Ben Roback is Head of Trade and International Policy at Cicero Group.
Two weeks ago on this site, we considered how coronavirus could derail Donald Trump’s economy-focused re-election campaign. In the intervening fortnight the challenge facing the President has become even more acute as global markets tumbled.
Since then, early signs of recovery have perhaps started to emerge. By market close on Tuesday evening, Wall Street rallied as Congress neared a COVID-19 stimulus deal. The S&P 500 jumped 9.3 per cent and the Nasdaq climbed 8.1 per cent. The Dow Jones enjoyed its biggest percentage gain since 1933. Markets surged again this morning after the overnight news that Congress and the White House had reached a deal to inject nearly $2 trillion into the economy.
The President has now entered the next stage of his own COVID-19 mitigation plan – the recovery phase. Trump told Fox News he would like to have the country “opened up, and just raring to go” by Easter, which is less than three weeks away. The White House is in a rush to get the American economy roaring again.
It marks yet another turn in Trump’s approach to the crisis. He didn’t seem to be taking COVID-19 all that seriously initially, dismissing it occasionally as the “China virus” and an inconvenience that threatened his election prospects.
Since then, the President has pivoted – hard. Once markets crashed and the body of scientific evidence had built into a deafening crescendo, he reinvented himself as a “wartime president”. The shift to an early recovery and reopening of the American economy has therefore prompted fierce debate.
Michael Strain, an economist at the right-leaning think tank AEI – which often sees eye to eye with this administration – wrote in a searing op-ed: “Trying and failing to reopen the economy before economic activity is organically ready to resume could have dire economic consequences.” The Hill described the President “mulling the biggest gamble of his presidency”. In seeking a short-term economic bounce, Trump risks accelerating an immediate health crisis and prompting longer term economic pain.
But the election is – at least currently – scheduled to take place in just eight months’ time, and a President who frequently tweets about stock market gains and growing 401K retirement plans feels under pressure to return Americans to the economic good times.
It appears to be a staggeringly myopic approach motivated by political gain. Instead, it’s clear that there is no quick or easy fix to a global health crisis that is leaving economies crippled in its wake.
In attempting to push the US from prevention and mitigation to recovery, the President has put himself at odds with scientific advisers and an overwhelming avalanche of evidence that suggests America is nowhere near ready to loosen its grip on the pandemic. Just yesterday, the leading US medical and health organisations (the American Medical Association, American Hospital Association, and American Nurses Association) wrote an open letter calling on the American people to stay home to help reduce the spread of COVID-19.
But does the President have the unilateral power to shift the American response to COVID-19? In short, no.
Don’t lose sight of the President, but watch state governors
Whilst Trump captures the media’s attention with daily press briefings and town halls, significant power lies in the hands of state governors, county commissioners, and mayors around the country. The Constitution allows governors to issue their own policies to issue orders to protect their citizens in emergencies, including those dealing with public health – such as COVID-19.
It is therefore governors who have the power to sign off stay-at-home orders, instructing their citizens to remain indoors. The message coming out of Washington DC – one of an imminent recovery and economic revival – is at great odds with the stark warnings in just under half the US states that are currently under lockdown measures restricting public gatherings and social contact. The lives of more than 160 million Americans have been changed on a state, not executive basis.
Proof of that is the extent to which some measures differ between states. For example Gavin Newsom, the Governor of California, effectively made it a crime to socialise outside the home, while Michelle Lujan Grisham, his New Mexico counterpart’s, measures are more advisory than mandatory.
Trump announced his own COVID-19 guidelines on 16 March, but they are just that – guidelines, not mandatory. The President has the power to amend or shift those guidelines, but it will not change the instructions in states like New York and California where aggressive prevention plans remain in place. Legally, states remain largely independent of the President and the federal government in regard to public health and police measures. Politically, Republican governors will feel under some pressure to follow the Trump’s lead in states where the president is popular.
Despite that, the sheer weight of the federal government gives the President a degree of leverage over state governors at times of national emergency. A live illustration of that is taking place at present as Andrew Cuomo, the Governor of New York, has been pleading with the Trump administration to use the Defense Production Act to ramp up ventilator production. Mike Pence, the Vice President has authorised 4,000 more ventilators to be sent to New York from federal reserves.
Washington DC does not speak for America
The World Health Organization said yesterday that the US risks becoming the epicentre of the global COVID-19 outbreak, with more than 55,000 confirmed cases and over 800 deaths so far according to Johns Hopkins University data. The President is seeking to project confidence from the White House briefing room podium – but if America’s governors, county commissioners, and mayors are pursuing their own more aggressive measures, then it will fall on deaf ears.