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Trump Fully Invoking The Defense Production Act Would Help, But It Won’t Fix Everything

The U.S. doesn’t have what it needs to fight the novel coronavirus. N95 respirator masks are emergency room workers’ ideal line of defense against the small particles of spittle that can transmit COVID-19. It’s a banal-looking medical product — like a baseball straining under a small tarp of synthetic cloth — but its mundanity doesn’t make it easy to find. A recent NBC News survey of health care workers reported widespread rationing of N95 masks in hospitals. The country also doesn’t have enough ventilators — machines that assist breathing — and the need for those will be a matter of life and death in the coming days. There are around 160,000 ventilators in U.S. hospitals and only 16,600 ventilators in the Strategic National Stockpile, according to a recent report from the Center for Public Integrity. New York state alone is requesting an additional 30,000. While it’s unclear how many ventilators the country might need in the coming weeks and months, one estimate from a 2005 Department of Health and Human Services pandemic simulation put the number at 742,500.

The shortage of critical supplies has led many public officials to ask President Trump to make full use of a little-known-until-a-week-ago law, the Defense Production Act. So far Trump has been reluctant to fully deploy it, to the consternation of many (including those in his own party). White House statements on the use of the DPA have been muddled, suggesting a deeper bureaucratic confusion about how to even implement the act. But even with the law’s powers in full use, the pandemic has revealed America’s precarious place in the global marketplace as just another buyer, rather than an industrial fortress ready for a fight on its own shores.

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Passed in 1950 in response to the Korean War, the DPA allows the government to jump the supply chain line for needed goods in the midst of emergencies — it was invoked in 2017 to procure supplies for hurricane victims, for example — and authorizes it to incentivize the production of needed supplies.

Trump’s stance on deploying the DPA fully has been hazy, and his statements about the gravity of the supply shortage has varied — during a Thursday evening appearance on Fox News, he cast doubt on New York’s need for 30,000 ventilators. On March 18, he said that he would be “invoking the Defense Production Act just in case we need it.” The administration has said it would use some powers in the act, like the one that goes after hoarding and price-gouging of emergency supplies and one that requires companies to prioritize government contracts and allows the federal government to allocate emergency resources (it’s not clear how efficiently that’s actually being done yet). But groups like the U.S. Chamber of Commerce have reportedly lobbied the Trump administration against using the law to its full effect. The past week has seen Democratic lawmakers and former national security officials pillorying Trump for what they see as inadequate use of the law. New York Gov. Andrew Cuomo said on Tuesday, “I do not understand the reluctance to use the federal Defense Production Act to manufacture ventilators. If not now, when?”

The short answer is that’s not quite how the law works.

Those familiar with the workings of the DPA are quick to note its implementation is not a panacea. Dave Kaufman was in charge of DPA authorities in his role at FEMA during the Obama administration. He told me that there seems to be a fundamental public misunderstanding of what the law can do. “It’s being talked about in the media as restructuring the economy a la WWII. It’s not actually really that — it’s a powerful authority, don’t get me wrong, but it’s not nationalization of industry, which is kind of the way we’re talking about it.” Industrial leaders like General Motors Co. reportedly balked at the idea of the White House invoking the DPA.

The kind of DPA powers that Cuomo and the media have largely been talking about are the ones vested in Article III of the act. That portion of the law is meant to “create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national defense.” To go about that, the government is authorized to provide loans and loan guarantees to stimulate domestic production of needed goods, to make agreements to purchase products on a long term basis in order to encourage the production of needed goods and “to procure and install equipment in private industrial facilities,” in the words of a Congressional Research Service analysis of the DPA.

Kaufman said that invocation of the DPA isn’t always needed to get a job done. “You could also just make a commitment to a multi-year procurement and send the pricing signal to the market to stimulate development of supply,” he said. Ford, 3M and GE Healthcare pledged this week to jump-start production of ventilators and masks, though they didn’t give a timeline for the needed scale-up of production — it would likely be months. (On Friday morning, Trump tweeted that “General Motors MUST immediately open their stupidly abandoned Lordstown plant in Ohio, or some other plant, and START MAKING VENTILATORS, NOW!!!!!!” As Ohio Rep. Tim Ryan quickly pointed out, GM no longer owns the plant.)

But with N95 masks and ventilators, many of which are made overseas, things are tricky. “DPA authority is great to talk about, but if the commodities don’t exist here in the scale and quantity needed for demand, claiming the first off the line for what does exist is not really solving the problem,” Kaufman said, referring to the DPA power that allows the government to jump the supply chain.

China is a major producer of N95 masks and ventilators and the U.S. is competing for emergency supplies manufactured there, much like the rest of the world. It’s a stark reminder that despite Trump’s trade wars and inflammatory rhetoric, China remains a manufacturing behemoth. Well before the coronavirus pandemic began, the U.S.’s reliance on China for key goods dismayed government officials. A September 2019 NBC News report detailed the alarm of national security officials over how dependent the U.S. is on Chinese-manufactured pharmaceutical products. A Council of Foreign Relations analysis from December 2019 noted the rapid growth of the Chinese medical device manufacturing sector, aided by its government’s protectionist policies.

There is some production of the needed emergency products in the United States. 3M is a major producer of respirator masks: A spokesperson said in an email that it makes them in two locations in the U.S., South Dakota and Nebraska. A March 22 statement from 3M’s CEO noted that the company produces 35 million respirators per month and that “more than 500,000 respirators are on the way from our South Dakota plant to two of the more critically impacted areas, New York and Seattle.” At the time of publication, it was unclear how the masks would be apportioned to each region.

Governors have asked the federal government to take control of the allocation of ventilators and masks by using the DPA. Under Title I of the law — which technically, the Trump administration has said it has put into effect — the federal government can take charge of the allocation of emergency supplies. It’s not clear how well it’s doing that or communicating its plans to the states. South Dakota Gov. Kristi Noem, the chief executive of the state that produces so many N95 masks, expressed frustration during a call with Trump last week. “I need to understand how you’re triaging supplies,” she said, with other governors on the line. “I don’t want to be less of a priority because we’re a smaller state or less populated,” she said. According to The New York Times, Trump assured her that would “never” happen. Subsequently, the report noted, “Ms. Noem’s telephone line was disconnected.” Illinois Gov. J.B. Pritzker was referring to similar allocation concerns when he said that his state was “competing” with other states and federal agencies on the open market for emergency medical supplies.

Confusion over how or whether the Trump administration is using the DPA has grown over the last few days, a worrisome sign given the bureaucratic organization needed to oversee so many moving parts of government and industry that should ostensibly be working together. News came from the White House this week that the production of 60,000 testing kits had been expedited under the auspices of the act, but FEMA later said that in the end, it hadn’t needed to invoke the DPA. In an email to FiveThirtyEight over the weekend, a FEMA spokesperson wrote that it was “actively engaged with private industry partners through the National Business Emergency Operations Center. One outcome from this engagement is the stand-up of a cell that is coordinating needs and sourcing re-supply for the community-based testing sites.” Over the course of the week, it became clear that FEMA’s newly established Supply Chain Stabilization Task Force, headed by Rear Adm. John Polowczyk, was the agency’s attempt at centralizing interactions with private industry.

If a recent Democratic proposal from the Senate is any indication, there is a worry about the administration’s ability to marshal and organize critical information from private companies in the time of crisis. The proposal calls for basic information-gathering provisions, like an assessment of the country’s emergency medical protective gear, a point person to communicate with states and companies, and a hotline for companies to call for information.

Banal bureaucratic organization problems seem, for now, to be blunting the collective power of American capitalism in a time of crisis.

Clare Malone is a former senior political writer for FiveThirtyEight.