What to Know in Washington: Trump Pivots to ‘Phase Two’

President Donald Trump fixed his course on reopening the nation for business, acknowledging that the move would cause more illness and death from the pandemic but insisting it’s a cost he’s willing to pay to get the economy back on track.

Trump shifted his rhetoric yesterday, removing cautionary caveats about when and whether states should reopen and instead presenting the imminent easing of stay-at-home rules as a fait accompli.

As governors across the South and Midwest have begun returning people to work, Trump said he’s pivoting to “phase two” of the nation’s response to the pandemic, a step that will include disbanding the White House coronavirus task force, a group of public health experts that has been advising the administration on how to confront the outbreak.

The president has for more than a month clamored for a return to normal, stuck between the devastating human cost of the pandemic and the calamity that has befallen the economy as social-distancing measures pushed more than 30 million people into unemployment in a matter of weeks.

Yesterday marked the first time he clearly and unreservedly laid out his own cost-benefit analysis of the situation. “Will some people be affected? Yes. Will some people be affected badly? Yes,” Trump said. “But we have to get our country open and we have to get it open soon.”

On his visit to a Phoenix Honeywell International factory producing medical masks, Trump encouraged Americans to think of themselves as “warriors” as they consider leaving their homes, a tacit acknowledgment of deep public reservations about reopening the country too soon.

The U.S. continues to endure the largest coronavirus outbreak in the world, with about 1.2 million people infected and more than 70,000 killed so far.

Speaking separately in an ABC News interview broadcast last night, Trump said closing down the nation was “the biggest decision I’ve ever had to make.” Read more from Jordan Fabian and Mario Parker.

Photo by Brendan Smialowski / AFP via Getty Images

Trump participates in a tour of a Honeywell International plant in Arizona.

Most States Fall Short of White House Reopening Criteria: States are debating whether and how to reopen their economies and lift social-distancing measures. But are they ready?

Last month, the White House Coronavirus Task Force laid out a series of “gating criteria” meant to guide states on lifting restrictions and getting back to normal. They include a decline in symptoms of the virus as monitored by local health networks, fewer cases or a declining percentage of positive tests, and hospitals systems that can handle the strain of the outbreak. Bloomberg News’s analysis found that 20 states that have lifted restrictions don’t meet the White House guidelines for reopening. Many are moving ahead anyway. Read more from Polly Mosendz and Cedric Sam.

Trump’s Schedule: The president will sign a proclamation today at 12:15 recognizing National Nurses Day, according to the White House schedule. Iowa Gov. Kim Reynolds (R) will visit Trump at the White House at 2 p.m. Iowa has reported nearly 1,500 cases of the virus at just three meatpacking plants.

White House Press Secretary Kayleigh McEnany will hold a briefing at 4 p.m.

Register for the BGOV Webinar today at 2 p.m.: Join Bloomberg Government as we examine health care policy during a global pandemic. This live discussion will cover the continuing response to the coronavirus and the implications for long-term health policy. Register here.

Happening on the Hill

Industries Pushing for Targeted Tax Relief in Pandemic Bills: U.S. industry groups, confronted with the economic damage wrought by the pandemic, have started asking lawmakers for more targeted tax relief. The requests, which come as Congress is starting work on the next coronavirus relief package, are likely to intensify in the coming months as businesses map out their plans for a post-pandemic world.

The alcoholic beverage industry, for example, hard hit by the closure of restaurants and bars, is looking for a number of breaks. The U.S. Alcohol and Tobacco Tax and Trade Bureau is already letting distillers, vintners, and breweries put off their federal excise tax payments for 90 days. But alcoholic beverage importers can only do so if their revenues have dropped more than 40%. Read more from Kaustuv Basu and Colin Wilhelm.

Lawmakers to Talk Aviation Industry Effects: Airlines and airports must adopt even more measures against the spread of Covid-19, some of which would imply major new costs for an industry already suffering steep losses, a public health expert will tell lawmakers. Passengers should be screened for elevated temperatures and all employees should be required to wear masks and gloves, according to prepared testimony by Hilary Godwin, dean of the University of Washington’s School of Public Health. In-flight seating, she said, must be arranged so that people aren’t too close together, and airports have to be reshaped to promote social distancing.

The air-travel industry and government agencies overseeing it must allow public health considerations to “play a far greater role than before this pandemic,” Godwin said in the remarks. She is among four witnesses scheduled to appear today before the Senate Commerce Committee in a hearing on the state of the airline industry during the coronavirus pandemic. Read more from Alan Levin and Ryan Beene.

Senators Can Hear Nominee Testimony Virtually: Trump’s latest nominee to the appellate court regarded as the second-highest court in the land will testify on Wednesday at his confirmation hearing during which senators may appear virtually in a nod to coronavirus precautions. The Senate Judiciary Committee will hear from Justin Walker, a federal district judge who’s nominated to the the U.S. Court of Appeals for the District of Columbia Circuit. A protege of Senate Majority Leader Mitch McConnell (R-Ky.) who’s already been through one successful confirmation last fall, Walker is expected to move through the chamber a second time despite Democratic opposition, Madison Alder reports.

• Walker received a “Well Qualified” rating from the American Bar Association yesterday less than a year after it found him “Not Qualified” for his trial court seat in Kentucky, Alder reports.

Economic Actions & Industry Pains

Layoffs Turn From Temporary to Permanent: In an American economy negotiating a downturn that is already being likened to the 1930s Great Depression, data on Friday is expected to show more than 20 million Americans lost their jobs in April. Although Covid-19 fatalities in the U.S. haven’t started to trend down yet, economists are beginning to see signs that the recession is bottoming out. Decision makers from Trump down to company CEOs are hoping more than $2 trillion in fiscal stimulus and the gradual lifting of restrictions could set the stage for a significant rebound this summer.

Yet a worrying trend is emerging from the stacks of layoff notices filed by businesses in California, Florida, and New York, where service industries have been hammered by lockdown orders, as well as politically important swing states such as Michigan and Ohio, where key industries such as steel and autos already faced headwinds going into 2020. Plenty of layoffs that just a month ago were labeled “temporary” are now tagged “indefinite” or “permanent.” Alongside announcements of sweeping staff cuts by major employers such as Boeing and U.S. Steel and the accelerating pace of downsizing in brick-and-mortar retailing, such notices are a sign that even as businesses continue to hope for a speedy recovery, they are starting to plan for a slow one. Read more from Shawn Donnan and Joe Deaux.

Trump Extends Deadline to Return PPP Loans: The Trump administration is extending until May 14 the date companies can return loans from a popular coronavirus relief program without penalty. The Treasury Department and Small Business Administration had set May 7 as the date for firms to repay loans from the Paycheck Protection Program, but said in updated guidance posted yesterday that it’s extending the repayment date by a week. Read more from Mark Niquette.

Esper Warns of ‘Legacy Systems’ Cuts: Defense Secretary Mark Esper signaled he’d protect major weapons programs from budget cuts and continue to target older “legacy systems” if the Pentagon is faced with flat or reduced funding amid surging federal spending to combat the coronavirus crisis. “My inclination is not to risk any of the modernization programs” but “to go back and pull out more of the legacy programs,” Esper told reporters. “We need to invest those dollars into the future.” Esper acknowledged that the Pentagon, which has been looking at flat budgets beyond its $705 billion fiscal 2021 request, may face new pressure in the wake of about $3 trillion in unanticipated federal spending related to the virus pandemic. Read more from Tony Capaccio.

Meat Plant Virus Rates Hit 50%: More than half of workers at some American meat plants tested positive for coronavirus. Employees are still out sick, keeping production slow even as some facilities reopen, and grocers such as Kroger and Costco are rationing supplies. Even Wendy’s dropped burgers from some of its menus. The supply shortfalls and soaring prices underscore the challenges of quickly fixing America’s broken meat supply chain. Read more from Mike Dorning.

• Meanwhile, Vice President Mike Pence will travel to Iowa on Friday, as the state combats coronavirus outbreaks in meatpacking plants that threaten the U.S. food supply. Gov. Reynolds will visit the White House today to discuss the outbreak. Read more from Jennifer Jacobs.

Courts Request More Virus Aid: Federal courts need $36.6 million to address “emergent needs” in combating the coronavirus outbreak, including enhanced courtroom cleaning, health screenings, and teleworking infrastructure, the Administrative Offices of the U.S. Courts, the administrative arm of the judiciary, announced yesterday. Kimberly Strawbridge Robinson has more.

Trump Administration Sued by Migrants’ Kids for Denied Virus Aid: The Trump administration was sued over a provision in the coronavirus relief package that bars U.S.-citizen children of undocumented immigrants from getting stimulus payments. A group of seven children and their parents claim the law violates the children’s constitutional rights. The Trump administration also is being sued by citizens denied virus aid because they are married to undocumented immigrants. Read more from Bob Van Voris.

Research, Treatment & Cooperation

Trump’s Malaria Drug Tout Cost Millions: Trump has stopped talking about the decades-old antimalarial drug that he once touted as a “game changer” for Covid-19, but it won’t be as simple for the rest of the health system to just move on. When Trump first began touting the drug in mid-March, a frenzy ensued as hospitals, patients and doctors raced to secure supplies. Many believed even if the drug didn’t turn out to be an effective coronavirus treatment, it might be able to ward off infection. Anna Edney has more.

Gilead Treatment Rekindles Push to Rein In Prices: Gilead Sciences, maker of the novel coronavirus treatment remdesivir, faces a challenge from advocates of drug-pricing controls who want to set an example for the pharmaceutical industry. Some lawmakers on Capitol Hill and advocacy groups aligned with Democrats are making the case to include in the next coronavirus response package provisions to deny drugmakers such as Gilead exclusive rights to treatments and vaccines for the virus, as well as require price transparency for companies bringing new medicines to market. Read more from Alex Ruoff.

Covered Patients May Face Steep Virus Bills: Covid-19 patients with short-term health plans—which typically have restrictions on coverage—could find themselves on the hook for tens of thousands of dollars. The HHS has said the government will pay for coronavirus testing—but not treatment—of people with short-term plans. Trump has touted the health plans as a more affordable alternative to Obamacare, even though they may lack the coverage protections of policies created under the Affordable Care Act.

Many short-term plans have limits on what they’ll pay for hospital coverage, as well as overall yearly maximums.The plans usually cost less than comprehensive plans, but people may not be aware of their limitations until they incur medical costs that aren’t covered. Read more from Sara Hansard.

HHS ‘Disappointed’ Ousted Official Has Not Shown Up to Work: A spokesperson for the HHS says former Biomedical Advanced Research and Development Authority Director Rick Bright has not appeared at the NIH, where he was reassigned to work on diagnostics testing for Covid-19. Bright, who wants to remain BARDA director, was moved to NIH after he disagreed with his supervisors at the Department of Health and Human Services over the seriousness of the threat of the novel coronavirus, shortages of protective gear and contracts that went to companies with political connections, reports Anna Edney.

• Rep. Anna Eshoo (D-Calif.), chairwoman of the House Energy and Commerce Health Subcommittee, yesterday announced plans to hold a hearing on Bright’s whistleblower complaint next week.

Elections, Politics & Influence

Democrats Ordered to Reinstate Primary: The New York primary election is back on track after a federal judge ordered state Democratic officials to reinstate the vote on June 23 in response to Democratic presidential candidate Andrew Yang’s challenge to its cancellation. Numerous states rescheduled their presidential primary elections due to Covid-19 but New York is violating voters’ constitutional rights by having canceled the primary, U.S. District Judge Analisa Torres said in an order yesterday. Read more from Malathi Nayak.

Congressman Sues to Define Limits of Whitmer’s Power: Rep. Paul Mitchell (R-Mich.) is asking a federal court to throw out all of Michigan Gov. Gretchen Whitmer’s (D) “orders, rules, and enforcement activity” related to the pandemic, alleging the first-term Democrat has stretched her authority beyond U.S. and state constitutional boundaries. “In short, Mitchell brings this lawsuit to define the limits of a State’s police power,” the lawmaker said in a complaint filed in the U.S. District Court for the Western District of Michigan. Read more from Alex Ebert.

Virginia Temporarily Drops Witness Mandate For Absentee Voting: Virginians won’t need a witness when they sign absentee ballots for the state’s June 23 primary. The requirement is being temporarily waived under the settlement of a lawsuit approved by a federal court yesterday. Read more from Andrew M. Ballard.

What Else to Know Today

China Says Pompeo Has No Evidence Virus Escaped From Lab: China fired back at Secretary of State Michael Pompeo, saying he has no evidence to back up claims that the virus that causes Covid-19 escaped from a lab in the central city of Wuhan. The U.S. attacks on China were part of an election year strategy by Trump’s Republican Party ahead of this year’s election, Chinese Foreign Ministry spokeswoman Hua Chunying said today. She pointed to the World Health Organization’s assertion that the virus couldn’t be man-made, and repeated a denial from a top Wuhan laboratory official given to state media last month. Read more.

• Meanwhile, Taiwan urged the World Health Organization to allow it to rejoin a key global health assembly later this month despite objections from China, as Taipei pushes for more inclusion in international bodies. Taiwan needs a seat at the WHO’s annual decision-making meeting, the World Health Assembly, on May 18 to allow it access to firsthand information about the spread of the coronavirus pandemic, health minister Chen Shih-chung said at a briefing in Taipei today. Read more from Samson Ellis.

Trump Backs Putin’s Nuclear Powers’ Summit: Trump supports Kremlin leader Vladimir Putin’s proposal to hold a summit of the five permanent members of the United Nations Security Council, the American ambassador to Moscow said in an interview with a Russian news service. Trump sent a message recently to President Putin describing the initiative as a “good idea,” the Interfax news service cited U.S. Ambassador John Sullivan as saying in the interview published today. The agenda and details of the time and place for the meeting are now under discussion, he said. Read more from Henry Meyer.

Ginsburg Hospitalized for Gallbladder Ailment, High Court Says: Justice Ruth Bader Ginsburg underwent non-surgical treatment for a benign gallbladder condition and will be in the hospital for a day or two, the U.S. Supreme Court said. Ginsburg, 87, the court’s oldest justice and a four-time cancer survivor, had been suffering from a gallstone, which caused an infection, according to a statement from the court. She is “resting comfortably,” the court said, and plans to take part in today’s two arguments, which the court is conducting by telephone because of the coronavirus. Read more from Greg Stohr.

U.S. Puts Ball in Israel’s Court on Annexation: The U.S. is ready to recognize an Israeli declaration of sovereignty over the Jordan Valley and Jewish settlements in the West Bank, according to an interview with U.S. Ambassador to Israel David Friedman. Friedman spoke to Israel Hayom newspaper as Israeli Prime Minister Benjamin Netanyahu and rival Benny Gantz plan to implement a power-sharing agreement that allows for movement on annexation to begin on July 1. Friedman largely restated policies the U.S. laid out in its Middle East peace plan introduced in late January, which the Palestinians have flatly rejected because it falls far short of their demands. Read more from Alisa Odenheimer.

Russian Fighters a ‘Force Multiplier’ in Libya: Russian operatives are engaged in a large-scale campaign in Libya to bolster eastern commander Khalifa Haftar through a mix of technical support, direct involvement in combat operations and sophisticated influence campaigns, according to United Nations analysts. About 800 to 1,200 mercenaries from the Wagner group, headed by a confidant of President Vladimir Putin, have been actively operating in Libya since 2018, including at least 39 Russian snipers on the front lines, UN experts monitoring sanctions on the North African country wrote in their first extensive report on mercenaries, which was viewed by Bloomberg. Read more from David Wainer.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

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