What to Know in Washington: Trump Backs Off ‘Total Authority’

President Donald Trump backed away from his claim that he had total authority to order states to reopen the economy after a backlash from governors who said he was overstepping his constitutional powers.

“They know when it’s time to open, and we don’t want to put pressure on anybody,” Trump said yesterday at a White House press briefing. “I’m not going to put any pressure on any governor to open.”

Trump’s comments came a day after he said he had “the ultimate authority” to order states to comply with a federal plan to reopen the economy. His remarks sparked broad criticism from legal scholars and governors, including New York’s Andrew Cuomo, who warned of “a constitutional crisis like you haven’t seen in decades” if the president sought to lift social-distancing requirements over states’ objections.

Trump said a teleconference with governors would likely be held on Thursday, and predicted they will be “very, very respectful of the presidency.” When asked if he would withhold federal aid from states that don’t abide by his suggestions for a reopening strategy, Trump said he wasn’t making a threat and predicted state leaders “will listen” to his advice and requests.

“We’re going to work with the governors. The governors are going to do a good job,” Trump said. “And if they don’t do a good job, we’re going to come down on them very hard. We’ll have no other choice.”

The president did say the federal government would block governors from ending social-distancing practices early if federal health officials determined it was unwise, adding that he wanted states like New York — the epicenter of the pandemic — to take their time coming back online.

Trump’s remarks appeared to be a reversal after legal experts and some governors disputed his claim that he had the authority to order states to comply with his wish to reopen businesses. The 10th Amendment to the Constitution reserves for states all powers that aren’t specifically granted to the federal government. Read more from Jordan Fabian and Justin Sink.

Trump to Talk to CEOs: Trump said he’s tapping the country’s most prominent business executives, including Jamie Dimon, Tim Cook and Doug McMillon, to help revive the economy as the coronavirus pandemic shows signs of easing in some parts of the country. “They’re going to give us some ideas,” Trump said yesterday at the briefing, where he unveiled a sprawling list of dozens of CEOs from industries ranging from agriculture to defense. He said the leaders would participate in “economic revival” groups, but didn’t elaborate on how they may shape the administration’s policies. Read more from Jordan Fabian and Jennifer Jacobs.

Read the full list of dozens of companies involved here.

Separately, the Business Roundtable, a lobbying group representing chief executives of major companies, urged the White House to follow a strategy of reopening the economy from the coronavirus pandemic that is “guided by public health officials.” The group’s president, Joshua Bolten, wrote in a letter to the White House yesterday that the administration should make public safety a priority, underscoring the need for federal guidance. Read more from Ben Brody.

Photographer: Stefani Reynolds/CNP/Bloomberg

Trump at the White House on Tuesday.

What to Watch Today

Trump hosts a series of industry phone calls:

• 10 a.m.—Banking, financial services, food and beverage, hospitality and retail industry groups
• Noon—Health-care, tech, telecommunications, and transportation industry groups
• 2 p.m.—Agriculture, construction, labor, workforce, defense, energy, and manufacturing industry groups
• 3:30 p.m.—Sports industry groups

The White House Coronavirus Task Force hosts a press briefing at 5 p.m.

Lawmakers Next Steps and Spring Look Ahead: The urgency of legislation to address the coronavirus pandemic and the need for social distancing are upending the congressional calendar and other 2020 priorities. Download the BGOV webinar by Bloomberg Government legislative analysts and reporters.

Economic Actions & Industry Pains

Airlines, Treasury Reach Tentative Deal: U.S. airlines have struck preliminary agreements with the Treasury Department to access billions of dollars in aid as the government attempts to shore up one of the industries hardest hit by the coronavirus pandemic. The deal covers all major carriers, the Treasury said in a statement. American Airlines, for example, said it would get $5.8 billion in total support while Southwest Airlines said it will receive $3.2 billion. The government is doling out $25 billion in payroll assistance allocated for passenger carriers in the $2.2 trillion stimulus package signed into law March 27. Read more from Saleha Mohsin and Mary Schlangenstein.

Mnuchin’s Partnership with Fed Blurs Agency Lines: Treasury Secretary Steven Mnuchin has forged a crisis partnership with Federal Reserve Chairman Jerome Powell, giving the central bank a bigger role in U.S. fiscal policy and blurring the lines between the agencies as they unleash $4.5 trillion in stimulus to combat the coronavirus. Mnuchin and Powell work together on the coronavirus rescue “round the clock,” according to the Treasury secretary. Already, the 106-year-old central bank is lending directly to main street businesses for the first time since the Great Depression.

Some analysts and former government officials see an erosion of the Fed’s traditional independence from politicians in the White House and Congress, as well as a central bank straying from monetary policy — the supply of dollars — into tax-and-spend fiscal policy. The risk is that “fiscal dominance” of the Fed could raise inflation or create currency and banking crises down the road, said Mark Sobel, who was a civil servant at Treasury for more than 40 years. “This crisis is blurring the boundaries between fiscal and monetary policy,” he said. Read more from Saleha Mohsin.

Fed Help Leaves Black-Majority Cities On Their Own: The Federal Reserve’s decision to extend loans only to the most-populous local governments may have a stark, if unintended consequence: excluding some of the cities and counties with the biggest share of black residents. Baltimore, Atlanta and Detroit, a formerly bankrupt city that’s been dealing with a major outbreak of Covid-19, are among cities that don’t qualify for help, according to a report released yesterday by the Brookings Institution. Only cities with more than 1 million residents—and counties with more than 2 million—will be able to take out loans from the central bank to cover short-term deficits as the coronavirus shutdown decimates their tax revenues. As a result, none of the 35 cities with the biggest share of black residents will qualify, Amanda Albright and Craig Torres report.

Small Construction Firms Top List for Virus Loans: Construction firms have had a larger share of loans approved than other industries so far under a government program meant to help small businesses survive the coronavirus outbreak, and the average loan amount for all applications has been about $239,000, a new report shows. The U.S. Small Business Administration yesterday released the most comprehensive report to date of the $349 billion Paycheck Protection Program, a cornerstone of the federal government’s $2.2 trillion response to the pandemic. It details more than 1 million applications totaling $247.5 billion approved as of Monday. Read more from Jason Grotto.

Colleges Seek Access to Federal Lending: College groups are seeking clarity on whether higher-education institutions qualify for a federal lending program designed to soften the economic blow of the pandemic. The Federal Reserve’s “Main Street” lending program will provide $600 billion to small- and mid-sized businesses. But details about the program the Fed and Treasury Department released suggest nonprofits and colleges might not qualify. Higher-education lobbyists say they’ll urge that colleges be deemed eligible for the program as they look for any tools available to keep vulnerable institutions open in the face of huge losses from the pandemic. Read more from Andrew Kreighbaum.

Automakers Will Need Months to Restart Factories: Automakers are anxious to get their assembly lines rolling again, especially since leaving factories idle is costing them billions of dollars by the week. But the experience many of them have had in China illustrates just how long a slog it’s going to be before plants are producing at anywhere near pre-shutdown levels. It took almost two months for most of China’s industry to return to some semblance of normalcy — and that was with the benefit of mobile apps the government installed on citizens’ cell phones to track their movements and potential exposure to Covid-19 infected people. Read more from Gabrielle Coppola.

IRS Braces for Scammer Onslaught: The Internal Revenue Service is bracing for another epidemic: scammers trying to get their hands on the $1,200 checks being sent out to millions of Americans to bolster the economy. The payments, plus an additional $500 for each child, have begun hitting bank accounts this week, opening a wide avenue of opportunities for scams, identity theft and low-tech crimes such as stealing checks from mailboxes. Laura Davison has more.

IMF Urges Post-Pandemic Stimulus: The International Monetary Fund wants policy makers to avoid repeating the Depression-era mistake of ratcheting back budget deficits. Instead, it’s urging them to ramp up fiscal stimulus when the coronavirus contagion starts to abate. “Once the recovery has happened and we are past the pandemic phase, for advanced economies it would be essential to undertake a broad-based stimulus,” IMF chief economist Gita Gopinath told reporters yesterday. “This would be even more effective if it were coordinated across all the advanced economies.” Read more from Rich Miller.

Trump’s Signature Will Appear on Coronavirus Stimulus Checks: Trump’s signature will appear on the $1,200 checks being mailed to low- and middle-income households in the coming weeks, according to two officials familiar with the decision. Typically, a civil servant’s signature — the disbursing officer for the payment center — would appear on regular government benefit checks or one-time economic stimulus payments. Read more from Saleha Mohsin and Laura Davison.

Research, Treatment & Coordination

State Coalitions Race to Fight Virus: U.S. states are creating separate and growing confederations to set common policies on coronavirus tests, tracking patients and setting standards for resuming social and economic life. California Gov. Gavin Newsom (D) yesterday laid out rough benchmarks for reopening his state’s economy — and radically reshaping daily life — as he tried to bring other states into his West Coast coalition to fight the new coronavirus. The move came as New York Gov. Cuomo, who has marshaled seven Northeastern states, sparred with Trump over re-opening. And in the Midwest, another group of states is considering its own unified effort.

The remarkable ad hoc efforts, while more concrete than any plans publicly advanced by the federal government, also raised the possibility of a nation split into discrete regions, with their own standards and timelines for easing stay-at-home orders. That could hamper the larger fight against a virus that has already killed more than 25,000 Americans, as experts warn that lifting restrictions too soon would risk another surge of infections. Read more from David R. Baker and Brian Eckhouse.

Trump Halts WHO Funding: Trump said he’s instructed his administration to temporarily halt funding to the World Health Organization for taking Beijing’s claims about the coronavirus “at face value” and failing to share information about the virus as it spread. “The WHO failed in its basic duty and must be held accountable,” Trump said at a White House press conference yesterday. “The outbreak could have been contained at its source” if the organization had correctly responded early on, he added.

Trump is likely to get full support from Republicans in Congress. Several GOP lawmakers, such as Sens. Martha McSally (Ariz.), Rick Scott (Fla.) and Ron Johnson (Wis.), who yesterday sent a letter to the WHO requesting information ahead of a congressional investigation into the organization’s role “helping Communist China cover up information regarding the threat of the Coronavirus,” according to a press release. The U.S. has contributed about $893 million to WHO’s operations during its current two-year funding cycle, according to the organization.

House Democrats denounced Trump’s decision, saying he lacks the legal authority to do so and, like his withholding of aid to Ukraine, it would be a violation of the law. “In a desperate attempt to deflect blame, President Trump is threatening to violate the same spending laws that brought about his impeachment,” House Appropriations Committee spokesman Evan Hollander said in a statement. “The president does not have the unilateral authority to withhold the United States’ assessed contribution to the World Health Organization.” Jordan Fabian has more.

China criticized the move and pledged to support the global health body. China has “serious concerns” about the decision and called on the U.S. to fulfill its responsibilities, foreign ministry spokesperson Zhao Lijian said at a briefing in Beijing today. “This U.S. decision will weaken the WHO’s capabilities and undermine international cooperation,” Zhao said, adding: “China will as always support the WHO in playing an important role in international public health and global anti-epidemic response.” Read more.

U.S. to Boost Payment for Abbott’s Covid-19 Test: The U.S. government will nearly double the amount it pays hospitals and medical centers to run Abbott Laboratories’ large-scale coronavirus tests, an incentive to get the facilities to hire more technicians and expand testing that has fallen significantly short of the machines’ potential. Abbott’s m2000 machines, which can process up to 1 million tests per week, haven’t been fully used because not enough technicians have been hired to run them, according to a person familiar with the matter. Members of the White House’s coronavirus task force talked with lab directors on several occasions last week to determine what was causing the holdup, after Deborah Birx, a top State Department health official, said they were running at less than 10% of their capacity.

The reasons behind the delay were inexcusable to Birx and Seema Verma, head of the Centers for Medicare and Medicaid Services, said the person, who declined to be identified because the information isn’t public. The two officials acted quickly over the weekend to address the issue, and raised the amount CMS pays to $100 per test, up from about $51, the person said. Read more from Michelle Fay Cortez.

Questions About Coronavirus Immunity: Understanding the level of viral immunity in survivors of Covid-19 will prove key in making decisions about how and when to lift restrictions. But not all virus infections result in life-long protections. For example, human immunodeficiency virus, or HIV, doesn’t usually provide any protective shield. When it comes to SARS-CoV-2, the virus that causes Covid-19, little is known yet about the body’s immune response to an infection, health specialists say. Read more from Kristen V Brown.

Politics and Elections

Biden Relishes in One-Two Punch of Sanders, Obama Endorsements: Sen. Bernie Sanders (I-Vt.) and Barack Obama’s back-to-back endorsements this week cemented the Democratic Party behind Joe Biden as the presumptive nominee and demonstrated the careful calculus of party leaders to unite its once-warring progressive and moderate wings.

First came the vanquished rival. The Biden camp wanted Sanders to endorse before Obama to ensure the Vermont senator was genuinely behind the campaign, according to a Democrat familiar with the campaign’s strategy. It also allowed Obama to swoop in to close the Democratic contest, using his power as the party’s undisputed leader to unite the factions represented by the two candidates.

The danger for Biden is that with the coronavirus pandemic sidelining political events, he may miss the full effect of what could have been one of his biggest campaign moments to date. With the nominating convention potentially in doubt, he can’t afford to miss too many other headline moments, especially with an incumbent dominating the day’s headlines with a daily briefing. Read more from Tyler Pager.

Trump’s GOP Blames China for Coronavirus With Eye on 2020: Republicans are ratcheting up efforts to paint China as the villain in the coronavirus pandemic, seeking to shift blame as Trump faces increased criticism of his handling of a crisis that has shuttered the U.S. economy. The Trump campaign yesterday sent out a fundraising email that accused China of “lying” about the outbreak and saying the country must be held accountable, language that is harsher than the president has used himself.

Sen. Josh Hawley (R-Mo.) introduced a bill that would make the Chinese government liable for civil claims in U.S. courts if it’s found to have withheld information related to the virus. And House Republicans’ election committee issued a statement calling a freshman Democrat who flipped a Republican-held seat in 2018 a “Chinese asset.” Read more from Mario Parker and Billy House.

States Lagging in Mail Voting: Eight states lag behind the rest of the nation when it comes to vote-by-mail or expanded absentee ballot access in response to Covid-19, according to anti-corruption advocacy group Represent Us. The bipartisan national campaign wants all 50 states to make Vote by Mail available for the November election, given the health risks that could come from crowded polling locations. The “Late Eight” are Connecticut, Kentucky, Louisiana, Mississippi, Missouri, South Carolina, Tennessee, and Texas, Shaun Courtney reports.

• Meanwhile, the New Mexico Supreme Court said no to all-mail voting for the state’s June 2 primary, despite concerns about the health of voters and election workers during the pandemic, Brenna Goth reports.
• Kentucky voters will be required to show a photo ID to cast votes for president under a law enacted by the Republican-led state Legislature over the Democratic governor’s veto, Alex Ebert reports.

Louisiana Postpones Democratic Primary: Louisiana voters will for now be the last to select their preferences for presidential nominees after Gov. John Bel Edwards (D) postponed the primary date to July 11 because of the cornonavirus pandemic. It’s the second time Edwards has pushed back the election date in response to the spread of the virus. The election was originally scheduled for April 4 and delayed until June 20. Louisiana has been hard-hit by the cornavirus, with 21,518 cases and 1,013 deaths. Read more from Gregory Korte.

What Else to Know Today

New York Sues Trump Administration Over Covid-19 Paid Leave: The Trump administration is unlawfully excluding many workers from new coronavirus-related paid leave benefits, New York’s top attorney said in a lawsuit. A recent Labor Department regulation denies emergency paid sick and family leave to health-care employees and other workers Congress intended to cover, New York Attorney General Letitia James alleged in a complaint filed yesterday. Read more from Ben Penn.

Guatemala Says Infected Deportees Caused Virus Spike: Deportees from the United States are causing the number of confirmed cases of the novel coronavirus in Guatemala to rise, Health Minister Hugo Monroy said yesterday. Between 50% to 75% of people recently deported from the U.S. have tested positive for the virus, Monroy said after visiting Congress to discuss the outbreak with lawmakers. He insisted the U.S. send deportees to Guatemala with health documents certifying they are virus free, Michael McDonald reports.

Thompson Says DHS Watchdog to Testify: House Homeland Security Chairman Bennie Thompson (D-Miss.) said he received notice from DHS Inspector General Joseph Cuffari that he amended his office’s public summary of a report examining the death of an eight-year-old Guatemalan child in U.S. Border Patrol custody in December 2018, according to a statement from Thompson. Cuffari says he is committed to testifying publicly before Thompson’s panel about child deaths in CBP custody, Thompson said in the statement. Read the letter here.

Republicans Show Inspector General Support: Two Republican senators, Rob Portman (R-Ohio) and James Lankford (R-Okla.), said in a letter yesterday to Trump that inspectors general are important, particularly in times of crisis such as the pandemic, and urged him to not rely on acting IGs but to nominate ones to execute the posts in a formal capacity. Trump has recently ousted and criticized several inspectors general in recent weeks, including two leading coronavirus-related efforts and the intelligence community’s watchdog whose report to Congress led to Trump’s impeachment. Read the letter here.

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