directly to Stumpf's office, admitting that "I had less stress in the 1991 Gulf War than working for Wells Fargo." Workers at one Wells Fargo branch were told they would be "transferred to a store where someone had been shot and killed" if they didn't hit their sales targets. The OCC's brief includes a cascade of emails and memos and other evidence showing Stumpf and the rest of Wells Fargo's executive hierarchy either approved of what was going on, or were grossly negligent. The agency sensibly concluded that Stumpf should be held personally accountable for overseeing the ecosystem that created this whole mess; the buck, after all, stops with him.
When it came to the housing bubble, junk financial engineering allowed bad mortgages to be passed off as super-safe investments, sliced and diced into numerous instruments, then sold off throughout the system. This ability to essentially launder bad investments opened up a world of profit possibilities, but it also meant tons of bad mortgages had to be created to fuel the money grab. And that led to a massive effort throughout the banking industry to sucker customers into taking on shoddy loans and poorly-designed mortgages. Necessary paperwork was flubbed or falsified, and millions of families were shoveled though inappropriate and straight-up illegal foreclosures to protect the banks' bottom line once the housing bubble popped.
Again, the people in charge of the banks were either completely complicit, or criminally incompetent. But in the latter case, federal lawmakers and regulators essentially lost their nerve, refusing to go after the executives out of fear of creating a panic.
It's worth wondering how American politics might have evolved differently over the last decade if all the C-suite occupants on Wall Street had gotten the same treatment as Stumpf. Would the country have suffered from the same simmering populist resentment that ultimately gave us President Trump? Maybe not.
Finally, the other striking aspect of this is that it's Trump's regulators who decided to throw the book at Stumpf and his lieutenants. Trump's man in charge of the OCC, John Otting, is a textbook case of putting the fox in charge of the henhouse: Before taking over the OCC, he was in charge at OneWest Bank, which was neck deep in the mortgage abuses of the crisis. And in other instances, Otting has happily pushed Trump's kid gloves approach to Wall Street. Yet it was the Obama administration, supposedly a sober and technocratic operation by comparison, that basically let all the titans of Wall Street off the hook after 2008.
It's no secret that Trump's White House is basically a grift machine. But perhaps there's a paradoxical lesson in that: Having dismissed the demands of technocratic sobriety, Trump's people are both more willing to hand the big bank executives their heart's desire, and more willing to throw them under the bus if popular anger demands it. Something to think about there
How America made a mess of measuring poverty
Jeff Spross
Illustrated | Three Lions/Getty Images, Yevhenii Dubinko/iStock
February 13, 2020
Since 1963, the United States has been measuring what percentage of its population is in poverty. But it hasn't changed the way it measures poverty since 1963, either. Outside of annual adjustments for inflation, the Official Poverty Measure (OPM) works the same way now that it did six decades ago.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) aims to fix that. She introduced her Recognizing Real Poverty Act in September of last year, part of a larger suite of measures to aid low-income Americans. According to her office, the bill requires federal agencies to "adjust the federal poverty line to account for geographic cost variation, costs related to health insurance, work expenses for the family, child care needs, and new necessities, like internet access."
Granted, this is a call for a reform, and a study of what that reform should be. It doesn't lay out precise end goals. But Ocasio-Cortez is right: The way America defines poverty right now is a conceptual trainwreck.
Let's run through the problems.
First off, the OPM focuses solely on food: Using 1955 data, it defined a basket of foodstuffs any household would need for basic living, adjusted for family size, and determined that a household was in poverty if that basket cost more than a third of its overall budget. Basically, the Johnson administration needed some way to set eligibility for its new welfare programs, so it grabbed some work being done by government statisticians and retrofit it as an overall poverty measure. Other than the inflation adjustments, that's still how we define the poverty line. And it's still what we use to decide eligibility for a whole bunch of programs, from Medicaid to food stamps, school lunch programs, Obamacare's subsidies, and other grants and forms of assistance.
But focusing on food leaves out things that existed at the time that any reasonable person would also consider necessary for basic dignified living standards (health care, child care). And, of course, it leaves out other needs that have arisen since (like internet access or mobile phone service). Yet another problem is what sources of income are and aren't counted towards the total family budget, which the food budget is then measured against.
The answer to this last question is basically a random hodgepodge: Wage income is counted, along with dividends and interest payments; but capital gains from selling assets are not. Granted, capital gains aren't exactly relevant to the average low-income American, but government aid certainly is: The OPM counts unemployment insurance, Social Security, workers' compensation, and other benefits that are straight cash aid. It does not count assistance that isn't simple cash — say, health coverage in the form of Medicaid, or benefits linked to certain needs, like food stamps or housing assistance. Nor does the OPM count government aid that is distributed via the tax code, like the Earned Income Tax Credit or the Child Tax Credit.
This creates a perverse situation: Lawmakers, citizens and journalists all cite the OPM in discussions and arguments over how good a job America does fighting poverty, or what it should be doing differently. Yet a huge swath of the programs that aim to alleviate poverty have no effect on the OPM! Indeed, outside of a dramatic fall from 1960 to 1970, the official poverty rate has bounced between 11 percent and 15 percent ever since.
Now, American policymakers are hardly ignorant of this situation. Even in 1963, they knew they weren't creating the best measure — they just needed a measure. And over the last decade the government has developed an alternative metric, the Supplemental Poverty Measure (SPM), which addresses some of the OPM's problems.
The SPM cleans up a lot of the contributions to income: It includes non-cash benefits like food stamps and housing, and it includes transfers within the tax code, like the aforementioned tax credits. It also treats as necessities other expenditures beyond food, by subtracting spending on things like child care and out-of-pocket medical expenses out of its final measurement of a family’s income. The result is the SPM arguably comes closer to doing what we demand of the OPM: it actually tells us what effect our poverty-fighting efforts have had over time. When researchers took the SPM methodology and extended it back through time, they found a pretty consistent fall in America's poverty rate, from 26 percent in 1967 to 16 percent in 2014.
But the Supplemental Poverty Measure hardly ends the debate, either. It does not include government programs like Medicaid, for example — there remains a big argument over how to reduce the value of something like health care coverage to a simple dollar figure. The SPM also adjusts for different costs of living in different geographies, meaning the poverty rate it might find in a low-income area of Mississippi will actually be lower than the rate the OPM would find there. Finally, while the SPM treats expenditures like child care and medical bills as necessities — i.e. you're defined as in poverty if you can't afford them — it does not do the same for education costs or the ability to save. Those are effectively treated as luxuries, and whether you can afford them or not doesn't factor into the SPM's assessment.
Perhaps the most interesting change from the SPM to the OPM is how they set their thresholds. For the OPM, if that basket of foodstuffs, defined way back when, costs more than a third of your family budget, then you're in poverty. But the SPM does something more complex. It includes a bundle of needs — like food, clothing, shelter, and more — and sets its value at 33 percent of median income. This may sound really technical, but think of it this way: If every American, from the richest to the poorest, suddenly got $10,000 more a year, the OPM rate would drop to zero or something close to it. But the SPM rate would remain largely unaffected.
In other words, the OPM measures how many people fall below a standard of living that remains fixed over time. The SPM measures how many households fall past a certain distance from the country's median living standard. Both measures of the poverty rate can theoretically be reduced to zero. But while the OPM could be reduced to zero without affecting inequality at all, inequality would have to shrink — at least for the bottom portion of earners — for the SPM to fall to zero. This is generally understood as a debate between "absolute" measures of poverty, like the OPM, and "relative" measures, like the SPM. (Though technically, both measures are relative comparisons: The SPM to how other people are doing now, the OPM to how other people did in the past.) Which approach is better is a hot topic of debate among people who pay attention to this stuff.
And this really gets us to the core problem with defining poverty: There's no right way to do it. We're sufficiently used to the official poverty rate at this point that we treat it almost as an objective, scientific measure. But it’s nothing of the sort. How to define poverty is an inescapably political question, and an inescapably moral one.
Should education count as a necessity in the bundle of goods we must be able to afford to not count as impoverished? What about savings, or child care, or health care, et cetera? What about leisure time? (Some European measures of poverty do indeed include the ability to go on vacation as a life necessity.) Should our poverty measures factor in inequality or not? Answers will depend on a person's values and worldview and ideology. (For what it's worth, none other than Adam Smith came down in favor of the relative approach, in a famous parable about a linen shirt.)
One last interesting factoid: Gallup has actually been asking Americans for decades how much a family of four would need to make "to get along in your local community." In 1963, Americans said it was $5,304, which was relatively close to the OPM's threshold of $3,128. By 2007, the gap had expanded dramatically, with the "get along" response reaching $52,087, while the OPM threshold lagged behind at $21,500. Turns out if you just adjusted the 1963 answer for inflation, you'd get $37,500, which is still way higher than the updated OPM. The conservative American Enterprise Institute (AEI) surveyed Americans in 2016 to find out what they thought it took for a family of four to not be poor, and the average answer was $32,293. The OPM threshold for a family of four in 2016 was $24,339.
And get this: The most common international poverty metric is a relative measure, set at 50 percent of median income. Both the OPM threshold of $3,128 in 1963 and the AEI survey response of $32,293 in 2016 are pretty close to 50 percent of median income at the time. Decades ago, America's official poverty line used to match the 50 percent of median income threshold, then fell behind. But Americans' general opinion of what counts has poor has kept up with or even exceeded that measure.
Rep. Ocasio-Cortez may be opening up a can of worms by asking the federal government to rethink its Official Poverty Measure. But she can take heart that her fellow citizens also think there's something way off in how we decide who is and isn't poor.
Jeff Spross
Illustrated | Three Lions/Getty Images, Yevhenii Dubinko/iStock
February 13, 2020
Since 1963, the United States has been measuring what percentage of its population is in poverty. But it hasn't changed the way it measures poverty since 1963, either. Outside of annual adjustments for inflation, the Official Poverty Measure (OPM) works the same way now that it did six decades ago.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) aims to fix that. She introduced her Recognizing Real Poverty Act in September of last year, part of a larger suite of measures to aid low-income Americans. According to her office, the bill requires federal agencies to "adjust the federal poverty line to account for geographic cost variation, costs related to health insurance, work expenses for the family, child care needs, and new necessities, like internet access."
Granted, this is a call for a reform, and a study of what that reform should be. It doesn't lay out precise end goals. But Ocasio-Cortez is right: The way America defines poverty right now is a conceptual trainwreck.
Let's run through the problems.
First off, the OPM focuses solely on food: Using 1955 data, it defined a basket of foodstuffs any household would need for basic living, adjusted for family size, and determined that a household was in poverty if that basket cost more than a third of its overall budget. Basically, the Johnson administration needed some way to set eligibility for its new welfare programs, so it grabbed some work being done by government statisticians and retrofit it as an overall poverty measure. Other than the inflation adjustments, that's still how we define the poverty line. And it's still what we use to decide eligibility for a whole bunch of programs, from Medicaid to food stamps, school lunch programs, Obamacare's subsidies, and other grants and forms of assistance.
But focusing on food leaves out things that existed at the time that any reasonable person would also consider necessary for basic dignified living standards (health care, child care). And, of course, it leaves out other needs that have arisen since (like internet access or mobile phone service). Yet another problem is what sources of income are and aren't counted towards the total family budget, which the food budget is then measured against.
The answer to this last question is basically a random hodgepodge: Wage income is counted, along with dividends and interest payments; but capital gains from selling assets are not. Granted, capital gains aren't exactly relevant to the average low-income American, but government aid certainly is: The OPM counts unemployment insurance, Social Security, workers' compensation, and other benefits that are straight cash aid. It does not count assistance that isn't simple cash — say, health coverage in the form of Medicaid, or benefits linked to certain needs, like food stamps or housing assistance. Nor does the OPM count government aid that is distributed via the tax code, like the Earned Income Tax Credit or the Child Tax Credit.
This creates a perverse situation: Lawmakers, citizens and journalists all cite the OPM in discussions and arguments over how good a job America does fighting poverty, or what it should be doing differently. Yet a huge swath of the programs that aim to alleviate poverty have no effect on the OPM! Indeed, outside of a dramatic fall from 1960 to 1970, the official poverty rate has bounced between 11 percent and 15 percent ever since.
Now, American policymakers are hardly ignorant of this situation. Even in 1963, they knew they weren't creating the best measure — they just needed a measure. And over the last decade the government has developed an alternative metric, the Supplemental Poverty Measure (SPM), which addresses some of the OPM's problems.
The SPM cleans up a lot of the contributions to income: It includes non-cash benefits like food stamps and housing, and it includes transfers within the tax code, like the aforementioned tax credits. It also treats as necessities other expenditures beyond food, by subtracting spending on things like child care and out-of-pocket medical expenses out of its final measurement of a family’s income. The result is the SPM arguably comes closer to doing what we demand of the OPM: it actually tells us what effect our poverty-fighting efforts have had over time. When researchers took the SPM methodology and extended it back through time, they found a pretty consistent fall in America's poverty rate, from 26 percent in 1967 to 16 percent in 2014.
But the Supplemental Poverty Measure hardly ends the debate, either. It does not include government programs like Medicaid, for example — there remains a big argument over how to reduce the value of something like health care coverage to a simple dollar figure. The SPM also adjusts for different costs of living in different geographies, meaning the poverty rate it might find in a low-income area of Mississippi will actually be lower than the rate the OPM would find there. Finally, while the SPM treats expenditures like child care and medical bills as necessities — i.e. you're defined as in poverty if you can't afford them — it does not do the same for education costs or the ability to save. Those are effectively treated as luxuries, and whether you can afford them or not doesn't factor into the SPM's assessment.
Perhaps the most interesting change from the SPM to the OPM is how they set their thresholds. For the OPM, if that basket of foodstuffs, defined way back when, costs more than a third of your family budget, then you're in poverty. But the SPM does something more complex. It includes a bundle of needs — like food, clothing, shelter, and more — and sets its value at 33 percent of median income. This may sound really technical, but think of it this way: If every American, from the richest to the poorest, suddenly got $10,000 more a year, the OPM rate would drop to zero or something close to it. But the SPM rate would remain largely unaffected.
In other words, the OPM measures how many people fall below a standard of living that remains fixed over time. The SPM measures how many households fall past a certain distance from the country's median living standard. Both measures of the poverty rate can theoretically be reduced to zero. But while the OPM could be reduced to zero without affecting inequality at all, inequality would have to shrink — at least for the bottom portion of earners — for the SPM to fall to zero. This is generally understood as a debate between "absolute" measures of poverty, like the OPM, and "relative" measures, like the SPM. (Though technically, both measures are relative comparisons: The SPM to how other people are doing now, the OPM to how other people did in the past.) Which approach is better is a hot topic of debate among people who pay attention to this stuff.
And this really gets us to the core problem with defining poverty: There's no right way to do it. We're sufficiently used to the official poverty rate at this point that we treat it almost as an objective, scientific measure. But it’s nothing of the sort. How to define poverty is an inescapably political question, and an inescapably moral one.
Should education count as a necessity in the bundle of goods we must be able to afford to not count as impoverished? What about savings, or child care, or health care, et cetera? What about leisure time? (Some European measures of poverty do indeed include the ability to go on vacation as a life necessity.) Should our poverty measures factor in inequality or not? Answers will depend on a person's values and worldview and ideology. (For what it's worth, none other than Adam Smith came down in favor of the relative approach, in a famous parable about a linen shirt.)
One last interesting factoid: Gallup has actually been asking Americans for decades how much a family of four would need to make "to get along in your local community." In 1963, Americans said it was $5,304, which was relatively close to the OPM's threshold of $3,128. By 2007, the gap had expanded dramatically, with the "get along" response reaching $52,087, while the OPM threshold lagged behind at $21,500. Turns out if you just adjusted the 1963 answer for inflation, you'd get $37,500, which is still way higher than the updated OPM. The conservative American Enterprise Institute (AEI) surveyed Americans in 2016 to find out what they thought it took for a family of four to not be poor, and the average answer was $32,293. The OPM threshold for a family of four in 2016 was $24,339.
And get this: The most common international poverty metric is a relative measure, set at 50 percent of median income. Both the OPM threshold of $3,128 in 1963 and the AEI survey response of $32,293 in 2016 are pretty close to 50 percent of median income at the time. Decades ago, America's official poverty line used to match the 50 percent of median income threshold, then fell behind. But Americans' general opinion of what counts has poor has kept up with or even exceeded that measure.
Rep. Ocasio-Cortez may be opening up a can of worms by asking the federal government to rethink its Official Poverty Measure. But she can take heart that her fellow citizens also think there's something way off in how we decide who is and isn't poor.
Costco is refreshingly boring
Jeff Spross
Illustrated | MicrovOne/iStock, Wikimedia Commons, Aerial3/iStock
February 21, 2020
Costco is pretty boring. Or at least it used to be.
Providing good pay and benefits, minimizing payouts to shareholders, and concentrating on doing one thing well were once considered just good business sense. These days, they feel like a refreshing deviation from the crowd.
Readers probably have at least a glancing familiarity with Costco. The wholesale retailer was founded in 1983 by Jeffrey Brotman and James Sinegal, with the latter remaining CEO until 2011. As of 2019, it ran 785 giant warehouse-like stores globally, including 546 in America. It employed 254,000 people globally and 163,000 nationally. Costco sells its items at lower prices, but you also usually have to buy them in bulk, and there's no stockroom to the store — everything stacked out for customers is everything they have to sell.
Shopping at Costco requires a membership, which you do have to pay a fee for, but the chain is known for a sometimes-fanatical base of return customers. In fact, membership dues are largely how it makes money. The company more or less breaks even on its sales, which is how it keeps prices down. And Costco currently boasts about 99 million cardholders.
Meanwhile, Costco has also garnered a steady reputation as a good place to work.
As of early last year, no employee at the company makes less than $15 an hour. In 2018, the median annual pay at Costco was $38,810, which is actually pretty good considering the median wage for all Americans was $33,706 that year. And it's even better in light of Costco's direct rivals in the notoriously low-pay retail sector, like Walmart and Amazon — whose median 2018 pay was $19,177 and $28,446, respectively.
Beyond wages, Costco also stands out for its other job benefits: Anyone who's worked at the company for 15 months gets health coverage (including vision and dental), a 401-K, seven paid holidays, multiple paid breaks each day, and Costco recently began offering paid parental leave as well. "The best part is all the perks — guaranteed hours, benefits, time and a half on Sundays, free turkeys at Thanksgiving, four free memberships, a livable wage," one worker told Business Insider.
Costco also takes its workers' careers seriously. The company works hard to promote from within its ranks — including the CEO that replaced Sinegal, Craig Jelinek, who had already worked at Costco for almost three decades. The company's employee turnover rate is a mere 6 percent, suggesting its workers aren't just putting up with the job until they can get something better. In fact, an index of good jobs developed by an MIT professor put Costco at the very top of food retailers in 2015.
Now, the reason so many companies in the U.S. work hard to drive down labor costs — paying workers less and giving them fewer benefits — is so they can have more money to spit out to shareholders. Ultimately, every corporation has to decide how to divvy up its revenue: Spend it on workers? On new investments and expansions? Or just hand it over to ownership? In recent years, U.S. companies have enthusiastically gutted their own finances to shovel money to shareholders, in the form of both dividend payments and huge indulgences in stock buybacks. It's the mirror image of America's stagnating wages and declining job benefits.
As you probably guessed, Costco's shareholder payouts are notably restrained. The company is still an attractive investment — it's grown by 70 percent over the last 10 years and brought in a profit of $889 million in 2018. And Costco's share price is accordingly high. But, given its success, Costco also has a reputation among stocktraders for being somewhat stingy. "[Costco's] stock yields only 1.1 percent… well below the S&P 500's average of about 2 percent," as a Barron's analysis put it in 2017. "Costco's low yield is reflected in the stock's modest payout ratio, which measures how much of a company's net income gets paid out as dividends."
Another thing to note is Costco's debt load. It's above average for companies overall, but Costco is also a big and successful company, and by all accounts it has the resources and cash flow to justify that debt. This is also significant, since one way a lot of U.S. companies have juiced shareholder payouts is by taking on additional debt to finance them.
Now for the caveats.
The pressure in the U.S. economy for companies to essentially operate as ATMs for shareholders is overwhelming and ubiquitous. And while Costco has been resistant, it also seems to be getting dragged in that direction. Its regular dividend payments remain low, but it has also started issuing special one-time dividend payments to give its shareholders some extra bonuses. Over the last eight years, it's also started a stock buyback program, though thus far the buybacks have been modest — only around 1 percent of Costco's overall market capitalization.
The ratio of Costco's CEO compensation to its median worker compensation has also shot up: In 2013, it was 48-to-1, but by 2019 it was 169-to-1. Granted, these calculations can be slippery: CEO compensation involves stock holdings as well as actual salary, so that jump in the ratio is due at least in part to the company's successful stock market run over that time period.
The thing to keep in mind, however, is that it's precisely this compensation structure that has led so many companies to essentially cannibalize themselves. Since the shareholder revolution of the 1980s, CEOs have been incentivized with stock options to put the interests of shareholders above all other considerations. (This was not the case at mid-century.)
There's no one trick to avoiding this fate, particularly in an economy where it's the norm. It's just a question of how firmly the company's internal culture sticks to its values. If Costco is flirting with the share buybacks and a rising CEO pay ratio, that's possible evidence it's not holding its ground as firmly as before.
So far Costco deserves credit for demonstrating you can be a successful business while treating your workers' well-being as an asset rather than an inconvenience. Like Best Buy, Costco also seems to have avoided the worst temptations of shareholder capitalism by keeping its finances balanced and adapting to the demands of retail competition in the internet age — in short, by running a sensible and prudent business model.
Like I said, it's all pretty boring, yet refreshing.
Jeff Spross
Illustrated | MicrovOne/iStock, Wikimedia Commons, Aerial3/iStock
February 21, 2020
Costco is pretty boring. Or at least it used to be.
Providing good pay and benefits, minimizing payouts to shareholders, and concentrating on doing one thing well were once considered just good business sense. These days, they feel like a refreshing deviation from the crowd.
Readers probably have at least a glancing familiarity with Costco. The wholesale retailer was founded in 1983 by Jeffrey Brotman and James Sinegal, with the latter remaining CEO until 2011. As of 2019, it ran 785 giant warehouse-like stores globally, including 546 in America. It employed 254,000 people globally and 163,000 nationally. Costco sells its items at lower prices, but you also usually have to buy them in bulk, and there's no stockroom to the store — everything stacked out for customers is everything they have to sell.
Shopping at Costco requires a membership, which you do have to pay a fee for, but the chain is known for a sometimes-fanatical base of return customers. In fact, membership dues are largely how it makes money. The company more or less breaks even on its sales, which is how it keeps prices down. And Costco currently boasts about 99 million cardholders.
Meanwhile, Costco has also garnered a steady reputation as a good place to work.
As of early last year, no employee at the company makes less than $15 an hour. In 2018, the median annual pay at Costco was $38,810, which is actually pretty good considering the median wage for all Americans was $33,706 that year. And it's even better in light of Costco's direct rivals in the notoriously low-pay retail sector, like Walmart and Amazon — whose median 2018 pay was $19,177 and $28,446, respectively.
Beyond wages, Costco also stands out for its other job benefits: Anyone who's worked at the company for 15 months gets health coverage (including vision and dental), a 401-K, seven paid holidays, multiple paid breaks each day, and Costco recently began offering paid parental leave as well. "The best part is all the perks — guaranteed hours, benefits, time and a half on Sundays, free turkeys at Thanksgiving, four free memberships, a livable wage," one worker told Business Insider.
Costco also takes its workers' careers seriously. The company works hard to promote from within its ranks — including the CEO that replaced Sinegal, Craig Jelinek, who had already worked at Costco for almost three decades. The company's employee turnover rate is a mere 6 percent, suggesting its workers aren't just putting up with the job until they can get something better. In fact, an index of good jobs developed by an MIT professor put Costco at the very top of food retailers in 2015.
Now, the reason so many companies in the U.S. work hard to drive down labor costs — paying workers less and giving them fewer benefits — is so they can have more money to spit out to shareholders. Ultimately, every corporation has to decide how to divvy up its revenue: Spend it on workers? On new investments and expansions? Or just hand it over to ownership? In recent years, U.S. companies have enthusiastically gutted their own finances to shovel money to shareholders, in the form of both dividend payments and huge indulgences in stock buybacks. It's the mirror image of America's stagnating wages and declining job benefits.
As you probably guessed, Costco's shareholder payouts are notably restrained. The company is still an attractive investment — it's grown by 70 percent over the last 10 years and brought in a profit of $889 million in 2018. And Costco's share price is accordingly high. But, given its success, Costco also has a reputation among stocktraders for being somewhat stingy. "[Costco's] stock yields only 1.1 percent… well below the S&P 500's average of about 2 percent," as a Barron's analysis put it in 2017. "Costco's low yield is reflected in the stock's modest payout ratio, which measures how much of a company's net income gets paid out as dividends."
Another thing to note is Costco's debt load. It's above average for companies overall, but Costco is also a big and successful company, and by all accounts it has the resources and cash flow to justify that debt. This is also significant, since one way a lot of U.S. companies have juiced shareholder payouts is by taking on additional debt to finance them.
Now for the caveats.
The pressure in the U.S. economy for companies to essentially operate as ATMs for shareholders is overwhelming and ubiquitous. And while Costco has been resistant, it also seems to be getting dragged in that direction. Its regular dividend payments remain low, but it has also started issuing special one-time dividend payments to give its shareholders some extra bonuses. Over the last eight years, it's also started a stock buyback program, though thus far the buybacks have been modest — only around 1 percent of Costco's overall market capitalization.
The ratio of Costco's CEO compensation to its median worker compensation has also shot up: In 2013, it was 48-to-1, but by 2019 it was 169-to-1. Granted, these calculations can be slippery: CEO compensation involves stock holdings as well as actual salary, so that jump in the ratio is due at least in part to the company's successful stock market run over that time period.
The thing to keep in mind, however, is that it's precisely this compensation structure that has led so many companies to essentially cannibalize themselves. Since the shareholder revolution of the 1980s, CEOs have been incentivized with stock options to put the interests of shareholders above all other considerations. (This was not the case at mid-century.)
There's no one trick to avoiding this fate, particularly in an economy where it's the norm. It's just a question of how firmly the company's internal culture sticks to its values. If Costco is flirting with the share buybacks and a rising CEO pay ratio, that's possible evidence it's not holding its ground as firmly as before.
So far Costco deserves credit for demonstrating you can be a successful business while treating your workers' well-being as an asset rather than an inconvenience. Like Best Buy, Costco also seems to have avoided the worst temptations of shareholder capitalism by keeping its finances balanced and adapting to the demands of retail competition in the internet age — in short, by running a sensible and prudent business model.
Like I said, it's all pretty boring, yet refreshing.
America could run low on medicine at the
worst possible time
Jeff Spross
Illustrated | nevodka/iStock, AndreaAstes/iStock
February 25, 2020
By now, it seems pretty clear that China was caught flat-footed by COVID-19, known colloquially as the coronavirus, with potentially dire consequences for the country and its economy, not mention the rest of the world. But there's an additional unpleasant irony to that already grim news: Thanks to the way America's pharmaceutical industry has rearranged its global supply chains, a medical crisis in China could possibly throttle the supply of drugs Americans need to fight a medical crisis here.
Hard data on the situation is hard to come by, both because Chinese data sources are not exactly trustworthy and because these companies are cagey about sharing what they consider to be proprietary information. But here's what we know: Anywhere from 80 percent to 88 percent of active pharmaceutical ingredients (APIs) — the basic building blocks used to manufacture drugs in the United States — come in from abroad. Roughly 13 percent or 14 percent of all the APIs used to manufacture U.S. drugs come from China. And 14 percent is hardly a tiny amount. More to the point, even this number undersells the degree of our dependence on China.
There are 370 drugs sold here in America and considered "essential" by the World Health Organization that are at least partially dependent on APIs from China. We rely on the country for components to drugs that treat everything from epilepsy to depression to Alzheimers. Three of those drugs — “Capreomycin and streptomycin, both used to treat mycobacterium tuberculosis; sulfadiazine, used to treat chancroid, a sexually transmitted disease; and trachoma, a bacterial infection of the eye,” according to CBS — use components that only come from China. The United States also keeps a strategic national stockpile of critical drugs, and 85 percent of those use at least some API that China manufactures. Beyond drugs, Chinese manufacturers are major producers of other medical devices, like catheters, MRI machines, devices for monitoring blood oxygen levels, dental implants, and more.
The problem is that the way to prevent the spread of a disease like COVID-19 is to quarantine infected populations, shutdown or tightly regulate travel, and keep people in their homes and away from congregating in groups — all of which the Chinese government and authorities have done with gusto. But, by definition, this means shutting down places of work and factories and other hubs of industry, including many of China's 4,300 pharmaceutical and API manufacturers. According to reports from within the Food and Drug Administration (FDA), the agency is keeping its eye on a list of 150 drugs — including both generics and unique patented pharmaceuticals — that are at risk of shortages if China's manufacturing shutdown continues. Critical antibiotics like penicillin, amoxicillin, and doxycycline — which get 90 percent of the APIs from China — are also among those at special risk.
Thanks to the coronavirus outbreak, demand within China is also rising for certain drugs, particularly anesthetics and pain relievers. Even if manufacturers can keep cranking those drugs out, there could still be shortages anyway, simply because China has to stockpile more of them for its own needs rather than export them to everyone else. Finally, even if drugs or their components are produced in China, the manufacturing sites still have to be inspected by the FDA to clear them for sale in the United States. And the shutdown of Chinese society to contain COVID-19 risks curtailing and delaying those inspections as well, which would then cascade into delayed drug shipments.
"We are keenly aware that the outbreak will likely impact the medical product supply chain," the FDA said in a statement.
"If China shut the door on exports of medicines and their key ingredients and raw material, U.S. hospitals and military hospitals and clinics would cease to function within months, if not days," Rosemary Gibson, the author of China Rx, which covers how a lot of America and the world's pharmaceutical manufacturing now depends on China, told NBC back in September.
"Our biggest vulnerability is overdependence and single source of supply," Mike Wessel, a member of the U.S.-China Economic and Security Review Commission, explained late last year. "For critical products like antibiotics as well as life-sustaining drugs like blood pressure medicine, China, directly or indirectly, is the major or potentially sole supplier of those products to the U.S."
In fact, high-profile lawmakers on both sides of the aisle were worrying about this problem late last year before the coronavirus even hit the news. In that case, the issue was national security: Government officials were concerned China might retaliate in its ongoing trade war with the Trump administration by choking off America's drug supply. There were also worries that, FDA inspections or no, China's standards are lax and could lead to dangerous or contaminated drugs entering the United States. In fact, in the last few years, America and Europe have seen several recalls of Chinese-manufactured vaccines and other drugs for exactly this reason.
At the same time, China is as dependent on these trade relationships as the U.S. is. Thus, it's been trying to improve its inspection processes. Any trade war effort to constrict America's drug supply would also invite retaliation, since the U.S. exports a lot of end-product drugs (built from the APIs) back to China.
But in those cases, we're relying on China's national self-interest to prevent it from exploiting a vulnerability. What's disturbing about the COVID-19 outbreak is that it obeys no such logic. Another example of a natural disaster shutting down these supply chains actually came in 2017, when Hurricane Maria hit Puerto Rico: One plant on the island was responsible for half the small saline bags used by American hospitals, and when the supplier had no backup, hospitals across the country were suddenly short.
The good news is that, so far, drug shortages remain a potentiality rather than a reality. Drugmakers of course prepare for supply chain disruptions, and to an extent, they can turn to alternative suppliers around the world. Pharmaceutical companies are required to inform the FDA of any supply disruptions, and the agency is actively in contact with them for news. According to reports, no one has informed the FDA of a shortage yet. Major suppliers like Bayer, Johnson & Johnson, Merck, Roche, and Pfizer all told CBS they have alternative suppliers on hand, or other contingencies to address a shortage.
At this point, the most disturbing thing is the simple lack of information. We're relying on China and private companies to provide honest assessments, and to have appropriate backups — nevermind that the mad rush for cost-cutting is what led to the massive offshoring of these supply chains in the first place. "One of the big unknowns is how many products are sole-sourced — in which literally only one place in the world makes that raw material," Erin Fox, a University of Utah Health expert on drug shortages, told Wired. "We don't have good information on that at all." There's also the fact that it takes a while for inventories to turn over, so there will likely be a lag between the shutdown of API production in China and any shortage America may experience.
If nothing else, the episode highlights how risky it is for big corporations to concentrate the global supply chains for critical needs in one place, based on profit calculations rather than concerns about redundancy or national security. "All it takes is one plant to shut down to cause a global shortage. That's because there's such concentration of global production in China," Gibson told Wired.
At the very least, that seems imprudent.
Jeff Spross
Illustrated | nevodka/iStock, AndreaAstes/iStock
February 25, 2020
By now, it seems pretty clear that China was caught flat-footed by COVID-19, known colloquially as the coronavirus, with potentially dire consequences for the country and its economy, not mention the rest of the world. But there's an additional unpleasant irony to that already grim news: Thanks to the way America's pharmaceutical industry has rearranged its global supply chains, a medical crisis in China could possibly throttle the supply of drugs Americans need to fight a medical crisis here.
Hard data on the situation is hard to come by, both because Chinese data sources are not exactly trustworthy and because these companies are cagey about sharing what they consider to be proprietary information. But here's what we know: Anywhere from 80 percent to 88 percent of active pharmaceutical ingredients (APIs) — the basic building blocks used to manufacture drugs in the United States — come in from abroad. Roughly 13 percent or 14 percent of all the APIs used to manufacture U.S. drugs come from China. And 14 percent is hardly a tiny amount. More to the point, even this number undersells the degree of our dependence on China.
There are 370 drugs sold here in America and considered "essential" by the World Health Organization that are at least partially dependent on APIs from China. We rely on the country for components to drugs that treat everything from epilepsy to depression to Alzheimers. Three of those drugs — “Capreomycin and streptomycin, both used to treat mycobacterium tuberculosis; sulfadiazine, used to treat chancroid, a sexually transmitted disease; and trachoma, a bacterial infection of the eye,” according to CBS — use components that only come from China. The United States also keeps a strategic national stockpile of critical drugs, and 85 percent of those use at least some API that China manufactures. Beyond drugs, Chinese manufacturers are major producers of other medical devices, like catheters, MRI machines, devices for monitoring blood oxygen levels, dental implants, and more.
The problem is that the way to prevent the spread of a disease like COVID-19 is to quarantine infected populations, shutdown or tightly regulate travel, and keep people in their homes and away from congregating in groups — all of which the Chinese government and authorities have done with gusto. But, by definition, this means shutting down places of work and factories and other hubs of industry, including many of China's 4,300 pharmaceutical and API manufacturers. According to reports from within the Food and Drug Administration (FDA), the agency is keeping its eye on a list of 150 drugs — including both generics and unique patented pharmaceuticals — that are at risk of shortages if China's manufacturing shutdown continues. Critical antibiotics like penicillin, amoxicillin, and doxycycline — which get 90 percent of the APIs from China — are also among those at special risk.
Thanks to the coronavirus outbreak, demand within China is also rising for certain drugs, particularly anesthetics and pain relievers. Even if manufacturers can keep cranking those drugs out, there could still be shortages anyway, simply because China has to stockpile more of them for its own needs rather than export them to everyone else. Finally, even if drugs or their components are produced in China, the manufacturing sites still have to be inspected by the FDA to clear them for sale in the United States. And the shutdown of Chinese society to contain COVID-19 risks curtailing and delaying those inspections as well, which would then cascade into delayed drug shipments.
"We are keenly aware that the outbreak will likely impact the medical product supply chain," the FDA said in a statement.
"If China shut the door on exports of medicines and their key ingredients and raw material, U.S. hospitals and military hospitals and clinics would cease to function within months, if not days," Rosemary Gibson, the author of China Rx, which covers how a lot of America and the world's pharmaceutical manufacturing now depends on China, told NBC back in September.
"Our biggest vulnerability is overdependence and single source of supply," Mike Wessel, a member of the U.S.-China Economic and Security Review Commission, explained late last year. "For critical products like antibiotics as well as life-sustaining drugs like blood pressure medicine, China, directly or indirectly, is the major or potentially sole supplier of those products to the U.S."
In fact, high-profile lawmakers on both sides of the aisle were worrying about this problem late last year before the coronavirus even hit the news. In that case, the issue was national security: Government officials were concerned China might retaliate in its ongoing trade war with the Trump administration by choking off America's drug supply. There were also worries that, FDA inspections or no, China's standards are lax and could lead to dangerous or contaminated drugs entering the United States. In fact, in the last few years, America and Europe have seen several recalls of Chinese-manufactured vaccines and other drugs for exactly this reason.
At the same time, China is as dependent on these trade relationships as the U.S. is. Thus, it's been trying to improve its inspection processes. Any trade war effort to constrict America's drug supply would also invite retaliation, since the U.S. exports a lot of end-product drugs (built from the APIs) back to China.
But in those cases, we're relying on China's national self-interest to prevent it from exploiting a vulnerability. What's disturbing about the COVID-19 outbreak is that it obeys no such logic. Another example of a natural disaster shutting down these supply chains actually came in 2017, when Hurricane Maria hit Puerto Rico: One plant on the island was responsible for half the small saline bags used by American hospitals, and when the supplier had no backup, hospitals across the country were suddenly short.
The good news is that, so far, drug shortages remain a potentiality rather than a reality. Drugmakers of course prepare for supply chain disruptions, and to an extent, they can turn to alternative suppliers around the world. Pharmaceutical companies are required to inform the FDA of any supply disruptions, and the agency is actively in contact with them for news. According to reports, no one has informed the FDA of a shortage yet. Major suppliers like Bayer, Johnson & Johnson, Merck, Roche, and Pfizer all told CBS they have alternative suppliers on hand, or other contingencies to address a shortage.
At this point, the most disturbing thing is the simple lack of information. We're relying on China and private companies to provide honest assessments, and to have appropriate backups — nevermind that the mad rush for cost-cutting is what led to the massive offshoring of these supply chains in the first place. "One of the big unknowns is how many products are sole-sourced — in which literally only one place in the world makes that raw material," Erin Fox, a University of Utah Health expert on drug shortages, told Wired. "We don't have good information on that at all." There's also the fact that it takes a while for inventories to turn over, so there will likely be a lag between the shutdown of API production in China and any shortage America may experience.
If nothing else, the episode highlights how risky it is for big corporations to concentrate the global supply chains for critical needs in one place, based on profit calculations rather than concerns about redundancy or national security. "All it takes is one plant to shut down to cause a global shortage. That's because there's such concentration of global production in China," Gibson told Wired.
At the very least, that seems imprudent.
The coronavirus recession?
Jeff Spross THE WEEK
Illustrated | AndreyKrav/iStock, ATTA KENARE/AFP
Jeff Spross THE WEEK
Illustrated | AndreyKrav/iStock, ATTA KENARE/AFP
via Getty Images, EvgVect/iStock February 24, 2020
It was clear earlier this month that the coronavirus outbreak could severely damage the global economy.
On Feb. 12, I wrote that American and Chinese demand had been sustaining the world economy for the last few years, and if China were shut down due to the virus, the ripple effect through global supply chains could drag down the rest of world with it. And sure enough, this week began with news of how the disease is throttling trade flows in and out of China.
Technically called COVID-19 ("coronavirus" actually being the name for a whole family of viruses), the disease has now infected at least 77,150 people in China, with 2,592 deaths. On Monday, stock markets plunged on news that new and rapidly spreading outbreaks are now popping up in South Korea, Iran, and Italy. The Dow Jones dropped 3.5 percent — or 1,000 points — the S&P 500 fell 3.7 percent, and the Nasdaq plunged 3.7 percent.
The possibility of the virus spreading across the world is certainly unnerving. And while the World Health Organization has so far avoided declaring the disease an official pandemic, the organization did say it has "pandemic potential." But we don't even need to posit a pandemic to see how the virus could tank economies around the world.
An example: Reliable trade data out of China is hard to come by, but a Boston company named CargoMetrics has been trying to keep tabs. Their data covers not just shipping traffic but how full the cargo vessels are. And their index shows a 27 percent decline in Chinese imports from Feb. 7 to Feb. 17 — a massive deviation from the average trend in prior years. Dry cargo imports — things like metals, ores, grains, wood, coal, and steel products — are down 40 percent.
China's imports "are totally in freefall," as CargoMetrics' CEO Scott Borgerson put it. Basically, over the last month, the country has bought way less stuff from the rest of the world than normal. And while China's exports to the rest of the world aren't suffering quite as badly, the situation is still "ugly," and down from the historical trends.
At this point, it is well-known that major players like Nike, Hyundai, Apple, and General Motors are having to curtail some operations, because they rely on Chinese manufacturers for goods and parts. But smaller businesses are getting hit, too. Everyone from shoe and blue jean manufacturers, to electric bicycle makers and outdoor fireplace suppliers and 3D printed toymakers for children are feeling the pinch, as imports from China they depended on suddenly dry up — in some cases, forcing them to switch to other Asian suppliers that are now shutting down as well, in fear of the spreading disease. In a particularly unpleasant irony, there are roughly 150 prescription drugs — "antibiotics, generics, and some branded drugs without alternatives," according to Axios — that may well experience shortages because of how dependent we are on Chinese manufacturers to produce them. Even the fashion industry is not immune. And it's the same story in other countries that rely on China for their supply chains, from Australia to Japan.
"The second-largest economy in the world is completely shut down. People aren't totally pricing that in," Larry Benedict, CEO of The Opportunistic Trader, told CNBC. According to the New York Times, an analysis from JPMorgan concluded that "the immediate impact of a large China demand and supply shock will be substantial." China's own President Xi Jinping called the coronavirus a "crisis," as the country reneged on its earlier plans to ease travel restrictions out of the city of Wuhan, an epicenter of the outbreak.
The basic problem is that the way to contain a disease is to prevent people from traveling and from interacting in large groups. Which is not limited to, but certainly includes, keeping them from working — many factory employees in China, for example, remain stuck at home and unable to commute to work. "Because the remedies are extreme, even small risks of infection and of death can have a drastic effect on economic activity," as economist Olivier Blanchard put it.
And there's no way "stimulate" a country out of this situation: China has announced various efforts to prop up its economy, from a hose of new loans to keep companies afloat to a raft of new tax breaks. But no amount of money can compensate a business model when workers literally aren't allowed to go to work.
The good news is that, in an already-depressed world economy, economic stimulus can increase demand throughout the world in the places that haven't been physically hit by the virus yet, and that could at least provide a cushion as supply chains transition.
Beyond that, the global economy's best hope is that the virus can be contained relatively soon. The growth of new cases of COVID-19 in China actually peaked earlier this month, according to World Health Organization data. And in China itself, six provinces that were more or less shutdown have relaxed their emergency ratings, and are allowing companies to bring their workers back in. (The problem is that it's hard to know precisely what to make of this given given how untrustworthy the Chinese government has proven itself to be.) Experts also predict world economic growth will slow to a measly 1 percent this quarter, but recover soon after.
Of course, all that depends on virus peaking already or soon. Given the outbreaks in Italy and elsewhere, that doesn't sound like a safe bet.
There's no way to predict the future in a situation like this. But if the outbreak grows around the world while continuing to drive the Chinese economy into the ground, it's not hard to see how the world's already-limping economic growth could go negative. In which case, we've got a coronavirus recession on our hands.
It was clear earlier this month that the coronavirus outbreak could severely damage the global economy.
On Feb. 12, I wrote that American and Chinese demand had been sustaining the world economy for the last few years, and if China were shut down due to the virus, the ripple effect through global supply chains could drag down the rest of world with it. And sure enough, this week began with news of how the disease is throttling trade flows in and out of China.
Technically called COVID-19 ("coronavirus" actually being the name for a whole family of viruses), the disease has now infected at least 77,150 people in China, with 2,592 deaths. On Monday, stock markets plunged on news that new and rapidly spreading outbreaks are now popping up in South Korea, Iran, and Italy. The Dow Jones dropped 3.5 percent — or 1,000 points — the S&P 500 fell 3.7 percent, and the Nasdaq plunged 3.7 percent.
The possibility of the virus spreading across the world is certainly unnerving. And while the World Health Organization has so far avoided declaring the disease an official pandemic, the organization did say it has "pandemic potential." But we don't even need to posit a pandemic to see how the virus could tank economies around the world.
An example: Reliable trade data out of China is hard to come by, but a Boston company named CargoMetrics has been trying to keep tabs. Their data covers not just shipping traffic but how full the cargo vessels are. And their index shows a 27 percent decline in Chinese imports from Feb. 7 to Feb. 17 — a massive deviation from the average trend in prior years. Dry cargo imports — things like metals, ores, grains, wood, coal, and steel products — are down 40 percent.
China's imports "are totally in freefall," as CargoMetrics' CEO Scott Borgerson put it. Basically, over the last month, the country has bought way less stuff from the rest of the world than normal. And while China's exports to the rest of the world aren't suffering quite as badly, the situation is still "ugly," and down from the historical trends.
At this point, it is well-known that major players like Nike, Hyundai, Apple, and General Motors are having to curtail some operations, because they rely on Chinese manufacturers for goods and parts. But smaller businesses are getting hit, too. Everyone from shoe and blue jean manufacturers, to electric bicycle makers and outdoor fireplace suppliers and 3D printed toymakers for children are feeling the pinch, as imports from China they depended on suddenly dry up — in some cases, forcing them to switch to other Asian suppliers that are now shutting down as well, in fear of the spreading disease. In a particularly unpleasant irony, there are roughly 150 prescription drugs — "antibiotics, generics, and some branded drugs without alternatives," according to Axios — that may well experience shortages because of how dependent we are on Chinese manufacturers to produce them. Even the fashion industry is not immune. And it's the same story in other countries that rely on China for their supply chains, from Australia to Japan.
"The second-largest economy in the world is completely shut down. People aren't totally pricing that in," Larry Benedict, CEO of The Opportunistic Trader, told CNBC. According to the New York Times, an analysis from JPMorgan concluded that "the immediate impact of a large China demand and supply shock will be substantial." China's own President Xi Jinping called the coronavirus a "crisis," as the country reneged on its earlier plans to ease travel restrictions out of the city of Wuhan, an epicenter of the outbreak.
The basic problem is that the way to contain a disease is to prevent people from traveling and from interacting in large groups. Which is not limited to, but certainly includes, keeping them from working — many factory employees in China, for example, remain stuck at home and unable to commute to work. "Because the remedies are extreme, even small risks of infection and of death can have a drastic effect on economic activity," as economist Olivier Blanchard put it.
And there's no way "stimulate" a country out of this situation: China has announced various efforts to prop up its economy, from a hose of new loans to keep companies afloat to a raft of new tax breaks. But no amount of money can compensate a business model when workers literally aren't allowed to go to work.
The good news is that, in an already-depressed world economy, economic stimulus can increase demand throughout the world in the places that haven't been physically hit by the virus yet, and that could at least provide a cushion as supply chains transition.
Beyond that, the global economy's best hope is that the virus can be contained relatively soon. The growth of new cases of COVID-19 in China actually peaked earlier this month, according to World Health Organization data. And in China itself, six provinces that were more or less shutdown have relaxed their emergency ratings, and are allowing companies to bring their workers back in. (The problem is that it's hard to know precisely what to make of this given given how untrustworthy the Chinese government has proven itself to be.) Experts also predict world economic growth will slow to a measly 1 percent this quarter, but recover soon after.
Of course, all that depends on virus peaking already or soon. Given the outbreaks in Italy and elsewhere, that doesn't sound like a safe bet.
There's no way to predict the future in a situation like this. But if the outbreak grows around the world while continuing to drive the Chinese economy into the ground, it's not hard to see how the world's already-limping economic growth could go negative. In which case, we've got a coronavirus recession on our hands.
Trump's coronavirus response is worse than incompetent
Ryan Cooper
Illustrated | SAUL LOEB/AFP via Getty Images,
The global spread of coronavirus is verging on pandemic status. While the rate of new infection appears to be slowing in China thanks to drastic mass quarantines and clampdowns on movement, other outbreaks in Iran, South Korea, and Italy have still not been controlled. On Tuesday, the Centers for Disease Control (CDC) warned that an outbreak in the United States was probably just a matter of time.
This could be the greatest crisis faced by President Trump. But not only is he obviously incapable of handling the problem, he has already done tremendous damage to America's pandemic response system. The United States is highly vulnerable to epidemic disease because the president is a corrupt, tyrannical moron who can't do the job.
As I wrote earlier this week, Trump's model of governance is classic authoritarian corruption. He has stacked the bureaucracy with cronies whose only qualification is personal loyalty to Trump. He's recently charged a former college football quarterback with purging the civil service of Trump critics, and appointed Richard Grenell — a man with no intelligence experience who illegally lobbied for Hungary without registering as a foreign agent — as acting director of national intelligence.
Now, Trump is responding to bad news about COVID-19 (WHO's more accurate name for coronavirus) in typical authoritarian fashion — with denial. In a tweet, he insisted the media was hyping the problem to bring down the stock market.
Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible. Likewise their incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape! @CDCgov.....
— Donald J. Trump (@realDonaldTrump) February 26, 2020
And this is consistent with the diseased propaganda that grips the brains of basically the entire Republican Party. Right-wing commentators are already pushing conspiracy theories about the outbreak, no doubt driven by fear that the disease will hurt Trump's reelection prospects — like some crackpot who falsely asserted COVID-19 is a Chinese bioweapon, which was then amplified by Ben Shapiro, Senator Tom Cotton (R-Ark.) and the Trump administration itself. Others are suggesting that one CDC official is raising the alarm because she is the sister of former Deputy Attorney General Rod Rosenstein (who was pushed out for insufficient fealty to Trump). On his radio show, Rush Limbaugh scoffed: "Yeah, I'm dead right on this. The coronavirus is the common cold, folks," and asserted the media was hyping up the disease in an attempt to harm Trump. He said the fatality rate was a mere 2 percent, adding, "That's less than the flu, folks."
Limbaugh's mostly elderly listeners might be interested to learn that the actual fatality rate for the normal flu is about 0.1 percent, and while the overall death rate for COVID-19 indeed seems to be about 2.3 percent, deaths are heavily concentrated among the old. An initial study found 8 percent of people between 70-79 who caught the virus died, and 15 percent of those over 80. At that rate, if just 10 percent of the American population caught the virus, about 750,000 people would die.
All this makes an interesting contrast with Trump's behavior during the 2014 Ebola outbreak, when he accused the CDC of lying about how contagious the disease was, demanded that all U.S. citizens with the disease be left to die, and attacked President Obama for appointing a single person to coordinate the outbreak response (which did indeed bring it under control).
But Trump's denial of the problem also goes way beyond rhetoric. Over the last two years, Trump has hacked away at the funding and agencies responsible for defending Americans from viral threats. As Laurie Garrett writes in Foreign Policy, back in 2018, Trump "fired the government's entire pandemic response chain of command, including the White House management infrastructure." That same year the CDC cut its efforts to fight global diseases by 80 percent due to lack of funding. Trump's administration slashed funding for disease combat across the board, and eliminated a $30 million Complex Crisis Fund.
His recent proposed budget would gut $3 billion in funding for health security. He would slash funding for State Department and USAID global health programs by a third, cut the CDC budget by 7 percent, cut the Global Fund to Fight AIDS, Tuberculosis and Malaria by 58 percent, and reduce U.S. contributions to the World Health Organization by half.
He also has repeatedly proposed enormous cuts to Medicare and Medicaid, and allowed states to throw thousands off the latter program. Republicans have systematically undermined and weakened ObamaCare, exacerbating a structural weakness to epidemics in American society — our garbage health care system. Tens of millions of Americans have no insurance and tens of millions of others cannot afford to use the coverage they do have — meaning many will hesitate to go to the doctor to get tested for fear of being gouged by rapacious medical providers. Indeed, a Florida man who caught the flu in China did the responsible thing and went to the hospital to be tested for COVID-19; when it came back negative, he was slapped with a $1,400 bill despite being insured.
A major reason the coronavirus outbreak got out of hand in the first place is because of the Chinese government's inept initial response. They have since taken drastic action that while repressive, seems to finally be at least slowing the spread. The Chinese Communist Party may be corrupt and incompetent, but at least they are not gripped by delusional fruitcake propaganda and conspiracy theories.
It remains to be seen whether or not America will actually suffer an outbreak. But if it does, even the brutal Chinese Communist methods of fighting one will be off the table. President Trump is simply too incompetent to manage that, or anything else. Any efforts to beat COVID-19 will have to be done in spite of the vacant, doddering lunatic at the center of American power.
Ryan Cooper
Illustrated | SAUL LOEB/AFP via Getty Images,
Olga Beliaeva/iStock, jakkapan21/iStock
February 26, 2020
February 26, 2020
The global spread of coronavirus is verging on pandemic status. While the rate of new infection appears to be slowing in China thanks to drastic mass quarantines and clampdowns on movement, other outbreaks in Iran, South Korea, and Italy have still not been controlled. On Tuesday, the Centers for Disease Control (CDC) warned that an outbreak in the United States was probably just a matter of time.
This could be the greatest crisis faced by President Trump. But not only is he obviously incapable of handling the problem, he has already done tremendous damage to America's pandemic response system. The United States is highly vulnerable to epidemic disease because the president is a corrupt, tyrannical moron who can't do the job.
As I wrote earlier this week, Trump's model of governance is classic authoritarian corruption. He has stacked the bureaucracy with cronies whose only qualification is personal loyalty to Trump. He's recently charged a former college football quarterback with purging the civil service of Trump critics, and appointed Richard Grenell — a man with no intelligence experience who illegally lobbied for Hungary without registering as a foreign agent — as acting director of national intelligence.
Now, Trump is responding to bad news about COVID-19 (WHO's more accurate name for coronavirus) in typical authoritarian fashion — with denial. In a tweet, he insisted the media was hyping the problem to bring down the stock market.
Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible. Likewise their incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape! @CDCgov.....
— Donald J. Trump (@realDonaldTrump) February 26, 2020
And this is consistent with the diseased propaganda that grips the brains of basically the entire Republican Party. Right-wing commentators are already pushing conspiracy theories about the outbreak, no doubt driven by fear that the disease will hurt Trump's reelection prospects — like some crackpot who falsely asserted COVID-19 is a Chinese bioweapon, which was then amplified by Ben Shapiro, Senator Tom Cotton (R-Ark.) and the Trump administration itself. Others are suggesting that one CDC official is raising the alarm because she is the sister of former Deputy Attorney General Rod Rosenstein (who was pushed out for insufficient fealty to Trump). On his radio show, Rush Limbaugh scoffed: "Yeah, I'm dead right on this. The coronavirus is the common cold, folks," and asserted the media was hyping up the disease in an attempt to harm Trump. He said the fatality rate was a mere 2 percent, adding, "That's less than the flu, folks."
Limbaugh's mostly elderly listeners might be interested to learn that the actual fatality rate for the normal flu is about 0.1 percent, and while the overall death rate for COVID-19 indeed seems to be about 2.3 percent, deaths are heavily concentrated among the old. An initial study found 8 percent of people between 70-79 who caught the virus died, and 15 percent of those over 80. At that rate, if just 10 percent of the American population caught the virus, about 750,000 people would die.
All this makes an interesting contrast with Trump's behavior during the 2014 Ebola outbreak, when he accused the CDC of lying about how contagious the disease was, demanded that all U.S. citizens with the disease be left to die, and attacked President Obama for appointing a single person to coordinate the outbreak response (which did indeed bring it under control).
But Trump's denial of the problem also goes way beyond rhetoric. Over the last two years, Trump has hacked away at the funding and agencies responsible for defending Americans from viral threats. As Laurie Garrett writes in Foreign Policy, back in 2018, Trump "fired the government's entire pandemic response chain of command, including the White House management infrastructure." That same year the CDC cut its efforts to fight global diseases by 80 percent due to lack of funding. Trump's administration slashed funding for disease combat across the board, and eliminated a $30 million Complex Crisis Fund.
His recent proposed budget would gut $3 billion in funding for health security. He would slash funding for State Department and USAID global health programs by a third, cut the CDC budget by 7 percent, cut the Global Fund to Fight AIDS, Tuberculosis and Malaria by 58 percent, and reduce U.S. contributions to the World Health Organization by half.
He also has repeatedly proposed enormous cuts to Medicare and Medicaid, and allowed states to throw thousands off the latter program. Republicans have systematically undermined and weakened ObamaCare, exacerbating a structural weakness to epidemics in American society — our garbage health care system. Tens of millions of Americans have no insurance and tens of millions of others cannot afford to use the coverage they do have — meaning many will hesitate to go to the doctor to get tested for fear of being gouged by rapacious medical providers. Indeed, a Florida man who caught the flu in China did the responsible thing and went to the hospital to be tested for COVID-19; when it came back negative, he was slapped with a $1,400 bill despite being insured.
A major reason the coronavirus outbreak got out of hand in the first place is because of the Chinese government's inept initial response. They have since taken drastic action that while repressive, seems to finally be at least slowing the spread. The Chinese Communist Party may be corrupt and incompetent, but at least they are not gripped by delusional fruitcake propaganda and conspiracy theories.
It remains to be seen whether or not America will actually suffer an outbreak. But if it does, even the brutal Chinese Communist methods of fighting one will be off the table. President Trump is simply too incompetent to manage that, or anything else. Any efforts to beat COVID-19 will have to be done in spite of the vacant, doddering lunatic at the center of American power.
HHS Secretary Alex Azar reportedly blindsided by Trump putting Pence in charge of coronavirus response
February 26, 2020
Eric Baradat/AFP via Getty Images
WHEN TRUMP DOESN'T WANT TO DO SOMETHING HE GIVES IT TO PENCE OR JARED
After spending weeks leading the government's coronavirus task force, Health and Human Services Secretary Alex Azar found out he was being pushed aside just minutes before President Trump made the announcement during a Wednesday evening press conference, five people with knowledge of the situation told The Washington Post.
Trump revealed that Vice President Mike Pence will now head the task force, and everyone involved will report to him. A senior administration official told the Post Pence will lead his first meeting on Thursday, and decided to hold it at HHS "as a show of support to Azar."
Azar was asked Wednesday morning about the possibility of the administration appointing a czar to guide the government's response, and responded that he "didn't anticipate" this happening, as things were "working extremely well." At the end of Trump's press conference, Azar made sure to tell reporters he was still chairman of the task force, and was "delighted" to have Pence on board. Catherine Garcia
White House's rosy coronavirus comments are the exact opposite of what career health officials are saying
February 25, 2020
Money Sharma/Getty Images.
White House officials aren't on the same page as top health officials.
President Trump's economic adviser Larry Kudlow on Tuesday told CNBC there was basically nothing to worry about when it comes to the coronavirus' effect on the U.S. "We have contained this. I won't say [it's] airtight, but it's pretty close to airtight," he said. He also reassured viewers that while the coronavirus may be a "human tragedy," it won't be an "economic tragedy," since there aren't any "supply disruptions" just yet.
Supply disruptions may be one thing, but the Centers for Disease Control and Prevention nearly simultaneously warned of incoming "disruption to everyday life," saying the spread of the coronavirus in the U.S. is "not so much of a question of if" but rather "a question of when."
As CNN's Phil Mattingly put it, Kudlow's comments are "more or less, the exact opposite of what lawmakers were told in a briefing from top [Trump administration] health officials this morning." FiveThirtyEight's Nate Silver seemingly agreed Kudlow's (and President Trump's) comments were misguided, tweeting it "seems very very very very risky for the Trump administration to claim coronavirus is contained in the U.S. if it later proves not to be contained."
Perhaps Kudlow realized he may have sounded a bit too optimistic, because shortly after his CNBC appearance he told reporters the possibility of further travel restrictions are "under discussion." He continued, "I'm going to wait on that. I don't want to get ahead of my skis or their skis. It's all under discussion."
Still, he insisted the U.S. is very prepared for anything the coronavirus may throw our way. "We're not going to get caught with our pants down," he predicted, per Bloomberg's Jennifer Jacobs. "The virus is not going to last forever." Harvard epidemiologists may have something to say about that.
Donald Trump Takes Coronavirus So Seriously He Just Put Mike Pence in Charge
Erin Banco, Asawin Suebsaeng,
The Daily Beast•February 26, 2020
HIS GO TO GUY WHEN HE IS TOO LAZY OR INCOMPETENT TO DO SOMETHING
AND HIS IMMEDIATE CHOICE FOR SPUR OF THE MOMENT DECISIONS
Mandel Ngan/AFP via Getty
President Donald Trump has tapped Vice President Mike Pence to take over as leader of the administration’s coronavirus task force.
The announcement came after Trump and his administration spent days receiving harsh criticism from Capitol Hill for its mixed messages about the threat of coronavirus and what the government was doing to prepare.
On Wednesday night, Trump’s message was very clear: “Exactly right now,” he said, Pence will start leading the White House response to the coronavirus. “Mike will report back to me, but he’s got a certain talent for this,” Trump said.
The president’s decision to put Pence in charge was seen by some as further evidence that he is not taking the threat of coronavirus seriously.
Over the decades, Pence has amassed a public record that his critics have often bashed as anti-science. On matters of public health, for instance, he has made wild claims in the past.
“Despite the hysteria from the political class and the media, smoking doesn’t kill. In fact, two out of every three smokers does not die from a smoking-related illness and nine out of 10 smokers do not contract lung cancer,” Pence said in 2000. Additionally, Pence has advocated teaching creationism in American public schools and, as governor of Indiana, had an HIV outbreak explode on his watch because he moved too slowly on approving needle exchanges.
The president’s decision to entrust Pence with handling an outbreak that experts say is approaching pandemic levels comes after Trump spent much of the week frantically trying to quell fears that members of his team were at odds with each other, fearful that the narrative of dysfunction could complicate his re-election bid.
The New York Times first reported Wednesday that the president was considering tapping a coronavirus czar to streamline the interagency process. But senior officials waved off any notion that someone would step in to take the lead in place of Department of Health and Human Services Secretary Alex Azar.
Immediately after Trump’s Wednesday night announcement, Azar was reportedly overheard saying the press was “misunderstanding” Pence’s role and stressing that he was “still the chairman of the task force.” But he did also reportedly say he was “delighted” with Pence’s appointment.
The former Indiana governor offered a brief statement on his credentials but nothing else.
“As a former governor from a state where the first MERS case emerged in 2014, I know full well the importance of presidential leadership, the importance of administration leadership, and the vital role of partnership of state and local governments…. on the potential threats of dangerous diseases,” Pence said.
Trump said he would also bring on an official from the State Department to help the task force coordinate on the virus but did not mention the person’s name.
The president’s announcement that he is bringing on new members of the task force underscores the extent to which the White House is trying to adjust its messaging after days of confusion about how seriously to take the coronavirus threat. Still, though, despite briefings by the Centers for Disease Control and Prevention that the virus would eventually spread throughout the country, Trump, with a representative of that agency beside him, pushed back on that claim. “I don’t think it is inevitable,” he said. “Probable? Maybe.”
Reporters pushed him a second time. He doubled down. “There’s a chance to get worse… but nothing is inevitable,” he said.
Trump went on to blame the Democratic debate for the stock market’s downward spiral and complained that the Democrats were treating him unfairly—that he in fact had been out in front on combating the virus by banning flights to China.
As justification, Trump at one point during the beginning of the press conference held up a Johns Hopkins study that stated the U.S. was the country most prepared to handle the coronavirus.
Advisers to Trump have for weeks tried to gather data about how quickly the virus spreads, how it can be stopped, and how to contain an outbreak in the future. But those efforts have largely remained behind closed doors, leaving the public wondering what—if anything—the administration has been doing to address the outbreak. Meanwhile, as cases doubled, then tripled, across the globe, lawmakers on Capitol Hill have increasingly called out top administration officials to be more transparent and to declassify their briefings, accusing them of mixed messaging on the severity of the virus.
The situation came to a head Wednesday morning when Azar was grilled by lawmakers about the adequacy and breadth of the administration’s response. Azar defended the effort and beat off suggestions that he would soon be replaced with a formal czar for coordinating the coronavirus response.
The Terrifying Reality of Trump’s Coronavirus Promise
Harsh criticism from Capitol Hill over the administration’s handling of the virus—dubbed by Senate Minority Leader Chuck Schumer (D-NY) as “towering and dangerous incompetence”—prompted panic in the White House early this week that the administration was losing its grip on the narrative. The fear, according to two senior administration officials, was that not only lawmakers but the general public were becoming increasingly wary of the discrepancy between the president’s statements and those of the health officials leading the task force.
Dow Plunges Amid Global Freakout Over Coronavirus Outbreaks
Trump and his closest advisers tried to downplay fears about the virus in an attempt to correct the stock market, which fell more than 1,900 points over Monday and Tuesday, according to two senior administration officials. White House National Economic Council Director Larry Kudlow appeared Tuesday on CNBC, urging people to remain calm and insisting that the virus was contained to an “airtight” degree. At the same time, though, CDC officials were pushing a different story: The coronavirus was contained but would soon spread more widely in the U.S.
According to multiple doctors and administrators at three hospitals across the country, the need for more equipment—such as masks, gowns, and gloves—has grown more dire by the day. At Bellevue Hospital in New York City, one of the country’s only designated coronavirus centers, the stockpile of masks dipped by hundreds over the course of a day when news broke in January that the virus had landed in the U.S. They’ve since been replenished, but there are fears that the supply could dwindle again.
While top health agencies have warned that it is merely a matter of time before the virus spreads in the United States, Trump has seemed focused on controlling the narrative to prevent a financial crisis from getting in the way of his re-election campaign.
Over the past three weeks, Trump has, on multiple occasions, asked administration officials about the different effects the spread of coronavirus could have on the world and U.S. economies, according to two people present for the conversations.
“He referenced [concerns about] the stock market at least two times,” said one of these sources, recalling a discussion that occurred roughly two weeks ago.
A third source who spoke to Trump in the past few weeks said that the president mused about how his enemies could use pandemic fears against him. “Remember recession, recession, recession?” Trump said, the source recalled, referencing the media and cable news coverage late last year about the growing recession fears in the country.
Trump has privately said many times that his perceived adversaries in the press would “love it” if a recession occurred on his watch, thus crippling his chances at re-election, those close to the president say. Reached for comment Wednesday afternoon, the president’s White House comms apparatus made a point of sticking it to those alleged foes in the media.
“Unfortunately what we are seeing is a political effort by the Left and some in the media to distract and disturb the American people with fearful rhetoric and palace intrigue,” White House spokesman Judd Deere wrote in a statement. “The United States economy is the strongest in the world thanks to the leadership and policies of President Trump. The virus remains low risk domestically because of the containment actions taken by this administration since the first of the year.”
President Donald Trump has tapped Vice President Mike Pence to take over as leader of the administration’s coronavirus task force.
The announcement came after Trump and his administration spent days receiving harsh criticism from Capitol Hill for its mixed messages about the threat of coronavirus and what the government was doing to prepare.
On Wednesday night, Trump’s message was very clear: “Exactly right now,” he said, Pence will start leading the White House response to the coronavirus. “Mike will report back to me, but he’s got a certain talent for this,” Trump said.
The president’s decision to put Pence in charge was seen by some as further evidence that he is not taking the threat of coronavirus seriously.
Over the decades, Pence has amassed a public record that his critics have often bashed as anti-science. On matters of public health, for instance, he has made wild claims in the past.
“Despite the hysteria from the political class and the media, smoking doesn’t kill. In fact, two out of every three smokers does not die from a smoking-related illness and nine out of 10 smokers do not contract lung cancer,” Pence said in 2000. Additionally, Pence has advocated teaching creationism in American public schools and, as governor of Indiana, had an HIV outbreak explode on his watch because he moved too slowly on approving needle exchanges.
The president’s decision to entrust Pence with handling an outbreak that experts say is approaching pandemic levels comes after Trump spent much of the week frantically trying to quell fears that members of his team were at odds with each other, fearful that the narrative of dysfunction could complicate his re-election bid.
The New York Times first reported Wednesday that the president was considering tapping a coronavirus czar to streamline the interagency process. But senior officials waved off any notion that someone would step in to take the lead in place of Department of Health and Human Services Secretary Alex Azar.
Immediately after Trump’s Wednesday night announcement, Azar was reportedly overheard saying the press was “misunderstanding” Pence’s role and stressing that he was “still the chairman of the task force.” But he did also reportedly say he was “delighted” with Pence’s appointment.
The former Indiana governor offered a brief statement on his credentials but nothing else.
“As a former governor from a state where the first MERS case emerged in 2014, I know full well the importance of presidential leadership, the importance of administration leadership, and the vital role of partnership of state and local governments…. on the potential threats of dangerous diseases,” Pence said.
Trump said he would also bring on an official from the State Department to help the task force coordinate on the virus but did not mention the person’s name.
The president’s announcement that he is bringing on new members of the task force underscores the extent to which the White House is trying to adjust its messaging after days of confusion about how seriously to take the coronavirus threat. Still, though, despite briefings by the Centers for Disease Control and Prevention that the virus would eventually spread throughout the country, Trump, with a representative of that agency beside him, pushed back on that claim. “I don’t think it is inevitable,” he said. “Probable? Maybe.”
Reporters pushed him a second time. He doubled down. “There’s a chance to get worse… but nothing is inevitable,” he said.
Trump went on to blame the Democratic debate for the stock market’s downward spiral and complained that the Democrats were treating him unfairly—that he in fact had been out in front on combating the virus by banning flights to China.
As justification, Trump at one point during the beginning of the press conference held up a Johns Hopkins study that stated the U.S. was the country most prepared to handle the coronavirus.
Advisers to Trump have for weeks tried to gather data about how quickly the virus spreads, how it can be stopped, and how to contain an outbreak in the future. But those efforts have largely remained behind closed doors, leaving the public wondering what—if anything—the administration has been doing to address the outbreak. Meanwhile, as cases doubled, then tripled, across the globe, lawmakers on Capitol Hill have increasingly called out top administration officials to be more transparent and to declassify their briefings, accusing them of mixed messaging on the severity of the virus.
The situation came to a head Wednesday morning when Azar was grilled by lawmakers about the adequacy and breadth of the administration’s response. Azar defended the effort and beat off suggestions that he would soon be replaced with a formal czar for coordinating the coronavirus response.
The Terrifying Reality of Trump’s Coronavirus Promise
Harsh criticism from Capitol Hill over the administration’s handling of the virus—dubbed by Senate Minority Leader Chuck Schumer (D-NY) as “towering and dangerous incompetence”—prompted panic in the White House early this week that the administration was losing its grip on the narrative. The fear, according to two senior administration officials, was that not only lawmakers but the general public were becoming increasingly wary of the discrepancy between the president’s statements and those of the health officials leading the task force.
Dow Plunges Amid Global Freakout Over Coronavirus Outbreaks
Trump and his closest advisers tried to downplay fears about the virus in an attempt to correct the stock market, which fell more than 1,900 points over Monday and Tuesday, according to two senior administration officials. White House National Economic Council Director Larry Kudlow appeared Tuesday on CNBC, urging people to remain calm and insisting that the virus was contained to an “airtight” degree. At the same time, though, CDC officials were pushing a different story: The coronavirus was contained but would soon spread more widely in the U.S.
According to multiple doctors and administrators at three hospitals across the country, the need for more equipment—such as masks, gowns, and gloves—has grown more dire by the day. At Bellevue Hospital in New York City, one of the country’s only designated coronavirus centers, the stockpile of masks dipped by hundreds over the course of a day when news broke in January that the virus had landed in the U.S. They’ve since been replenished, but there are fears that the supply could dwindle again.
While top health agencies have warned that it is merely a matter of time before the virus spreads in the United States, Trump has seemed focused on controlling the narrative to prevent a financial crisis from getting in the way of his re-election campaign.
Over the past three weeks, Trump has, on multiple occasions, asked administration officials about the different effects the spread of coronavirus could have on the world and U.S. economies, according to two people present for the conversations.
“He referenced [concerns about] the stock market at least two times,” said one of these sources, recalling a discussion that occurred roughly two weeks ago.
A third source who spoke to Trump in the past few weeks said that the president mused about how his enemies could use pandemic fears against him. “Remember recession, recession, recession?” Trump said, the source recalled, referencing the media and cable news coverage late last year about the growing recession fears in the country.
Trump has privately said many times that his perceived adversaries in the press would “love it” if a recession occurred on his watch, thus crippling his chances at re-election, those close to the president say. Reached for comment Wednesday afternoon, the president’s White House comms apparatus made a point of sticking it to those alleged foes in the media.
“Unfortunately what we are seeing is a political effort by the Left and some in the media to distract and disturb the American people with fearful rhetoric and palace intrigue,” White House spokesman Judd Deere wrote in a statement. “The United States economy is the strongest in the world thanks to the leadership and policies of President Trump. The virus remains low risk domestically because of the containment actions taken by this administration since the first of the year.”
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