White House: Watch as we use our (semi-)fully operational Defense Production Act authority

Question: Is this exercise of the Defense Production Act a consequence of Donald Trump’s desire to get back to normal more quickly? Or is it a relatively cost-free tactic to show leadership even when it might not be entirely necessary? FEMA administrator Peter Gaynor told CNN’s John Berman that Donald Trump would make the first formal exercise of his DPA authority today in ordering more production of COVID-19 test kits, as well as using its “language” in contracts for other equipment:

FEMA Administrator Peter Gaynor said the Trump administration on Tuesday would formally implement the Defense Production Act to secure medical equipment sorely needed to fight the coronavirus pandemic.

“So, just a little while ago my team came in, and we’re actually going to use the DPA for first time today,” Gaynor told CNN in an interview.

Gaynor said triggering the act would help access “about 60,000 test kits,” and added that the administration would insert “DPA language” into the mass contracts for the federal government’s order of 500 million personal protective masks.

President Donald Trump last week invoked the DPA as the administration broadened its response to the public health crisis, but he has resisted actually activating the statute — insisting that governors bear more responsibility for obtaining potentially life-saving supplies and arguing that the private sector would pitch in to furnish equipment voluntarily.

That’s largely what has been happening. Before this announcement, Ford Motors’ executive chair Bill Ford told NBC’s Savannah Guthrie that his automobile plants will ramp up to meet the demand not for cars, but for critical-use medical equipment. Ford laid out on Today their plans to partner with 3M, GE, and other companies to start churning out ventilators, respirator filters, face shields, and masks. Reuters notes that this came just a couple of days after Trump cut red tape to allow other manufacturers to shift COVID-19-sidelined production into these products:

Ford Motor Co (F.N) said on Tuesday it was working with General Electric’s (GE.N) healthcare unit and 3M Co (MMM.N) to speed up production of ventilators for patients and respirators for healthcare workers as the coronavirus pandemic escalates. …

Ford and GE Healthcare will expand the production of GE’s ventilator design to support patients with respiratory failure or difficulty breathing caused by the pathogen, Ford said.

Separately, Ford would work with 3M to increase manufacturing capacity of its air-purifying respirator designs to meet a surge in demand for first responders and healthcare workers.

Fiat Chrysler has also joined the effort, pledging its resources for mask manufacturing to fill critical gaps at hospitals and clinics:

Italian-U.S. car giant Fiat Chrysler has confirmed plans to produce a million face masks a month and said it will distribute them to emergency services in North America to help the fight against coronavirus.

FCA, which is also trying to help produce badly needed respirators for patients in intensive care in Italy, is one of a number of large manufacturers adapting production lines to make products in desperately short supply.

“Production capacity is being installed this week and the company will start manufacturing face masks in the coming weeks with initial distribution across the United States, Canada and Mexico,” it said in a statement released late on Monday.

The monthly output of one million masks will be donated to police, emergency medical staff, firefighters and to workers in hospitals and health care clinics, it said.

Just the threat of the DPA probably helped push production decisions, a point that the White House made yesterday at its daily briefing. But also beyond that are the incentives already in place to shift production — no demand for their normal products and massive avalanche of sweet, sweet government cash. The same dynamic has some distilleries shifting production away from booze (when bars are closed and some liquor stores as well) to alcohol, disinfectants, and hand sanitizers. Some of that is simple civic-mindedness, but it’s also driven by business decisions to keep from folding by meeting the demand that is out there and in reach.

Economically speaking, the solution for this is to keep the incentives rolling out, and the federal government is about to approve a geyser of money. That should be enough to distort markets into providing the government’s top priorities; the DPA is supposed to be used for situations where even that isn’t enough. Politically speaking, however, just using the threat of DPA as a potential intervention isn’t enough. Too many people are now demanding its use, including governors of particularly hard-hit states, to address gaps in critical supplies. That makes the non-use of that authority tough to defend, at least in a political sense.

Just this morning, Andrew Cuomo lashed out at Trump’s reluctance to use the DPA to command production of ventilators, out of considerable and understandable frustration:

Hence, we have Gaynor on TV this morning announcing the flexing of Trump’s DPA muscle, even though it might not actually accelerate the production of anything more than what would have taken place anyway. It will probably be just an hour or two from now before Trump issues an order under the DPA for ventilators too, especially since production is ramping up now anyway. It’s a good way of positioning the president as a leader who has control of the situation and protects him from political criticism, which has some value of its own in a crisis. At least, it will until the next time a governor or political opponent latches onto another shortage and attempts to blame Trump for it, at which point the White House can break out the DPA language again while supplying the more effective incentives more quietly. Lather, rinse, repeat is not just a handwashing strategy.