Donald Trump is refusing to use a critical federal law that would ramp up production of desperately needed medical supplies, a move that puts profits over the public.
Trump authorized use of the Defense Production Act on Wednesday (Mar. 18) in response to the COVID-19 outbreak.
But he said at a news conference the following day it’s still to early to determine to what extent the White House should use the law to marshal supplies.
The move came in the face of pressure from bipartisan members of Congress and governors to use the powers.
State and local officials have said hospitals and medical workers are quickly running out of personal protective equipment like masks, gowns and gloves, as well as ventilators as the number of coronavirus cases soar, according to press reports.
Among other things, the act would allow the government to compel companies to produce needed supplies and marshal the necessary resources.
But more importantly, it would allow the government to control prices to prevent gouging or excessive profits.
As it is, companies that make such things as ventilators, masks and personal protection equipment are free to charge what the market will bear.
What’s more, the Trump administration appears to be bidding up prices for medical supplies and putting them out of reach of local governments.
Massachusetts Gov. Charlie Baker told Trump during a video conference on Thursday that his state three times lost out to the federal government on purchases of critical supplies.
“I’ve got a feeling that if someone has the chance to sell to you and to sell to me, I am going to lose on every one of those,” a Baker told Trump. The president laughed at the remark.
The situation created a classic Catch-22. Trump has directed governors to buy their own medical supplies only to find the federal government outbidding them. The practical effect is higher prices for all local governments.
“Prices are always a component of that also. And maybe that’s why you lost to the feds, OK, that’s probably why,” Trump replied to Baker.
When New Mexico’s governor raised similar concerns later in the call, Trump said he would ask FEMA to ensure there were no conflicts with purchases in the future, according to Bloomberg.
The Federal Emergency Management Agency, also known as FEMA, is responsible for coordinating responses to national emergencies like floods and hurricanes.
If the president were to use the Defense Production Act (DPA), he could require businesses to sign contracts or fill orders deemed necessary for national defense.
It also allows the president to designate materials to be prohibited from hoarding or price-gouging. Both hoarding and price gouging have been problems during the crisis.
The act also gives the president broad authority to The requisition property, force industry to expand production and the supply of basic resources and impose wage and price controls.
The government could also control consumer and real estate credit, establish contractual priorities and allocate raw materials toward good and services necessary to combat the virus.
Trump’s order gave Health and Human Services Secretary Alex Azar the power to determine “the proper nationwide priorities” to allocate all necessary health and medical resources and services.
Trump last used the act in June 2017 to address critical shortages of radiation hardened microelectronics, radiation test and qualification facilities and satellite components and assemblies in the aerospace industry.
In 2011, President Obama invoked the act to force telecommunications companies, under criminal penalties, to provide detailed information to the Commerce Department on the use of foreign-manufactured hardware and software as part of efforts to combat Chinese cyber-espionage.
The law was initially passed in 1950 in response to the Korean War.