Nurses in garbage bags?: Why the Trump administration must use the Defense Production Act to mobilize production of critically needed hospital protective equipment immediately
On Tuesday, New York Governor Andrew Cuomo spent much of his coronavirus press conference imploring President Trump to use the Defense Production Act (DPA) now to force factories to manufacture essential medical equipment such as masks, gloves, gowns, and ventilators.
Trump has continually refused to do so, saying that the acquisition of medical supplies is a job for governors: “You know, we’re not a shipping clerk.” Yet, on a conference call last week, Republican governor Charlie Baker (Mass.) told Trump that his state had been denied three major orders for medical equipment because the federal government had outbid him.
Health care workers are at the front lines of the COVID-19 crisis. In Italy, 9% of “total COVID-19 cases are health care workers, contributing to the breakdown of the hospital system in the north of the country.” U.S. health care workers are also especially hard hit.
While both Democratic and Republican governors are pleading for help, staff in at least one nursing home have already resorted to using plastic garbage bags to make gowns, as have nurses and doctors in Spain and England.
Clearly, the DPA will make a difference.
The Act is a Korean-war-era law that has been used many times to help the federal government respond to emergencies ranging from war and national disaster to terrorism prevention. Prior to the coronavirus crisis, Trump invoked the law in 2017 to mobilize the industrial base for his latest fantasy, the Space Force. The act allows the president to require companies to prioritize government contracts and orders needed for national defense, including national emergencies.
Rep. Ro Khanna (D-Calif.) has called for a massive $75 billion appropriation for funding under the DPA. As written, the 1950 Act has caps of $50 million per contract and total funding of only $750 million (the president can waive the $50 million cap in emergencies). Yet the federal government estimates that 3.5 billion N-95 ventilator masks will be needed over the next year alone, at a cost of $7 billion. Individual air purifiers and ventilators, at $25,000 to $50,000 each, will require additional tens of billions of dollars. Clearly, the contract and funding limits in the 1950 DPA are outdated and completely inadequate for the current crisis, and they must be waived or replaced.
The economics of the DPA are straightforward—volume buying is cheaper and more efficient. Moreover, a mandated order from the government can displace other less essential production. Rather than having 50 state governors, plus thousands of mayors and hospitals, competing with each other for scarce resources, the purchasing power of the federal government can and should be used to maximize production, minimize costs, and allocate supplies to areas of greatest need, just as in wartime.
Governor Cuomo explained, “I will contract with a company for 1,000 masks. They’ll call back 20 minutes later and say the price just went up because they had a better offer.” Recently, South Dakota Governor Kristi Noem told the President and the coronavirus task force, “I need to understand how you’re triaging supplies…. We, for two weeks, were requesting reagents for our public health lab from C.D.C., who pushed us to private suppliers who kept canceling orders on us. And we kept making requests, placing orders.”
Prices always tend to rise in times of shortages. Oil exporting companies used this to their advantage in the oil embargoes of 1973 and 1979. Those were supply shocks, caused by producer decisions to cut output. The current shortages of medical supplies are due to a surge in demand caused by the COVID-19 crisis.
But the DPA can be used in both cases. Economist Dean Baker has explained that, under the DPA, Congress and the president can compel companies to produce masks and respirators and other critical supplies, and pay them “cost plus 10 percent.” And we can use the purchasing and logical expertise of federal agencies to direct supplies to the areas of greatest need first.
Trump’s opposition to invoking the DPA can be distilled into two words: profits and politics. The Chamber of Commerce has opposed its use for the COVID-19 crisis, saying “invoking [the DPA] may do more harm than good in sectors such as pharmaceuticals and medical equipment.” The reason why is clear. The Chamber’s members can maximize profits by playing desperate states, cities, and medical facilities off against each other and sending supplies to those with the deepest pockets rather than the greatest need. This is no way to run an economy in a national crisis.
The federal government should contract for all needed supplies, pay for them directly, and prioritize shipments to areas of greatest need. The Department of Defense and Federal Emergency Management Agency (FEMA) have vast experience in large-scale contracting and logistics, and they should be immediately tasked with these responsibilities. Magsamen, Mulligan, and Kendall of the Center for American Progress have outlined six immediate steps Trumps should take to implement the DPA. In addition, President Trump should limit exports of critically needed medical supplies and equipment.
The Trump administration is prioritizing the profits of medical equipment manufacturers over the lives of millions of Americans on the front lines of the crisis. On Sunday, Trump adviser Peter Navarro claimed, “We’re getting what we need without putting the heavy hand of government down.” Meanwhile, in the real world, government agencies are scrambling to tell hospitals how they should operate if supplies and equipment run out. Given the time that will be needed to ramp up production and repurpose factories and production lines, it is already weeks too late for this urgent mobilization.
The current shortages are being exacerbated by the centralization of decisions in the White House and the unwillingness or inability to delegate authority to the relevant government agencies. Unfortunately, the unconscionable lack of decisive action has put the lives of the millions of Americans at risk.
The coronavirus crisis is too large and complex to be controlled by one man, or by a few hundred people in a few offices in the White House. It is time for the full power of the federal government to be unleashed to respond to the COVID-19 pandemic. The stimulus act now being considered by Congress should fully fund Rep. Khanna’s proposal. Furthermore, that act should compel the president to activate the DPA to ensure the supply of all medical supplies, drugs, and equipment needed to respond to the coronavirus crisis. There is no more time to waste.