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President Trump has made use of his authority under the Defense Production Act (DPA) to prod General Motors and other companies to aid in the pandemic response. He has not gotten high marks for these typically fumbling responses. Indeed, for a president who has spent three years crying “emergency” over relative nonissues like the Mexican border and steel imports, Trump has seemed oddly reluctant to break out the big policy guns in an actual crisis.
Setting aside whether reasonable people should trust Trump to use the authorities wisely (a big caveat), there is a lot that a president could be doing that this one is not. Here are 10 ways that the DPA and related statutes could be used.
1. Nationalize Medical Supply Chains
Trump has told states that they’re essentially on their own when it comes to getting medical supplies. This has led to bidding wars against each other at worst, and some limited state-to-state cooperation at best. And because the relevant suppliers and distributors are private actors, the profit motive encourages selling on the basis of high price, not objective human need.
This is madness. Policy-makers learned the hard way that a decentralized approach leads to war profiteering (during World War I) and anarchy (under the industrial policies of the early New Deal). That was why, in 1941, Congress delegated sweeping authorities to President Roosevelt to “allocate any material or facility, in such manner, upon such conditions, and to such extent as he may deem necessary or appropriate to” protect national defense.
This so-called allocation authority was extended, then renewed dozens of times since, and its powers were used hundreds of thousands of times in war, by a wide range of agencies. But in recent years, most agencies have reported that they never use it, and the Department of Health and Human Services (HHS) issued guidance as recently as the Obama administration essentially pledging that it never would.
The administration has broken with this tradition and said it would be using allocation authorities to block the export of medical supplies. This is too little, too late—especially considering that Representative Katie Porter (D-CA) reported that some US medical exports to China saw a 1,094 percent month on month jump in February. Rather than pleading with manufacturers to do the right thing or playing catch-up, the administration could instead tell firms to reserve 10, 50, or even 100 percent of their capacity to start producing the health supplies we need.
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2. Convert Big Tech Into Big Public Epidemiology
Google and other tech companies have developed technology that uses smartphone location data to show just where those obnoxious non-isolating spring breakers in Florida went after the keg stands were over. More generally (and on a supposedly anonymized basis), this kind of data lets companies show who is—and who’s not—physically isolating.
The only problem: the same problem as always with Big Tech. Utility-level tools that invade your privacy shouldn’t be in the hands of private monopoly profiteers. Using the same DPA allocation powers, the administration could stipulate that 50 percent of tech firms’ coding resources go to supplement Center for Disease Control tracking efforts for the duration of the crisis.
3. Go Green
Another provision of the DPA allows the president to order energy companies to maintain, expand, or contract their activities in order to maximize domestic energy supplies when these are scarce, critical, and essential (and the transition cannot be reasonably accomplished otherwise). The Clinton administration used this power during the 2001 energy crisis to ensure an ongoing supply of electrical power and natural gas to California utilities.
While the energy sector doesn’t appear to be in such dire straits just yet, a deep recession and cheap natural gas could impede progress on renewable energy projects. If these markets break down, or if vital parts from China’s solar industry get backlogged, a president could order expansion of green production (and perhaps pair this with other sweeteners, like the kind discussed below).
4. Publicly Finance the Cure
The DPA also gives the executive branch a wide range of powers to issue loans, loan guarantees, procurements, and subsidies to keep critical industries going. While these authorities have for the most part been used sparingly in recent decades, they could be unleashed on a massive scale to publicly finance the cure for Covid-19 and to secure other needed items.
5. Turn the Transport Industry Into a Relief Organization
Under the DPA’s voluntary Civil Reserve Airforce Fleet and Intermodal Sealift Agreement, airlines and carrier ships agree to put themselves at the government’s disposal in emergencies, in exchange for the government’s using their cargo services during normal times. Almost every major US airline company participates, and the programs were activated to evacuate medical personnel and perform other services in both Operation Desert Storm and the Iraq War. Members of Congress also asked the administration to use these authorities to help Puerto Rico during Hurricanes Irma and Maria.
With consumer travel ground to a halt and experts warning that we could see severe humanitarian and economic crises in developing countries, the aviation and shipping industries could be put to work getting supplies to developing countries and serving as sea hospitals outside major urban outbreak centers.
6. Create Small-Business Squads
With much of the service economy on ice, many are worried about widespread business collapse. For instance, as celebrity chef David Chang warned, the crisis may see the end of restaurants as we know them. This could happen for instance, because hedge funds snap up struggling small businesses or extend loans on onerous terms. The DPA offers a way around that, authorizing federal authorities to green-light coordination between firms that would otherwise run afoul of antitrust rules. This could mean, for instance, cartels of chefs, coffee shops, and bookstores that can coordinate with each other on prices and production—as a defense against predatory finance.
7. Drain the C-Suites
Another DPA provision allows the president to call forth a National Defense Executive Reserve (NDER), where heads of industry and business experts are deputized into government service for the duration of the emergency, with some normal civil service rules suspended. Currently, no agency has an active NDER unit, but that could change. Tired of tech and finance bros’ floating unhelpful ideas to try to profit from the crisis? Take them out of their posh headquarters and get them at a desk processing DPA allocation orders. All hands on deck.
8. Cap Amazon Prices, Empower Amazon Workers
In response to surging consumer demand, Amazon is rationing its services—prioritizing essential deliveries over others, much as the government would have done in earlier crises. At the same time, prices have surged for certain categories of products, and essential workers are risking their lives for wage rates that treat them as disposable humans.
With a little assist from Congress, Trump could cap Amazon’s prices and raise Amazon workers’ wages. The original version of the DPA went much further than the version of the statute that survives today. Regulators were allowed to put price ceilings for “any material or service, and at the same time shall issue regulations and orders stabilizing wages, salaries, and other compensation.” The government was also allowed to negotiate tripartite deals between labor, management, and the public to keep the labor peace. Regulators today could use these powers (if reactivated) to rein in Jeff Bezos and the Amazon Marketplace sellers, all while protecting workers.
It’s unlikely that Mitch McConnell’s Senate would go along with these proposals. But it’s worth noting that when bipartisan majorities rolled back price control authorities in 1953, they did so because they assumed Congress would, obviously, reauthorize the powers in a heartbeat.
9. Rent Control and Mortgage Stabilization for All
Workers and the unemployed are rightfully worried about paying their rent during the crisis, while homeowners are panicked about paying their mortgages. So far, the feds seem little inclined to do much about this, leaving it to the states to step into the breach. But with mega-banks that cross state lines owning so many of the mortgages, subfederal authorities are limited in what they can do. The DC Council, for instance, recently passed legislation that allows residential tenants to request rent deferrals if their landlords can get mortgage payments deferred. But that’s possible only if the bank that holds the mortgage is regulated by DC—excluding most major banks.
When big banks are the problem, big government has to step in. During the Truman administration, regulators were concerned that lenders might fuel speculative booms in real estate, and that housing quality (especially for veterans) might deteriorate.
As New Dealer Raymond Foley told Congress: “While housing considerations must be subordinated to the necessities of national security, the Nation’s housing standards should be maintained at as high a level as is consistent with defense needs.… It is of paramount importance that whatever restrictions are necessary are made equitably applied without requiring undue sacrifice from those least able to pay for housing.”
Accordingly, the original DPA gave the administration considerable control over consumer and real estate credit. While these powers were repealed in the years after, Congress could repeal the repeal, so that people can stay in their homes and see financial relief.
10. Socialism for Essential Workers
The DPA isn’t the only statutory game in town. The Brennan Center at New York University has identified 123 special authorities that are triggered during emergencies. These include opening up the Veterans Administration health and nursing home facilities to members of the armed forces, suspending student loan payments and interest accrual for active duty officers, and providing emergency services to farm workers. The National Guard and other armed forces should definitely be granted all of this. But in this health emergency, workers at hospitals, grocery stores, and takeout joints are equally essential. Congress could amend these authorities to ensure that all workers deemed essential get access to health care and debt forgiveness.
