J'rg Carstensen via AP Images
3M has a conference room named after it in the U.S. Chamber of Commerce headquarters.
First Response
This crisis has proven that global supply chain management was a fiasco in the making, just waiting for a sudden shock to collapse completely. But a new report out today, exclusively provided to the Prospect, makes the case that corporate power also damaged the ability for the nation to respond to the coronavirus crisis by producing everything it needs.
The report, entitled “Unmasked,” was produced by the Public Accountability Initiative and several partners, including the SEIU and CWA unions, the Partnership for Working Families, Action Center on Race and the Economy, Care Test Protect, and Bargaining for Common Good. It highlights the role of the U.S. Chamber of Commerce, an ever-present force in Washington, in pulling policymakers away from the kind of wartime mobilization required to protect health care workers and treat those suffering from COVID-19.
We know that the Chamber has lobbied the Trump administration against invoking the Defense Production Act, the Korean War-era law that allows the federal government to prioritize contracts for private industry to produce necessary supplies. Those contracts aren’t as lucrative as the private market, and the Chamber’s member companies would rather do lucrative things (euphemistically described as “restricting flexibility”) than assist the country in a crisis. Those members include medical manufacturers 3M and Honeywell, who “have outsized influence at the Chamber and would be among the companies most significantly affected by the full invocation of the DPA,” according to the report.
There are thousands of companies with membership in the Chamber of Commerce, but only 110 executives sit on the board of directors. They do the majority of the work of setting Chamber policy. 3M and Honeywell both have board seats; the 3M representative is a company vice president who handles manufacturing management and the supply chain. The Honeywell rep on the Chamber board is the company’s top lobbyist; Honeywell has been lobbying on the Defense Production Act as far back as 2019, before anyone knew about coronavirus. There’s even a conference room in the Chamber’s Washington headquarters named after 3M.
A week ago, 3M and the Trump administration got embroiled in a dispute over N95 masks that eventually ended amicably. But in general, the administration has taken the line that invoking the DPA would damage the free market, reasoning completely in line with the Chamber’s position. The Chamber believes production of vital goods in this crisis should be voluntary, and so does the White House, really.
Other companies on the Chamber of Commerce board employ frontline workers who need protective equipment, or produce critical medical supplies themselves. They include shippers FedEx and UPS; pharmaceutical firms Abbott Labs, Pfizer, and Bayer; and Steward Health Care, which recently blackmailed the state of Pennsylvania into a bailout for one of its hospitals. Bailed-out airlines United, American, and Delta also sit on the Chamber of Commerce board.
“I am disgusted, but by no means surprised, to find out that the companies with the biggest financial stake in this pandemic are trying to evade any responsibility to simply do the right thing,” said Erin Murphy, RN, co-founder of the Care Test Protect Campaign, part of the coalition that release the report.
Unsanitized readers know that there’s another issue with the DPA: it has a funding component (you have to pay out the companies for the goods) that has only a billion dollars or so in it. That gives the Chamber of Commerce another point of leverage to block emergency government control an coordination of the supply chain. The result has been absolute chaos, with the government overpaying for goods and competing with cities and states and hospitals, which also drives up the price amid scarcity in manufacturing.
The groups who released the report want to see full invocation of the DPA to produce critical supplies like protective equipment, ventilators, and testing materials. “I am not happy that the U.S. Chamber of Commerce and the corporate executives who sit on its board, are actively lobbying against using the Defense Production Act to produce such supplies,” said Vanessa Quinn, a registered nurse in Buffalo, New York. “The Federal government, during a time of crisis, has the responsibility to ensure that we have the supplies and equipment we need.”
Read all Unsanitized coverage here
Stealing the Checks Update
Today I have a new scoop in the ongoing banks-stealing-the-emergency-coronavirus-checks story. After being given the green light by the Treasury, banks are dutifully using the $1,200 CARES Act payments to offset existing debts. USAA Bank, one of the nation’s 30 largest, took $3,400 in CARES Act payments from a disabled veteran, his wife, and two kids. The account hadn’t been used by the family for over a year, but it was what the IRS had on file for their refunds. The family had debts and what they called a fraud charge on the account, but USAA said it wasn’t fraud, and they owed $8,000. So USAA took this emergency payment from a charged-off account, depriving a family that needed the money to make rent and buy medicine.
The New York Times spoke to the same family and a couple others having their CARES Act payments taken (they did credit the Prospect for breaking the story, as did the Times editorial board). I have since heard from more people having this happen to them. I did not go into this crisis with a good impression of banks, but this really infuriates me. This money is not just a stimulus infusion, but for many folks, an absolute lifeline. And banks are just taking them? From accounts that are charged off, effectively closed for accounting purposes? The true mark of the industry’s insidiousness can be seen with the Bank Policy Institute, a trade group, demanding that the government exempt CARES Act payments from court-ordered garnishments by private debt collectors, not mentioning that the banks themselves can, and do, take the money.
This is a full-spectrum failure. Congress should have protected these payments, they way they do Social Security and disability and veterans benefits, explicitly in the law. Congress didn’t. Then Treasury had the authority to write rules that protect the payments. Treasury didn’t. Then banks could do the right thing and not take peoples’ emergency money in a crisis. The banks, well, didn’t.
I’m going to continue to report on this until every cent due these families is returned to them.
Test Test Test
By now you’ve probably heard about the protests in Michigan from MAGA types, congregating while an infectious disease is afoot and demanding that the state reopen. The irony is thick with these ones, and also probably deadly. The truth is that we will likely “re-open” the country prematurely, but “reopen” is a relative term. If nobody actually wants to patronize businesses out of fear of infection, what have you reopened? If a tree falls in the forest, etc.
The only way to actually reopen the country is by instituting a program of mass testing, so you can isolate those with COVID-19. Nobody understands this more than the business community, who pleaded with the president on Wednesday to dramatically increase testing, or nobody will come out of their homes. Experts in the field like Dr. Fauci know this is true as well.
Unfortunately we’re going in the opposite direction. Testing has effectively plateaued for three weeks, and dropped by about 30 percent in the last week. There are shortages of swabs—hey, maybe hollowing out our industrial base was a bad idea—and many commercial labs that process the tests have a backlog. We don’t have the equivalent of an in-home pregnancy test that can rapidly pump out results. There are some claims of “overly restrictive” criteria that is blocking testing, but if you don’t have the equipment who cares what the criteria are?
I’d be happy to clear any bottlenecks, since this is the number one most critical aspect for public health and economic revival. It’s amazing how much it’s been put to the back burner. Senate Democrats just released a $30 billion bill to surge testing but they did it on April 15, months after we knew about the virus and that testing would be the key to beating it.
Some localities are taking matters into their own hands. New York City got a supply of 100,000 tests per week, which isn’t enough but it’s a start. San Francisco is instituting a first-in-the-nation contact tracing program, where people who test positive are asked who they have been in contact with in prior days, and outreach staff follows up with them. Monitoring is done with the help of cell phone apps.
We don’t have a lot of time to figure this out. Testing is the only safety valve from the “your money on your life” choice over how to reopen the country.
Today I Learned
- First-time unemployment claims went down last week!... to 5.245 million. (Calculated Risk)
- Why are Maxine Waters and Sherrod Brown urging a bailout of mortgage servicers, the worst companies in America? I wrote a whole book about them! (Financial Services Committee letter)
- The House should have “looked closely” at remote voting before they adjourned and left Washington. (Reuters)
- The small business loan funds are pretty much gone. (Wall Street Journal)
- Seventeen bodies found at a nursing home. The real death count is so much higher than has been reported. (New York Times)
- The Taliban, drug cartels, and MS-13 are operating as quasi-governments and trying to keep people safe during the crisis. (Washington Post)
- Inmate calling and video visitation now free at federal prisons. (Politico)
- Where is the government getting all this money from? Brr goes the printing press. (New York Times)
