What to Know in Washington: Trump Aides Draft Economic Measures

The Trump administration is drafting measures to blunt the economic fallout from coronavirus and help slow its spread in the U.S., including a temporary expansion of paid sick leave and possible help for companies facing disruption from the outbreak, according to three people familiar with the matter.

The economic package is still being debated and hasn’t yet been presented to President Donald Trump. Some of its components could change, while others, such as a sick leave plan, may require congressional action.

A small group of White House and Treasury officials worked on the proposal through the weekend, the people said. The timing of any of the economic measures is unclear, but they would likely be rolled out on a step-by-step basis, beginning with aid to individual Americans who are infected, then expanding to companies and workers affected by lost business.

Pressure is growing on Trump to take more decisive action in response to the virus outbreak, as the number of cases in the U.S. and worldwide continues to grow. Stock futures in the U.S. were down almost 5% in trading ahead of today’s market opening in New York, triggering exchange rules that limit declines.

Trump and his top economic adviser, Larry Kudlow, have both questioned whether a broad intervention would be needed in response to coronavirus, pointing to a strong jobs report on Friday. But Kudlow said the same day that limited measures might be considered.

The top two Democrats in Congress urged Trump yesterday to do more in response to the outbreak, including an expansion of affordable testing and stronger protections for health workers. Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) also called for making paid sick leave available to workers affected by quarantine orders and school closings.

“President Trump continues to manufacture needless chaos within his administration and it is hampering the government’s response to the coronavirus outbreak,” Pelosi and Schumer said in a joint statement.

A short-term expansion of paid sick leave is drawing the attention of top administration officials, the people said, because it would cost less than another proposal floated in recent weeks: a temporary payroll tax cut. Read more from Saleha Mohsin and Jennifer Jacobs.

Photographer: Chris J. Ratcliffe/Bloomberg

Fed Faces Fresh Pressure to Act: The Federal Reserve is under intensifying pressure to tackle the increasing risk of a worldwide credit crunch as falling commodity prices combine with the spreading virus to hammer financial markets. Less than a week since the U.S. central bank executed an emergency interest-rate cut, there is growing fear among investors that a liquidity crunch is emerging in money markets as stocks and bond yields continue their recent plunge.

A key gauge of banking-sector risk, known as the FRA/OIS spread, soared to its highest level since 2011, while dollar-swap spreads widened, suggesting stresses in U.S. markets are becoming increasingly severe. That could again force the Fed to take the lead with action if officials become worried that disorderly markets or a lending squeeze increases the likelihood of the world tumbling into recession. Read more from Enda Curran and Christopher Anstey.

More on the Coronavirus Response

Two GOP Lawmakers to Quarantine After Contact: Two Republican lawmakers will self-quarantine in their houses after contact at a recent political conference with a person who later tested positive for coronavirus.

Sen. Ted Cruz (R-Texas) will self-quarantine in his Texas home. He said he had a “brief conversation and a handshake” with the unnamed person at the recent CPAC conference in National Harbor, Md. “I’m not experiencing any symptoms, and I feel fine and healthy,” Cruz said in a statement, adding that authorities have advised him the odds of transmission given their brief interaction was “extremely low.” Those who’ve interacted with him in the last 10 days “should not be concerned about potential transmission,” medical authorities have told him.

Rep. Paul Gosar (R-Ariz.), a dentist by trade who had extended contact with the person at CPAC, said in a statement that he will close his Washington office for a week. Gosar and three senior staff members will self-quarantine this week, with Gosar staying at home in Arizona. Gosar said that he and his staff are not experiencing any symptoms. Read more from Derek Wallbank.

Americans Told to Avoid Cruises: The U.S. is asking Americans to avoid cruise ships just as it prepares to move more than 3,000 passengers and crew off the Grand Princess vessel off California following an outbreak of the new coronavirus on board. Medical teams will enter the cruise ship today after at least 20 people where confirmed to be infected with the virus. They’ll assess the condition of those on board the boat, which remains in open waters near Oakland, Calif., California Gov. Gavin Newsom (D) said yesterday. Patients who are most acute and in need of hospitalization will be the first to leave when the ship docks in Oakland, while others will be quarantined at military bases across the country. Read more from Dana Hull and Hailey Waller.

Fauci Says Scope Is ‘Not Encouraging’: “Social distancing” will become more prevalent in the U.S. over the next three months as the nation attempts to tamp down the spread of the new coronavirus, Anthony Fauci said yesterday. “We’re getting a better sense as the days go by” of the scope of the outbreak in the U.S., Fauci, director of the National Institute of Allergy and Infectious Diseases, said on NBC’s “Meet the Press.” “Unfortunately, that better sense is not encouraging, because we’re seeing community spread.”

“If you’re a vulnerable person, take it seriously, because particularly when you have community spread, you may not know at any given time that there are people who are infected,” Fauci said of the idea of social distancing, or actions that include avoiding large gatherings. “It’s common-sense stuff.” Read more from Elizabeth Dexheimer.

Governors Give Mixed Grades to Federal Response: Three U.S. governors fighting the new coronavirus debated the effectiveness of the federal government response, with two faulting mixed messages from the Trump administration and one saying he was grateful for the help. Read more from Steve Geimann.

Federal Funding, Help on Offer: The federal government is offering funding and assistance to drugmakers and medical device companies looking to develop new coronavirus vaccines and treatments, the health agency said Friday. Those products include diagnostic tests, vaccines, drugs to treat lung damage, ventilators, or medications that prevent infections after being exposed to the virus. Companies would work with the Biomedical Advanced Research and Development Authority, a branch of the HHS that helps with disaster preparedness. Read more from Jacquie Lee.

Adviser Birx is Rarity in White House: Deborah Birx, a medical doctor and retired Army colonel, was appointed to her post as the State Department’s global ambassador for AIDS prevention under President Barack Obama — and that’s usually enough to doom someone’s career in the Trump administration. But it’s a measure of her stature, and her political savvy, that she’s been elevated to coordinate the administration’s response to the coronavirus. “Her reputation is stellar,” said Jeremy Konyndyk, senior policy fellow at the Center for Global Development. She’s a natural choice, he said, “if you’re looking to try to bring a competent steady hand into this process and someone with a proven track record on global health matters.” Jennifer Jacobs, Shira Stein, Nick Wadhams and Glen Carey have more.

Sanders Says Eventual Vaccine Should Be Free: Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) says any eventual vaccine for the deadly novel coronavirus should be made available free of charge once developed and approved for use, Derek Wallbank reports. Democrats have increasingly called for affordability guarantees for medicines developed in part through taxpayer-funded research.

Elections, Politics & Policy

Trump Campaign Rallies Will Go On: Trump says he intends to continue holding large campaign rallies regardless of the threat posed by the growing coronavirus outbreak. “We will have tremendous rallies and we’re doing very well and we’ve done a fantastic job with respect to that subject on the virus,” Trump said before dinner Saturday with Brazilian President Jair Bolsonaro at his Mar-a-Lago resort in Palm Beach, Fla. Trump’s rallies, which draw thousands of rapturous supporters, were a signature of his 2016 campaign and remain the beating heart of his re-election bid. He held his most recent rally in Charlotte, N.C., on March 2, drawing a capacity crowd to the 9,600-seat Bojangles’ Coliseum, Mario Parker and Jennifer Jacobs report.

Meanwhile, Sanders said yesterday he would cancel large campaign rallies if asked to do so by state health officials, Magan Crane reports. Asked in an interview with NBC what he would do if his campaign was asked not to hold a big campaign event as part of an effort to stem the spread of coronavirus, he said, “Look, we’re not going to endanger the health of anyone in this country.” “We are talking to public health officials all over this country and obviously what is most important to us is to protect the health of the American people,” he said.

Joe Biden said yesterday he would follow the advice of public health officials if they suggest canceling Democratic presidential campaign rallies, Jennifer Epstein reports. At Pearl’s Southern Cooking in Jackson, Miss., Biden put some antibacterial gel on his hands before eating and told reporters he would consider ending large events. “We’re listening to the experts and the CDC and taking advice from them. Whatever advice they give me we’ll take,” he said.

Biden Aims to Run Up Delegate Lead with Michigan: Biden’s newfound momentum could bring him an insurmountable lead in delegates by mid-March, leaving Sanders with little power to stop the former vice president from becoming the 2020 Democratic nominee for president. Buoyed by primary wins on Super Tuesday, Biden’s now well-positioned to extend his delegate advantage over Sanders at the six nominating contests to be held tomorrow and from some or all of the four states that vote a week later. A strong showing this week raises the prospects for Biden to be in the lead for good on March 17, when 577 delegates — about 43% of Super Tuesday’s total — will be awarded. Read more from Gregory Korte.

Sanders is focused on the “enormously important” prize of Michigan, but said he doesn’t plan to drop out if he fails to win there. As he trails Biden, Sanders is eager for a repeat of the Michigan win he logged in his 2016 bid for the Democratic nomination, Jesse Hamilton reports.

Sanders scrapped a speech Saturday night that was supposed to make the case for why black voters should support him over Biden after determining it would be better for the black participants at the event to speak on the topic. At a town hall on “racial and economic justice” in Flint, Mich., Sanders was scheduled to deliver a prewritten speech that spokesman Mike Casca said would “directly address the African-American community” and contrast the Vermont senator’s record with Biden’s. Instead, Sanders delivered a roughly 30-minute version of his stump speech to a mostly white crowd and made little mention of issues of race. A six-person panel that included Cornel West, a Harvard philosophy professor and top Sanders surrogate, then addressed issues of racial inequities. Read more from Tyler Pager.

Harris Endorses Biden for President: Sen. Kamala Harris (D-Calif.) endorsed Biden yesterday, joining several former 2020 Democratic presidential hopefuls who’ve already backed the former vice president. “I believe in Joe Biden and will do everything in my power to help elect him the next president of the United States,” she said in a statement and a video posted on Twitter. Her endorsement comes after Biden’s strong Super Tuesday showing, including a better than expect performance in Harris’ home state, where Sanders’ lead has narrowed as primary-day ballots continue to be counted. Read more from Jennifer Epstein.

Biden, Sanders to Share Debate Stage Without Gabbard: The Democratic National Committee announced qualification criteria for the March 15 Democratic presidential debate that all but ensure Biden and Sanders will share the stage without Rep. Tulsi Gabbard (D-Hawaii). The rules announced Friday do away with the previous requirement of meeting a polling threshold. Instead, eligible candidates must have 20% of the delegates allocated in the 28 nominating contests that will have taken place by March 15, Max Berley reports.

Michael Bloomberg, the majority owner of Bloomberg Government’s parent company, also sought the Democratic presidential nomination. He endorsed Joe Biden on March 4.

Around the Administration

Trump Replaces Mulvaney With Meadows: Trump said that acting White House Chief of Staff Mick Mulvaney would be replaced by Rep. Mark Meadows (R-N.C.), changing the top leadership of the White House in the midst of the coronavirus outbreak. Trump said on Twitter that Mulvaney — who was in South Carolina on Friday night following a personal trip to Las Vegas, according to three people familiar with the matter — would become the U.S. special envoy for Northern Ireland. Meadows, a Trump ally and loyal defender of the president during the impeachment trial, had declined to run for re-election this fall. Mulvaney has had the job in an acting capacity for more than a year, but Trump said Meadows would be “chief of staff.” Read more from Jennifer Jacobs, Jordan Fabian and Billy House.

Trump Seeks More Time in Biofuel Waiver Case: The Trump administration is asking a federal court for 15 additional days to consider a possible appeal in a case threatening its ability to widely exempt oil refineries from biofuel-blending requirements. In a filing late Friday with the U.S. Court of Appeals for the Tenth Circuit, the Justice Department said more time is needed because the Jan. 24 ruling conflicts with the Environmental Protection Agency’s practice of issuing waivers under the Renewable Fuel Standard program. Read more from Jennifer A. Dlouhy.

Labor Group Sues to Block Rule That Hinders Organizing: The biggest labor confederation in the U.S. sued the Trump Administration to block a rule that would make organizing workers more difficult, Robert Burnson reports. The new rule was announced in December by the National Labor Relations Board and is scheduled to take effect April 16.

NCUA Probe Details Drinking, Strip Club Visits by Ex-Top Lawyer: While on the job, the National Credit Union Administration’s former top lawyer visited strip clubs, drank heavily and was accused of using marijuana, conduct that clearly violated the terms of his employment, the financial regulator’s inspector general said in a report released Friday. Joining ex-General Counsel Michael McKenna on his hours-long trips to strip clubs was his deputy, Lara Daly-Sims, according to the watchdog’s probe. Daly-Sims told colleagues and NCUA investigators that she felt pressured by McKenna to go along, as he was her boss and he was positioning her to be his successor, the report said. In a Friday statement, Daly-Sims’s lawyer said she filed a complaint with the NCUA accusing McKenna of sexual harassment that triggered the inquiry into his behavior. The inspector general’s investigation does not reference Daly-Sims making a harassment claim against McKenna. Read more from Jesse Hamilton.

Court Says Pentagon May Have Misjudged JEDI Bid: A federal judge overseeing Amazon’s challenge of its loss to Microsoft of a Pentagon cloud-computing contract said the Defense Department may have misjudged the software giant’s pricing proposal for the work. In a ruling unsealed on Friday, U.S. Court of Federal Claims Judge Patricia Campbell-Smith said it’s likely Amazon’s “chances of receiving the award would have increased” if it weren’t for the Pentagon’s errors. “Accordingly, the court concludes that plaintiff is likely to succeed on the merits of its argument that the DOD improperly evaluated” part of Microsoft’s price proposal, she said.

Campbell-Smith’s comments were part of a ruling that temporarily blocked Microsoft from working on the Pentagon cloud-computing project, known as the Joint Enterprise Defense Infrastructure, or JEDI, while Amazon’s lawsuit is litigated. The contract is worth as much as $10 billion over a decade. Read more from Naomi Nix.

AT&T Cooperates With DOJ in Google Probe: AT&T is cooperating with the Justice Department in its Google investigation, which is exploring whether the online search and advertising giant violated antitrust laws, Scott Moritz reports, citing a person familiar with the situation. The discussions are part of a probe into Google’s digital advertising and search operations, and antitrust officials have been meeting with a range of parties, people with knowledge of the matter have said previously. That includes discussions with companies and organizations other than those that have voiced complaints about Google in the past, such as Oracle, News Corp. and Yelp.

Defense & Foreign Affairs

Trump and Bolsonaro Discuss Venezuela: Trump hosted Brazilian President Jair Bolsonaro for dinner at his Mar-a-Lago resort in Florida on Saturday, where the two leaders discussed the U.S.-led effort to oust Venezuelan President Nicolas Maduro. The two men are mutual admirers who won election by appealing to nationalist sentiment in their countries. Along with Venezuela, they spoke about a future trade deal, the Middle East and collaboration in military research, according to a joint statement after the meeting. Read more from Samy Adghirni, John Harney and Mario Parker.

Trump to Host Irish Prime Minister: Trump will meet with Irish Prime Minister Leo Varadkar at the White House on Thursday to discuss economic/cultural ties and a “joint commitment to maintain the gains of the Good Friday Agreement,” the U.S. administration said in a statement.

North Korea Launched Three Projectiles: North Korea fired three unidentified projectiles Monday off its eastern coast, South Korea’s defense ministry said in a text message, in its second such launch in a week. South Korea’s Joint Chiefs of Staff said the three seem to have been launched from Sondok, and flew into the sea separating the country from Japan. Japan’s Coast Guard said the North Korea projectile didn’t land in its territorial waters and a Japanese public broadcaster said the projectiles appeared to be ballistic missiles. The launches come after a three month lull in testing and are the first such provocations since leader Kim Jong Un said Dec. 31 that he was no longer bound by a self-imposed freeze on major weapons tests. Read more from Jihye Lee.

Saudi Arabia Extends Crackdown on Royal Family: The crackdown on dissent against Crown Prince Mohammed bin Salman within the Saudi royal family widened on Saturday with the arrest of a fourth prince, the New York Times reported. The detention of Prince Nayef bin Ahmed, a former head of army intelligence, suggests the full extent of the action remains unclear, according to the newspaper, citing two Saudis close to the royal family. Prince Nayef is the son of Prince Ahmed bin Abdulaziz Al Saud, who was arrested the day before along with his nephews, former Crown Prince Mohammed bin Nayef and Prince Nawaf bin Nayef. Read more from Glen Carey and Vivian Nereim.

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com