A deadly corporate lobbying campaign

This is the online version of Popular Information, a newsletter about politics and power — written by me, Judd Legum. You can sign up for your own subscription to get independent accountability journalism straight to your inbox:

Across the country, states are facing acute shortages of the supplies they need to slow the mounting death toll from COVID-19. There are not enough ventilators, protective gear for health care workers, or COVID-19 tests. These items are desperately needed to save the critically ill, keep the medical system functioning, and identify the sick so that they don’t unwittingly spread the virus. 

Trump has a powerful tool to compel private industry to produce what’s needed: the Defense Production Act. But, thus far, Trump has been extremely hesitant to use it. 

On March 18, Trump invoked the Defense Production Act but said it was not necessary for him to actually use it. 

On March 24, FEMA Administrator Peter Gaynor announced that Trump would use the Defense Production Act to secure thousands of additional COVID-19 tests. The next day, Gaynor abruptly reversed course and said that using the Act was unnecessary.

On March 27, Trump finally deployed the Act “to require General Motors to accept, perform, and prioritize Federal contracts for ventilators.” But, more than a week before Trump issued his order, General Motors had already “put hundreds of workers on an urgent project to build breathing machines as hospitals and governors pleaded for more in response to the coronavirus pandemic.” So it is unclear if Trump’s actions will meaningfully increase the supply. 

Trump has not used the Defense Production Act at all for COVID-19 tests or to accelerate the production of masks and other protective equipment for health care workers. Why? One reason is that the U.S. Chamber of Commerce (the Chamber), a lobbying group composed of major corporations, is lobbying Trump against invoking the law. The Chamber articulated its position in an issue brief:

A broad designation of industries under the [Defense Production] Act could easily backfire...Imposing new strictures on U.S. firms that require flexibility as they strive mightily to boost production in the cooperative spirit demanded by the present national emergency would be counterproductive. In these circumstances, an expansion of government regulation would be unhelpful and risky...Instead, government and industry need to continue to work closely together in a collaborative manner to devise specific responses to shortages for identified products.

According to the New York Times, the Chamber persuaded Trump’s son-in-law and top economic adviser that using the Defense Production Act was a bad idea.

The U.S. Chamber of Commerce and the heads of major corporations have lobbied the administration against using the act. They say the move could prove counterproductive, imposing red tape on companies precisely when they need flexibility to deal with closed borders and shuttered factories.

Mr. Trump and the director of his national economic council, Larry Kudlow, as well as Mr. Kushner, were persuaded by those arguments, administration officials said.

The approach advocated by the Chamber and accepted by the White House is not working. Critical shortages of key ventilators, protective equipment, and COVID-19 tests persist. The longer these shortages continue, the more people will die.

But the Chamber represents its members. They are the ones that pay dues that allow the organization to exist. If enough member companies spoke out against the Chamber’s lobbying, it would have to stop. Here are three companies that could make a difference by speaking out. 

Don’t be evil

Google says it will “support small- and medium-sized businesses (SMBs), health organizations and governments, and health workers on the frontline of this global pandemic.” Specifically, the company is highlighting steps it is taking to increase production of protective gear and ventilators. 

[Google will provide] [d]irect financial support and expertise to help increase the production capacity for personal protective equipment (PPE) and lifesaving medical devices. We’re working with our longtime supplier and partner Magid Glove & Safety, with the goal of ramping up production of 2-3 million face masks in the coming weeks that will be provided to the CDC Foundation. Additionally, employees from across Alphabet, including Google, Verily and X, are bringing engineering, supply chain and healthcare expertise to facilitate increased production of ventilators, working with equipment manufacturers, distributors and the government in this effort.

But Google is also an active member of the Chamber, and the Chamber is blocking action that could marshal the resources of numerous companies to produce this equipment. If Google spoke out against the Chamber’s lobbying, it would create enormous pressure on the Chamber to shift course. 

Google did not immediately return a request for comment. 

Just do it

Nike is positioning itself as an upstanding corporate citizen amidst the pandemic. In a statement, the company said the “well-being of our teammates and consumers is our top priority.” 

The company is using its marketing prowess to spread the word about social distancing. Iconic athletes like Michael Jordan and LeBron James are posting Nike-branded messages urging people to stay at home. 

👑 Now, more than ever, we are one team. #playinside #playfortheworld 👑
March 21, 2020

In a conference call, Nike CEO John Donahoe said the company was working on producing personal protective equipment for medical professionals. 

Companies like Nike need to do our part. Based on needs identified by the teams and health professionals at Oregon Health & Science University, our teammates are working right now about how to best help, including prototyping face shields of OHSU and others.

Nike resigned its seat on the Chamber’s board of directors in 2009 over a dispute about climate change. But the company said it would “continue our membership” because “[we] believe that we can better influence policy by being part of the conversation.”  

Nike is in a position now to influence the Chamber’s policy by speaking out against The Chamber’s lobbying activity. Nike did not immediately return a request for comment. 

What’s in your wallet?

Capital One CEO Rich Fairbank wrote an impassioned message to his employees about the financial giant’s response to COVID-19:

This is an extraordinary moment in human history. We are witnessing three unprecedented events sweep the world with breathtaking speed: A global pandemic, a near shutdown of the world, and a fiscal intervention on a magnitude unseen in generations. Uncertainty is everywhere. The global economy is on hold, and many businesses and individuals are unable to simply wait it out. How this will play out is difficult to predict. But Capital One is well prepared and we have sprung into action.

...I am moved by the heartfelt notes of gratitude from our customers who, despite all the chaos and uncertainty in their own lives, have taken time to write to Capital One. They are emotional about how our associates have served them with kindness and compassion, and they are grateful for how our company is supporting them during this crisis. 

The company is taking a number of laudable steps, including “a $50 million commitment of new and existing funds to support nonprofit partners who are serving local communities in this extraordinary time of stress and disruption.”

But Capital One is also a member of the Chamber, and the Chamber is actively blocking action which could blunt the impact of COVID-19 in the United States. If Capital One is truly committed to supporting its customers, it could speak out against the Chamber’s lobbying efforts. 

Capital One did not immediately return a request for comment.


Thanks for reading!