Trump urged to use wartime powers over US companies

Via Financial Times

A little-used piece of wartime legislation has taken centre stage in the increasingly bitter battle between Donald Trump and critics who accuse the president of not doing enough to fight coronavirus.

As supplies of equipment such as protective masks and hospital ventilators have run low, Democrats and even some Republicans have criticised the president’s reluctance to use the Defense Production Act, under which he can compel companies to make certain products.

On Thursday, Chris Murphy, a Democratic senator from Connecticut, warned: “The problem is that the private sector supply chain has broken down. It is a ‘Lord of the Flies’ situation today in which supplies are not heading to areas of need but are instead heading to places where the money is or where the political connection is.”

He added: “It is time to federalise the national critical medical supply chain.”

There have been similar warnings from Joe Biden, the frontrunner in the Democratic presidential primaries, and Andrew Cuomo, the governor of New York.

The act, which was passed in 1950 during the Korean war, enables the federal government in effect to take over parts of the industrial base.

Under the terms of the act, an administration can compel companies to prioritise government contracts over private ones, make them send equipment to certain areas ahead of others, and provide loans and grants to encourage certain forms of manufacturing.

Mr Trump has given Alex Azar, the health secretary, the authority to implement the act. But while the Pentagon in particular regularly uses the act to make sure suppliers prioritise certain contracts, Mr Trump has been reluctant to use it for coronavirus because he says companies are already doing all they can and he does not want to nationalise parts of US business.

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Some large companies’ actions reflect this argument.

Ford, which is working with 3M and GE to help make ventilators and respirators, told the Financial Times: “We continue to pursue these efforts voluntarily, and while we are coordinating closely with the federal government, we are not being asked to manufacture medical equipment under the Defense Production Act.”

Other companies have also said they will convert manufacturing processes to make products that can help fight the disease, from General Motors making ventilators to Pernod Ricard, the drinks company, producing hand sanitiser.

Neil Bradley, chief policy officer at the US Chamber of Commerce, said: “No one has identified anything that could be done right now which is not being done. If you invoke it to tell a company to do what they are already doing, all you are doing is creating confusion.”

Many smaller companies, however, say they want stronger guidance from the Trump administration on exactly what is needed and where it should go.

“Everyone wants to help, but there’s a lot of chaos out there,” said Carl Bass, a manufacturing expert and the former chief executive of the design software company Autodesk. “It needs government leadership. This government is putting $1tn into economic recovery but they’re leaving it to open auctions around medical equipment.”

Blankie Tails, a US company which makes blankets in the shape of mermaid tails and Disney princess dresses, is now using its storage space and network of suppliers in China to source and supply masks and ventilators to the New York State government. Hattie Grace Elliot, its founder, said: “Time is ticking . . . It would be great if we could have [the DPA] but in the meantime you’ve just got to keep moving forward and do what you can do.”

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Amar Hanspal, chief executive of Bright Machines, which makes manufacturing equipment, said: “[The DPA] would help — it certainly works as a catalyst. It is a way to convey the seriousness, and the magnitude of the need.”

Defence officials say they are looking at using certain provisions within the act to provide loans and grants to companies that could manufacture masks and other medical equipment. But they insist they are not planning to use its more heavy-handed powers to take over parts of the defence industrial base unless mandated to do so by the president.

Ellen Lord, under secretary for acquisition at the defence department, said: “[Mr Trump] is talking about broadly using DPA to take over private industry — that’s what he has clearly said he is not going to do.” 

Other departments seem more ambivalent about whether to use such powers or not. On Tuesday, Peter Gaynor, the administrator of the Federal Emergency Management Agency, said his agency would use the act to buy “about 60,000 [coronavirus] test kits”.

But later that day, a spokesperson for Fema said: “At the last minute we were able to procure the test kits from the private market without evoking the DPA.”

But the reality is that the more the president continues to talk of controlling coronavirus as being akin to a war effort, the stronger the calls are likely to become for him to use the powers available to a wartime president.

“This is often what presidents do during a time of war,” said Jerry McGinn, who used to oversee DPA programmes at the Pentagon. “But it seems right now companies are falling over themselves to do everything they can anyway.” 

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Additional reporting by Katrina Manson in Washington and Joshua Chaffin in New York