The 535 | April 2020

In what likely would have been a period of legislative stalemates and election year politicking, the COVID-19 pandemic has instead forced those in the capital to cross party lines and work together. Despite an increase in bipartisanship, the pandemic has brought to light numerous systemic problems that have long existed in the country, from the struggle between federal and states’ rights to enduring issues within the American health care system.

Federal Wavering

The Trump Administration, wary of big government intervention, has largely shied away from sweeping measures that would make policy more cohesive and uniform across the country. After cries from both parties, one tool the President has invoked is the Defense Production Act (DPA). The DPA is a 1950 Korean War era law that provides executive authority regarding the private production and public procurement of goods in cases of national defense. In a case that echoes many of today’s policy predicaments, disagreements between unions and the steel industry during the Korean War led to widespread industry strikes at a time when increased production was desperately needed. President Truman, leery of disruptions in the defense industries, seized steel production plants to ensure continued production. In 1952, Youngstown Sheet & Tube Co. v. Sawyer, also known as the Steel Seizure case, went to the U.S. Supreme Court, and the Court ultimately ruled against Truman, finding he had overstepped his authority.

A contemporary application of this law allows the government to force factories to fulfill government-issued orders for medical supplies such as personal protective equipment (PPE) and ventilators before manufacturing supplies for the private sector. Prior to the DPA’s implementation, manufacturers have been left on their own to identify which supplies are needed and by whom. These persistent unknowns have intensified pressure on state governments and hospitals, already under tremendous operational and logistical strain. Following the announcement that the government would invoke the DPA, President Trump appointed controversial economist Peter Navarro to coordinate it. Navarro currently heads the Office of Trade and Manufacturing Policy (OTMP) at the White House, where he is a staunch believer in the America First ethos when it comes to trade.

Lack of federal leadership has in some cases led the private sector to extend aid offers on Twitter. Elon Musk, who has been outspokenly skeptical of the severity of COVID-19, offered to begin producing ventilators at Tesla facilities. Negotiations between New York City Mayor Bill de Blasio and Elon Musk over the production and acquisition of these ventilators transpired over Twitter. It has also forced states to bid against each other in the open market for life-saving resources.

Christian Siriano, a couture designer, shifted his sewing team’s work from ballgowns to face masks. His exchange with New York Governor Cuomo also occurred on Twitter. Critics of the Trump Administration argue that stronger involvement and coordination efforts from the federal government would obviate the need for such exchanges.

Federal Bailout

In typical fashion, the Congressional response to COVID-19 began with highly partisan negotiations, but eventually led to an historic bailout package. Democrats have pushed for stronger protective measures for workers, such as hazard pay for essential workers and bailouts for small businesses. Republicans, on the other hand, have largely favored reserving bailout money for big business, which they regard as vital to the trickle-down economy. Republican calls to bail out the cruise ship industry were met with substantial logistical hurdles when it was revealed that major industry players are registered offshore to avoid paying federal taxes. Republican efforts to include a $500 million “slush fund” that would have had relatively little oversight also failed in the final version. The echoes of 2008 are hard to ignore.

In late-March, lawmakers on Capitol Hill emerged with the third and largest bailout package, amounting to $2 trillion—the largest bailout in U.S. history. Support for the bill was overwhelmingly bipartisan, and it received unanimous support in the Senate. The bailout, however, falls short of what progressives were hoping to achieve and it has many more strings attached than what the more conservative Republicans were seeking. Much of the actual bailout money will go the Federal Reserve, which will then determine who qualifies as loan recipients.

The bill also contains money for pharmaceutical research and drug manufacturing as well as $130 billion for hospitals. It also includes a one-time payment of $1,200 to citizens making under $75,000 per year with an additional $500 per child for households. Individuals making up to $99,000 are eligible for a reduced portion. However, those checks will be taxed. This bailout amount has been met with a shrug by many citizens, who view $1,200 as far too little in a major economic crisis, especially in cities like New York City, where median rent exceeded $2,900/month last year. Another major win for Democrats was a $260 billion expansion of unemployment insurance, including expanding access to part-time, self-employed, and gig economy workers.

The bailout package also treated the District of Columbia as a “territory” akin to Guam and Puerto Rico, which, like D.C., lack official statehood status. The lack of statehood status means those living and working in the capital itself will receive significantly less bailout money than areas with official statehood status. As it currently stands, the Senate is adjourned until April 20th, and the House begins a pro forma session in which no votes are held but bills can be introduced. The House is hoping to assemble a fourth stimulus package during the Senate recess period.

Trade Landscape

In March alone, over fifty countries enacted export controls, including on food and medical supplies. In the United States, Trump Administration opponents argue that existing trade war measures, including Section 301 tariffs on China, have hurt the United States’ ability to import desperately needed medical supplies from China.

Robert Zoellick, the former head of the World Bank, went so far as to pen an op-ed in the Wall Street Journal titled “Trump’s Tariffs Leave the U.S. Short on Vital Medical Supplies.” Ambassador Robert Lighthizer, the current U.S. Trade Representative, opened his Wall Street Journal rebuttal with “In the past several weeks, we have seen attempts to politicize the coronavirus, as well as hackneyed efforts to revive long-discredited arguments in favor of globalization.” Trade experts around the world have warned against erecting even more barriers to international trade, arguing that the free flow of goods, particularly food and medical supplies, is vital in a time of global crisis. Top-ranking WTO officials have noted that during past crises, the international community could depend on top-down leadership. Now, however, countries themselves will have to work bottom-up to ensure the free flow of vital supplies.

While trade matters have become more complex in recent weeks, the U.S. Food and Drug Administration (FDA) has enacted measures to hasten the fight against COVID-19. These measures include lifting certain import restrictions, relaxing rules for ventilators and test kits, and more rapidly providing licenses for labs to work on a potential vaccine.

State Level Responses

Although the federal government has yet to announce a national shelter-in-place mandate, a growing number of states have enacted sweeping measures, from closing all non-essential businesses to implementing shelter-in-place or shelter-at-home rules. While the specific parameters of these rules vary significantly among cities and states, they are generally intended to keep citizens at home except when they leave for food, medication, or exercise. As of late-March, over 220 million Americans were living under pandemic-related restrictions. On March 29, President Trump recommended extending existing social distancing guidelines through April 30, but states themselves still possess legal authority to follow minimum federal guidelines or implement more robust policies.

So far, the most adversely affected states are New York, Washington, and California. As of the last week of March, the majority of states have enacted strong measures, with a handful, mostly in highly conservative or libertarian areas, have enacted limited measures (see map for state-specific policy breakdowns).

In Denver, Colorado, for example, the Mayor announced that marijuana dispensaries and liquor stores were not “essential businesses.” Denver residents immediately stormed dispensaries and liquor stores, leading the city to reverse its decision a mere three hours later. The District of Columbia has yet to issue a formal shelter-in-place order, instead closing non-essential businesses and urging people to stay home. A formal shelter-in-place order for D.C. could compromise the functionality of the federal government, including Congress, which has demonstrated its woeful unpreparedness for working remotely. Many Capitol Hill staffers are continuing in-person work, despite worries about their own safety.

Elections

Despite widespread shutdowns resulting from the coronavirus, the presidential election campaign presses on. Former Vice President Joe Biden and Senator Bernie Sanders (D-VT) are the two remaining Democratic candidates. Despite disappointing, if not damning, results in early primary and caucus states, Senator Sanders has vowed to stay in the election in hopes of driving the Democrats’ national platform further to the left. Senator Sanders has also used the outbreak to renew calls for universal health care and an increase of the minimum wage. Surprisingly, the coronavirus has so far helped President Trump’s poll numbers, which have steadily climbed since the beginning of the outbreak. Trump has used his daily press briefings as free publicity, essentially treating them as televised campaign rallies. As of the end of March, his approval rating hovers near 50 percent, approaching the all-time high of his presidency.

In terms of elections logistics, a growing number of states have postponed special and primary elections in order to combat the spread of COVID-19. By late March, over ten states had postponed elections, leading the New York Times to ask “Is All of 2020 Postponed?” The bill included $400 million to fortify states against possible pandemic-related disruptions in elections. Many elections experts have already argued for enhancing mail-in voting, but states will also have to ensure that in-person voting remains possible and safe.

Conclusion

The U.S. currently leads the world in confirmed cases of COVID-19, which now exceeds 150,000 throughout the country, with New York the heaviest hit. Meanwhile, unemployment claims in the last few weeks have surpassed 3.3 million and show no signs of abating. Widespread protests are scheduled among gig workers, from Amazon warehouse employees to Instacart workers. These workers have been delivering food, medical supplies, and other essentials to consumers throughout the country but have themselves been denied basic protections, including hazard pay. A widespread strike could further exacerbate economic strains.

Overall, the response to the COVID-19 pandemic has been variegated across the U.S. Some states, such as New York, are confronting the pandemic head-on, while other states, such as Missouri and Mississippi, have yet to issue shelter-in-place requirements. Current projections anticipate a peak in U.S. COVID-19 cases during the month of April, putting more pressure on federal and state governments to act faster and with more funds.

The 535 is a publication of the Bertelsmann Foundation from our offices in Washington, DC. It connects the European Parliament and German Bundestag to U.S. Congressional policy and politics and contributes to a common transatlantic political culture. The 535 is a quarterly publication that highlights issues, legislation, and policymakers relevant to transatlantic legislative cycles.

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