What to Know in Washington: Trump Plan Leaves Decision to States

Days after insisting he had absolute authority to steer the country’s economic recovery from the coronavirus outbreak, President Donald Trump instead handed over the keys to governors and businesses.

Trump issued guidelines yesterday for states to consider as they decide whether to relax stay-at-home orders and other social-distancing measures enacted to curb the spread of the virus. The brief document lays out a three-stage process and leaves many difficult decisions to statehouses.

The president set no deadlines, demanded no particular action and offered little federal assistance. One page of the document says that states undertaking a resumption of normal life should plan to “independently” secure protective gear and medical equipment for their hospitals. Businesses are advised to come up with their own protocols for temperature checks, protective gear, sanitation and testing.

“A national shutdown is not a sustainable long-term solution,” Trump said yesterday at his daily White House news conference. “Now that we have passed the peak in new cases, we’re starting our life again.”

Trump said that 29 of the 50 states qualified to begin the reopening process his administration laid out or would be ready soon, naming Montana, North Dakota and Wyoming. He agreed with a questioner who suggested Hawaii.

In the best case, a state could abandon all but minimal social distancing practices within a month, under the plan. Yet it’s not clear whether most governors, business owners and workers share the president’s optimism that it will soon be safe to risk easing measures that only now appear to be slowing the virus’s spread in some hot spots, while cases and deaths continue to rise across the country.

In North Dakota and Wyoming, the number of cases is still rising, which may disqualify those states from attempting to reopen under Trump’s guidelines. Hawaii Governor David Ige, a Democrat, is “working with his cabinet and others to determine what specific milestones will be needed for Hawaii to begin a phased reopening,” spokeswoman Cindy McMillan said.

McMillan said the state does not yet believe it meets the federal criteria. Read more from Josh Wingrove, Justin Sink and Polly Mosendz.

U.S. to Lead Global GDP Contraction: Few countries in the world have been spared from the devastating economic consequences of the coronavirus outbreak. But no economy will have a bigger impact on global growth than the U.S. The leader in confirmed Covid-19 cases, the U.S. is expected to account for 31% of this year’s decline in worldwide gross domestic product, according to Bloomberg calculations using International Monetary Fund data. That’s more than twice the country’s share of global output. Overall, the IMF forecasts the global economy will contract 3%, the most in almost a century, before soaring almost 6% in 2021. Read more from Alex Tanzi and Wei Lu.

What to Watch Today

The House holds a pro forma session at 11 a.m.

Trump holds a phone call with faith leaders on the economy.

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

Economic Actions & Industry Pains

SBA’s Response Was Swift, But Not Smooth: Congress handed the colossal task of quickly getting $349 billion in pandemic relief for mom-and-pop firms to a small, understaffed federal agency that was overwhelmed from the program’s start.

Yet, after a glitch-plagued beginning, the Small Business Administration managed to approve applications and guarantee all the loans in just 13 days, dwarfing its previous record of $30 billion spread out over an entire year. With the funds now tapped out, many businesses remain in the cold, while some that received loans are still wondering when money will move into their accounts.

Questions remain about the handling of loans, including potential inequities between states — for example, why Texas got more than California, according to the most recent figures available — and whether the rapid pace at which money is being approved raises questions about the potential for fraud. Read more from Mark Niquette and Naomi Nix.

Congress is debating adding an additional $250 billion to PPP, and small business advocates are calling on lawmakers to add more money for the disaster loan program as well. About 100 members of Congress signed a letter yesterday to SBA Administrator Jovita Carranza with concerns about the EIDL program, saying they would strongly back a request for more funding. House Minority Leader Kevin McCarthy (R-Calif.) told reporters he supports adding money to the program, and a Senate Democratic bill floated last week included money for it.

Senate Minority Leader Chuck Schumer (D-N.Y.) and Speaker Nancy Pelosi (D-Calif.) spoke with Treasury Secretary Steven Mnuchin yesterday afternoon, and talks are ongoing, according to a statement released last night by a Schumer spokesperson. Democrats wants changes to the small business loan program, as well as more funding for hospitals and state and local government. Read more from Mark Niquette and Jennifer Jacobs.

  • Meanwhile, local and state governments renewed calls for federal support. At least $250 billion for local government relief is needed from Congress, the National Association of Counties, National League of Cities and the U.S. Conference of Mayors said yesterday in letters to Congress and the Trump administration. Three Democratic governors from Michigan, Wisconsin and Pennsylvania in a letter to Trump backed a bipartisan call from the National Governors Association for $500 billion to support the states during the crisis, in addition to funds for local governments, Sam McQuillan and Michael J. Bologna report.
  • States will likely opt out of extending the full swath of federal pandemic relief to their businesses, as they face shuttered state houses and potentially limited benefits. The federal tax code changes in the latest stimulus law are meant to help businesses suffering from economic upheaval during the pandemic. Included in the package was a temporary increase of the tax code Section 163(j) limit on deductions for business interest payments to 50% from 30% of adjusted taxable income. Read more from Tripp Baltz, Michael J. Bologna and John Herzfeld.

Lag in Relief Oversight Risks Repeat of Berry Martinis: The last time Congress disgorged billions of dollars to treat a national emergency, some of the money went to an evening reception for housing counselors who enjoyed strawberry shortcake martinis and were served from a carved beef station. Such questionable spending would be a plum target for watchdogs charged with monitoring the $2 trillion coronavirus relief voted by Congress. But first they’ll have to be assigned to the job. Three weeks after Congress set the spending in motion, and with money beginning to flow to thousands of businesses and millions of households, there’s little progress on naming overseers for the cascade of spending.

Congress is out of town until next month, while a congressional panel that is to have five members limps along with one appointee, who has no staff and can wield little more than a Twitter account. Trump has signaled hostility to oversight, sidelining the inspector general named to monitor all pandemic spending, and clashing with Democrats over how much independence to grant the overseers. Read more from Todd Shields, Jason Grotto and Saleha Mohsin.

  • The head of the Senate panel overseeing Federal Reserve and Treasury Department efforts to boost the U.S. economy urged the agencies to provide “quick” guidance to the market on the terms and eligibility for federal pandemic relief. Senate Banking Chairman Mike Crapo (R-Idaho) also reminded the two agencies in a letter released yesterday of the disclosure requirements under the stimulus enacted last month that empowered them to disburse billions of dollars into the U.S. economy reeling under the coronavirus. Read more from Saleha Mohsin.

Restart of U.S. Economy to Hinge on Mexico, Canada Help: What if Mexico and Canada don’t have the same timetable as the U.S. in mind for reopening the economy? Manufacturers in sectors ranging from chemicals to electronics have suppliers across the continent’s national borders. The automotive industry, which halted operations weeks ago to protect workers from the Covid-19 pandemic, is also contemplating how to reboot in North America. Much of the uncertainty about timing revolves around Mexico, which so far has taken an even stricter approach than the U.S. and Canada in the way it’s designated essential businesses allowed to still operate during the health crisis. Read more from Jenny Leonard.

Customs Panel Calls to Delay USMCA: An advisory panel for U.S. Customs and Border Protection is the latest group to ask Trump administration trade officials to delay the start date of the U.S.-Mexico-Canada Agreement to allow the auto and other industry groups more time to prepare for new rules. The Commercial Customs Advisory Committee says the coronavirus pandemic and the economic downturn make it difficult to meet these requirements before early next year. Read more from Rossella Brevetti.

Airline Loyalty Assets Could Be Collateral: The U.S. Treasury Department is in talks with some airlines about accepting their loyalty programs as collateral against government loans to help them weather the coronavirus crisis. Other assets are also in play, including some international flight routes, planes, engines, airport gates and spare parts, according to people familiar with the negotiations, who requested anonymity because the matter is private. Applications are due today for the $25 billion loan program, the second round of U.S. funds made available to airlines. Read more from Gillian Tan, Jenny Surane and Mary Schlangenstein.

Lawmakers Want Loans for Food Suppliers: Food service distributors such as US Foods and Gordon Food Service delivering critical supplies during the coronavirus pandemic should get priority for federal loan applications, a bipartisan group of 33 lawmakers said in a letter to Trump. The Treasury Department manages $500 billion in emergency relief for “severely distressed” industries under the third Covid-19 stimulus package. Lawmakers said the department should weigh difficulties food service distributors face as they adjust to shifting markets. Read more from Megan U. Boyanton.

Research, Treatment & Coordination

China Boosts Virus Death Tally: China revised its official death count from the coronavirus, adding some 1,290 fatalities from the city of Wuhan, but officials rejected accusations that it has covered up the true scale of the epidemic. The addition boosts the nationwide death toll by nearly 40% to 4,632, the National Health Commission said today, of which the majority come from Hubei province where Wuhan is located. Total confirmed infections rose to 82,692 after Wuhan added 325 cases in the revision, which was reported by state news agency Xinhua. Read more.

Mask-Maker 3M Joins States to Fight Price Gouging: With the coronavirus pandemic driving up demand for protective gear, profiteers and unscrupulous middlemen have taken advantage. Now, one of the biggest manufacturers of the products is fighting back. 3M, the maker of the coveted N95 mask that drew criticism from Trump over their availability, filed four lawsuits in the past week against alleged price-gougers in New York, California, Texas and Florida. The firms were seeking to sell 3M respirator masks to the Strategic National Stockpile, New York City government and a California medical center at prices as much as six times the normal cost — while 3M said it has not increased its prices. Read more from Susan Decker.

Biotechs Are Battling to Make First Good Blood Test: Antibody tests are at the forefront of a push to assess who has potentially built up some immunity to the new virus, even unknowingly, pinpointing who can probably leave confinement and start rebuilding shattered economies. But the technology is harder to get right than for basic diagnostics, and new tools have proved unreliable in the U.K. and Spain, raising questions about whether the race to supply them has come at the expense of quality. “Every scientist and his dog is trying to make this test,” said James Gill, a clinical lecturer at Warwick Medical School in Coventry, England. “Whichever one is the fastest, whichever one is the cheapest, and whichever one is most reliable will be adopted.” Read more from Tim Loh.

Moderna Snares $483 Million for Virus Vaccine: Moderna said the U.S. government has agreed to pay as much as $483 million for the company to develop and test its Covid-19 vaccine now in an initial clinical trial. Under the agreement, the Biomedical Advanced Research and Development Authority, part of the U.S. Department of Health and Human Services, would fund development of the vaccine mRNA-1273 up through approval by U.S. regulators, as well as efforts to scale up manufacturing, Moderna said in a press release. Moderna’s Covid-19 vaccine is one of the first to begin human trials. Moderna said that if the trial is successful, it could reach final-stage testing by fall 2020. Read more from Robert Langreth.

Most Americans Say Trump Too Slow to Act: Almost two-thirds of Americans say Trump was too slow to take important steps to address the coronavirus outbreak when cases of the disease were first reported in other countries, according to a Pew Research Center poll. Sixty-six percent said their greater concern is that states lift restrictions too quickly rather than not quickly enough, Ben Livesey reports.

Elections & Politics

Biden Says Endorsements Brought Windfall: Former Vice President Joe Biden told donors yesterday the trio of high-profile endorsements he got earlier in the week has triggered a surge in fund-raising, earning him more money in the last few days than he has received throughout the entirety of his campaign. Biden said his campaign raised $2.75 million on Wednesday, the day former rival Sen. Elizabeth Warren (D-Mass.) endorsed his campaign and the day after former President Barack Obama did. The day before, Biden said he raised $2.5 million online, the day after Sen. Bernie Sanders (I-Vt.) endorsed. Tyler Pager has more.

Grocery Group Gets Record Campaign Donation Fine: The Washington Supreme Court has reinstated an $18 million fine against the Grocery Manufacturers Association for violating the state’s campaign finance laws. It’s the largest such penalty ever assessed by the state. The Washington, D.C.-based trade group, which represents food and consumer products manufacturers, has been fighting the fine since 2017. Read more from Paul Shukovsky.

Democrats Lead Fundraising in Key Races: Democratic Senate candidates raised more money than Republicans in eight of the 10 most competitive races during the first three months of 2020, another sign that the chamber’s majority is in play. The fundraising dominance included contests in which Democratic challengers raised more than Republican incumbents in the quarter ending on March 31, according to reports to the Federal Election Commission: Arizona, Colorado, Georgia, Maine, Montana and North Carolina. Kenneth P. Doyle has more.

What Else to Know Today

House Weighs Allowing Votes by Proxy: The House will consider letting many members avoid traveling to Washington during the pandemic by arranging for other members to vote for them by proxy. House Rules Chairman Jim McGovern (D-Mass.) proposed this low-tech approach to address worries over health and travel raised by dozens of lawmakers during a call with Democrats yesterday. “A member casting a vote on behalf of another member would be required to have exact direction from that member on how to vote and would have to follow that direction,” McGovern said.

Pelosi has given her blessing to the the idea, according to her office. McGovern, in his statement, underscored the notion would be only a temporary alternative. The House isn’t scheduled to be back in session until May 4, and both McGovern and Pelosi indicated that absent a unanimous consent agreement, a rule change to allow proxy voting would itself require a vote. Read more from Billy House.

GOP Senators Seek FBI Records on Russia-Trump Probe: Republican Sens. Chuck Grassley (Iowa) and Ron Johnson (Wis.) said in a letter they’re seeking additional documents from FBI Director Christopher Wray from the bureau’s investigation into links between Russia and the Trump campaign. The senators said recently declassified footnotes show reporting in a dossier used to investigate a former Trump campaign aide may have been part of a Russian disinformation campaign. Read more from Caitlin Webber.

Trump Undermines Curbs on Mercury: The Trump administration yesterday attacked the legal basis of requirements to capture mercury and other heavy metal pollution from power plants, setting the stage for a court to potentially throw out those mandates altogether. The EPA issued a “supplemental finding” that concludes those Obama-era controls on mercury pollution are too costly to justify and no longer “appropriate and necessary,” years after utilities complied with the requirements by installing scrubbers on coal-fired power plants. Read more from Jennifer A. Dlouhy and Amena Saiyid.

Space Force Arming to Jam Russian and Chinese Satellites: The new U.S. Space Force is building an arsenal of as many as 48 ground-based weapons over the next seven years designed to temporarily jam Russian or Chinese communications satellite signals in the opening hours of a conflict. The first system, made by L3Harris Technologies, was declared operational last month after years of development, and the Space Force has taken delivery of 16. The service is also developing a new system, known as Meadowland, that’s lighter-weight, capable of adding updated software and able to jam more frequencies.

Since its formation last year as the sixth branch of the U.S. military, attention has focused on the Space Force’s defensive duty in safeguarding U.S. satellites and on organizational questions about its budget and relationship with the Air Force. Less has been disclosed about its offensive role, which centers on Meadowland. Read more from Tony Capaccio.

Roger Stone Denied a New Trial: Roger Stone’s longshot request for a new trial because of alleged juror bias was denied by the judge who sentenced him to more than three years in prison. The widely expected decision issued yesterday by U.S. District Judge Amy Berman Jackson in Washington means Stone may have to report to prison within two weeks. Stone may also appeal within two weeks. Stone, a Republican operative and early Trump booster, argued he deserved a new trial because the foreperson of the jury that convicted him of lying to Congress and witness tampering in November was a Democrat opposed to the president. Read more from Erik Larson.

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