COVID-19 Federal Update 5-1-20

May 1, 2020

The House Homeland Security Committee is holding two virtual forums regarding the coronavirus:

  • Former Federal Emergency Management Agency head Craig Fugate will speak with members at 10 a.m.
  • Former White House Ebola Response Coordinator Ron Klain will speak with members at 1 p.m.

Immigrants and Coronavirus Coverage: Congressional Hispanic Caucus Chairman Joaquin Castro (D-Texas), Speaker Nancy Pelosi (D-Calif.), Senate Minority Leader Chuck Schumer (D-N.Y.) and others hold a press call at 2:15 p.m. on the importance of ensuring American citizens married to immigrants are not denied coronavirus stimulus aid passed by Congress.

Democrats to Host Forum on Pandemic: Reps. Donald Payne Jr. (D-N.J.) and Val Demings (D-Fla.) will hold a virtual forum at 10 a.m. today on the Federal Emergency Management Agency’s role in nation’s pandemic and emergency response. Former FEMA Administrator Craig Fugate is set to join the forum, which will offer members and the public “insight on FEMA’s response to the largest disaster response of the agency’s history,” according to a statement.  House Homeland Security Committee lawmakers including Payne and Counterterrorism Subcommittee Chairman Max Rose (D-N.Y.) will also host a virtual forum today with former White House Ebola Response Coordinator Ron Klain, according to a statement.

McEnany First White House Briefing: White House Press Secretary Kayleigh McEnany will hold a briefing at 2 p.m., the first formal briefing for reporters in more than a year.  McEnany, who had been the spokeswoman for Trump’s re-election campaign, took over the job last month. Former Press Secretary Sarah Huckabee Sanders discontinued the briefings in March of last year, and her successor, Stephanie Grisham, did not resume them. John Harney and Josh Wingrove have more.

 

SBA Program

Justice Sees Early Fraud Signs in SBA Loans: The Justice Department has begun a preliminary inquiry into how taxpayer money was lent out under the Paycheck Protection Program and has already found possible fraud among businesses seeking relief, a top official said. Assistant Attorney General Brian Benczkowski, who runs the department’s criminal division, said prosecutors have contacted 15 to 20 of the largest loan processors and the Small Business Administration, which oversees one relief program, as part of an effort to police the trillions of dollars in federal aid being pushed out hastily to blunt the economic impact of the coronavirus pandemic. Read more from Tom Schoenberg and Christian Berthelsen.

IRS Denies Deductions for Forgiven PPP Loans: Small businesses that manage to get their Paycheck Protection Program loans forgiven may find themselves losing valuable tax breaks, according to new guidance from the Internal Revenue Service. Companies that qualify for loan forgiveness under legislation Congress approved won’t be able to deduct the wages or other businesses expenses they paid for using the loan, according to an IRS notice published yesterday. “This treatment prevents a double tax benefit,” the agency said in the notice. Read more from Laura Davison.

Meanwhile, new IRS FAQs provide conflicting guidance for taxpayers, deviating from a nonpartisan congressional committee’s interpretation of applying health care expenses toward a tax break for businesses who keep employees on their payroll during the coronavirus pandemic. The agency answered more than 90 FAQs, giving businesses much of the clarity they need to proceed with claiming the employee retention credit worth up to $5,000 per employee. But one significant difference between the IRS guidance, which was updated Wednesday, and the Joint Committee on Taxation’s recent description of the benefit could complicate employers’ decision-making, especially since neither of the items are legally binding—meaning taxpayers can’t rely on them to support an argument in court. Read more from Allyson Versprille and David Hood.

House Ways and Means Chairman Richard Neal (D-Mass.) wants a public briefing from the IRS within seven days on the coronavirus stimulus payments being provided to taxpayers. “I feel very strongly that Americans deserve to hear from the Administration on this important topic and have their questions answered directly by IRS officials,” Neal said in letter to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig. Read more from Kaustuv Basu.

Fed Expands PPP to More Lenders: The Federal Reserve yesterday said it’s expanding a program that helps the government provide stimulus loans to small businesses and is designed to keep workers on payrolls during the coronavirus pandemic. The Fed said in a statement that it broadened access to its PPP Liquidity Facility to additional lenders such as non-depository institutions. The central bank also widened the collateral that can be pledged. The Trump administration earlier yesterday laid out criteria allowing non-bank lender s to handle loans “to ensure broad and diverse lender participation.” Read more from Scott Lanman.

The Fed also revamped its Main Street Lending Program in ways that will allow battered oil companies to qualify for the aid after industry allies lobbied the Trump administration for changes. Larger, more heavily indebted companies can now qualify and use the money to pay off prior loans under the changes the central bank announced yesterday. The move opens the door to more oil and gas producers, said Sen. Kevin Cramer (R-N.D.), who pressed the administration on the issue as energy companies struggle to survive an epic collapse in fuel demand and crude prices. Jennifer A. Dlouhy, Ari Natter and Saleha Mohsin have more

 

Reopening of States

Red States Will Need Bailouts, Too: Many of the states that are ground zero for the Covid-19 pandemic—New York and New Jersey, as well as California and Illinois—are solidly Democratic. But the fiscal challenges that states now face aren’t limited to the blue ones and go well beyond pension obligations. States across the country are reeling from a brutal double whammy of lost revenue: With 30 million people thrown out of work in the past several weeks, income tax collections are tanking, and sales taxes have evaporated after store s and restaurants shuttered. Most states receive a majority of their revenue from those two sources. Read more from Danielle Moran.

An analysis backed by data from the Congressional Budget Office contends the pandemic could trigger state budget shortfalls of $650 billion over three years. The Center on Budget and Policy Priorities, a progressive think tank, on Wednesday issued a new estimate of the coronavirus outbreak’s impact on the states based on recent CBO data and updated projections from economists at Goldman Sachs.

The revised estimate suggests states will experience revenue shortfalls “substantially deeper than during the Great Recession.” Specifically, CBPP estimated losses of $110 billion for fiscal year 2020, $350 billion for fiscal year 2021, and $190 billion for fiscal year 2022. Those numbers compare to the estimate of a $500 billion shortfall the center announced in mid-April. Read more from Michael J. Bologna and John Herzfeld

 

Healthcare

A planned Senate Republican bill would require tech companies, such as Apple and Google, to obtain consent to collect people’s health or location data as part of a response to the coronavirus pandemic.  The bill, which is expected to be introduced by four Republicans when members return to the Capitol next week, comes as privacy concerns mount over the bulk collection of user data to trace the spread of virus. A draft of the legislation was obtained by Bloomberg and confirmed by two GOP staffers.  The measure, led by Sen. Roger Wicker (R-Miss.), seeks to require certain companies explain “how their data will be handled, to whom it will be transferred and how long it will be retained” when the patient data is first being collected, according to an announcement from the Senate Commerce, Science, and Transportation Committee, which Wicker heads. The committee has spent months working on a bipartisan bill governing online privacy with little success.

The bill comes as Apple and Google are racing to launch an app project that will give a tool to public health agencies to track the spread of the coronavirus. The technology would let those who test positive for Covid-19 to put their diagnosis into an app. The system would then use Bluetooth technology to notify anyone else who has come into contact with that person of possible exposure. The alerts wouldn’t reveal who the sick person is and the companies have taken steps to build in privacy protections and prevent the identification of those with the virus. Still the technology companies have faced criticism that the system is collecting too much data, and privacy concerns may get in the way of the broad adoption that would be needed to make the project work. Read more from Ben Brody, Rebecca Kern, and Daniel Stoller.

Contact Tracing Poses ‘Pandora’s Box’ for Reopening Businesses: Businesses looking at smartphone-based tools to track their workers’ contact with people infected with coronavirus will have to walk a delicate tightrope between reopening safely and protecting employee privacy. Apple and Alphabet‘s Google released initial versions of new virus proximity tracking tools Wednesday so public health agencies can prepare in advance of a mid-May roll out. The applications are designed to use public health information and unique Bluetooth identifiers assigned to devices to notify people when they’ve come into proximity with someone with the virus. Digital contact tracing would supplement analog efforts, in which tracers try to connect the dots via phone calls, in-person screenings, and voluntary disclosures.

Other businesses, like PricewaterhouseCoopers and Ford, are developing their own tracking devices as they prepare to eventually reopen offices and factories. Corporate lawyers say businesses are contemplating proximity-tracking wristbands and applications, among other tools to mitigate the spread of Covid-19, the disease caused by the coronavirus. Employers might require workers to agree to tracking in order to be permitted to return to their workplace when stay-at-home orders are gradually lifted. That could mean trading privacy rights—even when they’re off the clock—to keep their jobs. Read more from Daniel R. Stoller and Paige Smith.

Democrats Push for Contact Tracing Strategy: House Energy and Commerce Chairman Frank Pallone (D-N.J.), Health Subcommittee Chairwoman Anna Eshoo (D-Calif.) and Oversight Subcommittee Chairwoman Diana DeGette (D-Colo.) urged HHS Secretary Alex Azar in a letter yesterday to develop a national Covid-19 contact tracing strategy and increase the nation’s tracing capacity. The three Democrats said the White House lacks a “coordinated and comprehensive plan” on contact tracing and asked if any member of Trump’s coronavirus task force, specifically, is charged with handling U.S. tracing efforts. Read their letter here.

Medicare to Waive More Testing Rules: Medicare beneficiaries may now get tested for Covid-19 if they’re told to do so by a health-care professional, under changes announced yesterday. The Centers for Medicare & Medicaid Services said it’s temporarily waiving more regulations to give health providers and hospitals more flexibility in their response to the coronavirus crisis. Some of the changes were mandated by the third stimulus legislation that Trump signed into law last month. Read more from Shira Stein.

White House Uses Media’s Test Count, Not CDC’s: The Trump administration is using Covid-19 testing data from a volunteer tracking project led by reporters and not that of the U.S. Centers for Disease Control and Prevention’s, according to a strategy document, as the health agency significantly lags in counting how many Americans have been tested. A widespread national testing program will be essential to reopening the country. The White House has been relying in part on the Covid Tracking Project, a volunteer effort to collect and track testi ng data led by Alexis Madrigal, a journalist for The Atlantic. Kristen V. Brown and Emma Court have more.

FDA Moving Fast on Gilead Drug: The Food and Drug Administration is moving at “lightning speed” to review data on Gilead Sciences’ experimental remdesivir to treat Covid-19, Commissioner Stephen Hahn said, after results emerged from a key U.S. trial that stirred cautious optimism. “We’re working with the company to emphasize the necessity of speed, while at the same time, to understand the data,” Hahn said in an interview. Read more from Anna Edney.  Gilead may spend $1 billion on its breakthrough treatment for Covid-19 this year alone, CEO Daniel O’Day said. How much revenue — if any — the company expects to generate is another matter. The company has pledged to donate 1.5 million vials of the drug, its entire current supply, while O’Day said it is working with other major pharmaceutical companies to boost production of the medication, which must be given intravenously. The unprecedented pace and nature of the operation has left investors and the analysts who scrutinize corporate performance scrambling to understand what the business will ultimately look like. Read more from Michelle Fay Cortez.

Trump Says Vaccine Project Not Over-Promising: Trump defended the White House’s effort to fast-track a coronavirus vaccine, saying yesterday that the project’s goal to produce 300 million doses by the end of the year isn’t too ambitious. “I’m not over-promising,” Trump said at the White House yesterday. He complained that “if we come up with a vaccine in record time” his critics would say that he should have done it faster. The project aims to hasten vaccine development by testing many different candidates and beginning production before they’ve completed clinical trials simultaneously. Read more from Jordan Fabian.

Amgen Tests Otezla for Treatment: Amgen will investigate the psoriasis drug Otezla as a potential therapy to treat Covid-19, the company announced during its first-quarter earnings. In patients with severe symptoms, it’s believed that an overactive immune system may be at least somewhat to blame. Otezla is being investigated to help treat immune system-related inflammatory diseases other than psoriasis. Researchers are exploring if drugs that help temper the immune response may help to curb the severity of the illness. Read more.

Trump Hails Kushner’s Airlift But Details of Sales Are Secret: A program created by Donald Trump’s son-in-law Jared Kushner has airlifted millions of gloves, masks and other coveted coronavirus supplies into the U.S. from overseas — but it isn’t clear who’s getting them and at what price, or how much private-sector partners are earning through the arrangement. Kushner’s “Project Airbridge” provides transportation via FedEx and others for supplies that medical distributors, including McKesson and Cardinal Health, buy from overseas manufacturers, mainly in China. Once a supplier’s goods arrive in the U.S., the companies must sell half the order in government-designated hotspots. They sell the rest as they see fit.  The U.S. government provides the air transportation for free, to speed the arrival of the products. The six distributors keep the profits, if any. The program has won praise from some states, where officials say it provided hard-to-find supplies at a critical time in the Covid-19 outbreak, even if it met a fraction of demand. Other governors and lawmakers have raised questions, saying they have no visibility into how supplies are distributed and the government has only limited power to direct it . Read more from Josh Wingrove, Daniel Flatley and Shira Stein.

House Team Backs Doctors Group: A contingent of doctor-friendly lawmakers is looking at giving small-practice doctors a carve out in the next coronavirus bill. Reps. Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), both of whom are physicians, said that doctors working in their own practices or as part of small-group practices are among the hardest hit by the losses in patient visits caused by the spread of coronavirus. These practices have had to forgo elective medical procedures, which are typically more lucrative than emergency services, for months and many are in danger of closing. Alex Ruoff has more. Meanwhile, Speaker Nancy Pelosi (D-Calif.) said yesterday U.S. states and cities alone are seeking up to $1 trillion in aid in the next coronavirus relief bill, a number that may be tough to hit as lawmakers juggle demands to bolster the pandemic-crippled economy.  Pelosi said state governments are still finalizing their request but so far sought $500 billion, while local governments have a similar figure. Lawmakers also are considering other proposals including another round of payments to taxpayers, expanded unemployment insurance, help for renters, and access to broadband.

House Minority Leader Kevin McCarthy (R-Calif.) indicated openness to targeted state and local aid in the next bill in a press call yesterday. He said that states should be required to open their accounting books and prove that their expenses were virus-related to prevent them from using the funding for other fiscal burdens, such as public employee pension obligations. Read more from Erik Wasson, Billy House and Laura Litvan.

Senators Want More Medical Visas: A bipartisan Senate group said that it will introduce a measure that would temporarily address a shortage of doctors and nurses in the U.S. due to the coronavirus. The proposal would reallocate about 40,000 unused visas already approved in previous years for doctors and nurses, Sen. David Perdue (R-Ga.) said in a statement, Megan Howard reports.

HHS Awards $20 Million for Telehealth Access: The federal government will give $20 million to half a dozen national organizations and a university to boost telehealth access for vulnerable groups, including pregnant women and young children. The funding is aimed at increasing infrastructure and helping health-care providers get licensed to provide virtual care across state lines, the HHS said yesterday. Read more from Shira Stein.

Health Extenders Kicked Down Road in Virus Bill: More than a dozen health programs remain in limbo after again being extended for a short period in the third coronavirus relief law. Lawmakers pushed back until Nov. 30 a deadline—initially set for May 22—that was designed to require action on legislation that would tackle drug pricing or surprise billing. Danielle Parnass has more on the state of play of health extender legislation.

Airlines Enter Face-Mask Era: American and Delta have decided to make passengers wear face masks, adding momentum to what’s catching on as a new standard for the industry as it fights to win back customers during a pandemic. The larger carriers are following JetBlue, which announced April 27 that travelers would have to cover their nose and mouth throughout trips starting May 4. Small children are exempt, Mary Schlangenstein reports.

U.S. Spies See No Human Role in Virus: U.S. intelligence agencies don’t believe SARS-Cov-2, the virus that causes Covid-19, was created by humans or modified in China, a controversial finding that comes as the president increasingly tries to pin blame on Beijing for the outbreak. The U.S. intelligence community “concurs with the wide scientific consensus that the Covid-19 virus was not man made or genetically modified,” according to a statement from the DNI office yesterday.  The statement adds that the intelligence community “will continue to rigorously examine emerging information and intelligence” to learn if the outbreak began through contact with infected animals, “or if it was the result of an accident at a laboratory in Wuhan,” referring to the Chinese city where the virus was reported first. Read more from Chris Strohm and Billy House.

 

Transportation

Trump Hails Kushner’s Airlift: A program created by Donald Trump’s son-in-law Jared Kushner has airlifted millions of gloves, masks and other coveted coronavirus supplies into the U.S. from overseas — but it isn’t clear who’s getting them and at what price, or how much private-sector partners are earning through the arrangement. Kushner’s “Project Airbridge” provides transportation via FedEx and others for supplies that medical distributors, including McKesson and Cardinal Health, buy from overseas manufacturers, mainly in China. Once a supplier’s goods arrive in the U.S., the companies must sell half the order in government-designated hotspots. They sell the rest as they see fit.

The U.S. government provides the air transportation for free, to speed the arrival of the products. The six distributors keep the profits, if any. The program has won praise from some states, where officials say it provided hard-to-find supplies at a critical time in the Covid-19 outbreak, even if it met a fraction of demand. “We are very supportive of Airbridge and other federal programs that can provide PPE to our first-line responders,” said Colorado Governor Jared Polis, a Democrat. “But it doesn’t meet our full needs.”

Other governors and lawmakers have raised questions, saying they have no visibility into how supplies are distributed and the government has only limited power to direct it. The program appears to run largely outside the standard federal channels for competitive bidding, disclosure and transparency — the government hasn’t documented how the products are sold, how prices are determined or which hospitals and other customers receive the supplies. Read more from Josh Wingrove, Daniel Flatley and Shira Stein.

U.S. Response to Coronavirus Nears $3 Trillion: Lawmakers have passed four measures with almost $3 trillion in business loans, tax breaks, aid for individuals, and other funding to address the coronavirus pandemic, with talks underway for additional relief in the weeks ahead. Bloomberg Government’s legislative analysts review the first four response laws and policies that could be included in a fifth measure in a new BGOV OnPoint.

U.S. Working With Airports, Other Nations on Screening, Pompeo Says: Secretary of State Mike Pompeo, in a radio interview, said the U.S. is weighing measures to screen passengers once the coronavirus travel bans are lifted, Nick Wadhams reports. Pompeo, in an interview with Dan “Ox” Ochsner of Ox in the Afternoons, said he sees some new vetting procedures put in place.  “I think we’ll have to make sure that those people who are thinking about traveling have confidence that as they board that airplane they are not at risk,” Pompeo said. “People traveling to places like the United Kingdom or Europe or South America, we’re working with those airports and countries to develop exactly those algorithms so we can try and get people back into business, back into commission.”

FAA Grants Virus-Related Relief to Private Pilots: Federal aviation regulators are extending the testing deadlines for thousands of private pilots, flight schools and smaller commercial aviation operations because of the Covid-19 epidemic, Alan Levin reports. The FAA, using emergency tools to quickly enact new regulations, said in a filing that it plans to adopt the measures on May 4.  “This relief allows operators to continue to use pilots and other crew members in support of essential operations during this period,” the agency said in the Federal Register posting. In a separate action, the FAA yesterday also granted a two- or three-month grace period for training and testing deadlines for air-ambulance pilots. The agency also opened up a new drone training program to colleges as part of its Unmanned Aircraft Systems Collegiate Training Initiative.

American Bucks Funding Trends: American Airlines reported a first-quarter net loss of $2.2 billion, or ($5.26) per share yesterday, ending with $6.8 billion of available liquidity and expects to end the second quarter with approximately $11 billion of liquidity. Still, the carrier is doubling down on government aid even as rivals expand their funding sources with sales of shares and bonds. The largest carrier based on passenger traffic has been absent amid a recent flurry of activity in debt and equity markets tapped by Delta, United and Southwest. Instead, American is focused on negotiating a $4.75 billion loan from the Treasury Department. Like other carriers, American has already gotten U.S. payroll aid, taking $5.8 billion in grants and loans.

Travel Routes on Hold: American received permission from the Transportation Department to suspend service to Duluth, Minn. and halt flights to Hawaiian airports in Kahului, Kona and Lihue until August 18. From June to early September the carrier can also suspend flights to Anchorage, Alaska; Kalispell, Mont.; as well as Nantucket and Martha’s Vineyard, Mass., Ryan Beene reports. The airline is extending New York-area flight cancellations into May as demand remains low, Reuters reports, citing a memo to pilots.

Airlines Enter Face-Mask Era: American and Delta have decided to make passengers wear face masks, adding momentum to what’s catching on as a new standard for the industry as it fights to win back customers during a pandemic. The larger carriers are following JetBlue, which announced April 27 that travelers would have to cover their nose and mouth throughout trips starting May 4. Delta‘s mandate starts the same day, with American’s kicking in on May 11. Small children are exempt, Mary Schlangenstein reports.  Meanwhile, passengers flying with Frontier will have to wear masks at the airline’s ticket counters, gate areas and onboard its aircraft starting May 8. Face coverings have been required for Frontier flight crews since April 13. The airline will also block every other row on its aircraft departing on flights through first week of May, Erin McClam reports.

Detroit Struggles With Safety, Supply Chain: Ford briefed reporters yesterday on the safety measures the company has spent weeks preparing to resume North American production, but it fell short of assuaging the United Auto Workers union, which could stand in the way of much of the industry’s plans to reopen, Keith Naughton reports.  Another challenge is gearing up the extensive network of auto-parts suppliers, especially in Mexico, where stringent shelter-in-place orders have shut down almost all manufacturing. The UAW has set a high bar for Detroit carmakers to restart, and its stance reflects ongoing tensions over restarting factories that have been closed since mid-March. “The UAW is asking for as much testing as is possible to prevent exposure to the virus,” UAW President Rory Gamble said in a statement. While the availability and accuracy of tests are “fluid,” he said, the union wants as much of it deployed as possible.

UAW also has workers at General Motors. Vice President Mike Pence and Transportation Secretary Elaine Chao visited the automaker’s plant in Kokomo, Ind. yesterday. Pence was seen wearing a face mask following criticism for not doing so earlier this week during a visit to the Mayo Clinic.

Ligado Clearance to be Probed in Senate Hearing: The Senate Armed Services Committee yesterday formally announced a May 6 hearing on the impact to national security of the Federal Communications Commission’s approval of Ligado’s plan for a mobile broadband service.

FAA Awarding $1 Billion in Airport Improvement Grants: Transportation Secretary Chao yesterday announced the award of $1.187 billion in airport safety and infrastructure grants — $731 million in Airport Improvement Program (AIP) grants and $455 million in Supplemental Discretionary grants — to 439 airports in 50 states.

TSA’s Challenges With Canine Teams: The Transportation Security Administration spent almost $77 million for 287 Passenger Screening Canine teams in fiscal 2018 but still has yet to show that they can provide effective security at airport screening checkpoints, according to a new Department of Homeland Security Office of Inspector General report.  Additionally the watchdog audit found that because the agency doesn’t “identify and document mission needs, capability gaps, and operational goals for deploying the teams” officials can’t determine the number of teams needed, where to place them or if airports are using the teams properly.

Watchdog Hints at Contracted Air Traffic Control Preference: Contract towers were more cost effective and had comparable safety records to FAA towers, according to a recent watchdog report. On average, between fiscal years 2015 and 2018, contract towers used at least 47.6% fewer resources — or incurred lower controller staffing costs — even though comparable FAA towers handled more total flights, according to the Transportation Department’s Office of Inspector General report.

Challenges Meeting Positive Train Control Deadline: Software and vendor issues are making it difficult for railroads to meet the year-end positive train control (PTC) deadline, according to a Government Accountability Office report out yesterday.   The Federal Railroad Administration is requiring 42 railroads to implement PTC — a system designed to automatically stop a train before derailment or train-to-train accidents occur — by Dec. 3. The GAO found that 24 railroads remained in the same implementation phase in the last nine months of 2019. Part of the challenge is that positive train control software often must be customized to each railroad, making it more complex to set up.

Money-Saving Recommendations for Highway Projects: The Department of Transportation should better document how it selects highway projects to receive grants, the Government Accountability Office said in its annual list of recommendations to eliminate mismanagement and save money.  The list gives 16 open recommendations for the Transportation Department. Included are suggestions that the agency develop specific performance measures for self-driving cars and create a stronger methodology to compare truck safety. The Transportation Department has implemented eight of the 16 recommendations the GAO made last year.

Moon Landing Winners: NASA awarded contracts valued at almost $1 billion to companies including Elon Musk’s Space Exploration Technologies and Jeff Bezos’s Blue Origin to develop a moon lander, Justin Bachman reports.  The research contracts represent “the crown jewel” in the Trump administration’s effort to return astronauts to the moon by 2024, Doug Loverro, the U.S. space agency’s associate administrator for human exploration, said yesterday. Dynetics, an Alabama-based subsidiary of Leido, also was a winner.

Tesla May Get More Time on N.Y. Employment Quota: The pandemic may buy Tesla more time to meet an employment quota for its state-subsidized solar factory in Buffalo, New York. Officials are considering delaying state hiring targets for one year, according to a spokeswoman for New York’s economic development agency.  Tesla had until yesterday to employ 1,460 people at the plant to avoid paying a $41.2 million penalty, Brian Eckhouse reports.

 

Economy

Red States Will Need Bailouts, Too: Many of the states that are ground zero for the Covid-19 pandemic—New York and New Jersey, as well as California and Illinois—are solidly Democratic. But the fiscal challenges that states now face aren’t limited to the blue ones and go well beyond pension obligations. States across the country are reeling from a brutal double whammy of lost revenue: With 30 million people thrown out of work in the past several weeks, income tax collections are tanking, and sales taxes have evaporated after store s and restaurants shuttered. Most states receive a majority of their revenue from those two sources. Read more from Danielle Moran.

An analysis backed by data from the Congressional Budget Office contends the pandemic could trigger state budget shortfalls of $650 billion over three years. The Center on Budget and Policy Priorities, a progressive think tank, on Wednesday issued a new estimate of the coronavirus outbreak’s impact on the states based on recent CBO data and updated projections from economists at Goldman Sachs.

The revised estimate suggests states will experience revenue shortfalls “substantially deeper than during the Great Recession.” Specifically, CBPP estimated losses of $110 billion for fiscal year 2020, $350 billion for fiscal year 2021, and $190 billion for fiscal year 2022. Those numbers compare to the estimate of a $500 billion shortfall the center announced in mid-April. Read more from Michael J. Bologna and John Herzfeld.

Vaccine Effort Ramps Up: The race is on to be the first developer of a coronavirus vaccine, with global drugmakers and the White House seeking to compress into just months a process that normally takes several years. Whether it can happen remains an enigma. For the Trump administration, news of a successful vaccine could calm the virus’s toxic effects on the U.S. economy in the midst of an ongoing presidential campaign. Trump’s goal with “Operation Warp Speed,” a covert push reported on this week, is for hundreds of millions of doses to be produced by year’s end. “I’m not over-promising,” Trump said in a White House meeting with New Jersey Gov. Phil Murphy (D) yesterday. “You know who’s in charge of it, honestly? I am.”

The White House initiative aims to compress research, testing and manufacturing of a vaccine by as much as eight months, pulling in health agencies, military resources and drugmakers. The plan, which could result in billions of dollars in government spending, hasn’t been rolled out in full. The idea is that the government would bear some of the financial risk that would normally fall to individual drugmakers, according to people familiar with the plan. The administration would facilitate the running of multiple processes in parallel to build out manufacturing for vaccines, some of which could fail, said the people who asked not to be identified because the specifics aren’t yet public. Read more from Riley Griffin.

Covid-19 Pandemic Likely to Last Two Years, Report Says: The coronavirus pandemic is likely to last as long as two years and won’t be controlled until about two-thirds of the world’s population is immune, a group of experts said in a report. Because of its ability to spread from people who don’t appear to be ill, the virus may be harder to control than influenza, the cause of most pandemics in recent history, according to the report from the Center for Infectious Disease Research and Policy at the University of Minnesota. People may actually be at their most infectious before symptoms appear, according to the report.  After locking down billions of people around the world to minimize its spread through countries, governments are now cautiously allowing businesses and public places to reopen. Yet the coronavirus pandemic is likely to continue in waves that could last beyond 2022, the authors said. Read more fro John Lauerman.

McConnell Spoke With MLB Chief: Senate Majority Leader Mitch McConnell (R-Ky.), in an interview with a Kentucky sports radio station, said he spoke with Major League Baseball Commissioner Rob Manfred a few weeks ago to discuss getting the season back up and running. “I called the commissioner of baseball a couple of weeks ago and I said, ‘America needs baseball. It’s the sign of getting back to normal. Any chance?” McConnell told 93.9 FM WLCL. He said there’s discussion about how to salvage at least part of the season starting around July 4. Read more from Steven T. Dennis.

Homeland Chair Wants ICE Contractor Detention Info: House Homeland Security Chairman Bennie Thompson (D-Miss.) sent letters to private prison companies CoreCivic, The GEO Group, and others which manage some detention facilities for Immigration and Customs Enforcement yesterday. Thompson pressed for more information about how the companies are trying to halt the rising spread of coronavirus, citing media reports indicating the groups were preventing staff and detainees from wearing masks. Thompson also pressed for information on how many staff tested positive.  Meanwhile, the American Civil Liberties Union and Capital Area Immigrants’ Rights Coalition filed a lawsuit against the Trump administration alleging failure to provide fair hearings and release to immigrants in detention, a situation they said puts those individuals in heightened jeopardy due to the spread of the virus in facilities, according to a press release.

Democrat Wants Job-Training Funds to Top Great Recession Level: The top Democrat on the House labor panel is proposing a bill to nearly double the investment in workforce-training programs Congress made during the Great Recession, setting up another point of possible partisan tension as lawmakers move toward negotiations on the next major virus-relief package. House Education and Labor Committee Chairman Bobby Scott (D-Va.) will introduce a proposal Friday to spend $15 billion on workforce-training programs, dwarfing the commitment in the $2.2 trillion CARES Act, which featured a $345 million grant program for unemployed workers. The bill would give states funding to beef up vocational training programs and other employment services to aid the flood of newly jobless workers, a number that has now eclipsed 30 million. Read more from Jaclyn Diaz.

 

Campaign Trail

Trump Campaign to Break TV Hiatus: Presidential candidates saturated the airways with more than 9,000 hours of political ads this winter. But since most of the country went into a virus-fueled lockdown, neither Trump nor Joe Biden have broadcast a single 30-second television spot. Now, Trump’s re-election campaign is set to release a flood of advertisements touting his response to the coronavirus pandemic after both camps wrestled with how to make their case to nervous voters without seeming tone deaf amid the crisis and its economic fallout. A senior Trump campaign official said the president is spending seven figures on a nationwide ad blitz praising his management of the crisis. The commercials, which will begin appearing on Sunday, are meant to be inspirational and to signal the start of economic recovery after more than a month of lockdown because of social-distancing requirements, the official said. Read more from Bill Allison and Mario Parker.

Biden to Address Assault Allegations on TV: Biden will address Tara Reade’s sexual-assault allegations for the first time today in an interview on MSNBC, the network announced yesterday. Reade, a former aide in Biden’s Senate office, said in 1993, Biden pushed her against a wall in a Senate office building, put his hand up her skirt and sexually assaulted her with his fingers. The Biden campaign has denied the allegations as have other former Biden aides, but the presumptive Democratic nominee has yet to address Reade’s claims himself. MS NBC said Biden would be joining “Morning Joe” to do so for the first time. Read more from Tyler Pager. Trump said yesterday that Biden should respond to the assault allegations and said they could be false. Trump said he knows “all about false accusations,” arguing he’s been falsely accused a number of times, Catherine Dodge reports.

Pence Says Flynn Likely Didn’t Intend to Mislead: Vice President Mike Pence said he increasingly believes former White House National Security Adviser Michael Flynn didn’t intend to mislead him about conversations with a Russian official before Trump took office. “I’m more inclined to believe it was unintentional than ever before,” Pence told reporters yesterday after a tour of a General Motors plant in Indiana that’s building hospital ventilators. “When you see the nature of abusive actions by Justice Department officials toward him, it’s dee ply troubling.” Read more from Jennifer Jacobs and Justin Sink.

 

Other stories

 

Supreme Court to Hold First Livestream Arguments: For the first time in history, people outside the U.S. Supreme Court’s walls will be able to hear arguments as they happen. It may not be baseball, but plenty of court watchers and casual fans alike are excited for the action. The institution rejects cameras in the courtroom or even same-day audio, but the coronavirus threw it a curveball and now the justices are livestreaming 10 arguments over the next two weeks, with that audio carried to the public by C-Span and other networks.

Kimberly Strawbridge Robinson details those controversies to be considered by the nine justices over six dates, beginning May 4 and wrapping up on May 13. They’ll be phoned in by counsel as the court abides social distancing requirements necessitated by the pandemic. The lineup starts with some table-setters, less weighty cases, presumably to work out any kinks, then finishes with some heavy hitters — cases involving subpoenas for Trump’s financial records and a dispute over faithless Electoral College electors. Read more.

Trump Eyes Order to Block Savings Fund From Chinese Stocks: Trump is exploring blocking a government retirement fund from investing in Chinese equities considered a national security risk, a person familiar with the internal deliberations said. The Thrift Savings Plan — the federal government’s retirement savings fund — is scheduled to transfer roughly $50 billion of its international fund to mirror an MSCI All Country World Index, which captures emerging markets, including China. The move comes after months of pressure from concerned lawmakers such as Sen. Marco Rubio (R-Fla.). Read more from Jenny Leonard.

Trump Attack on Sweden Revives Covid-19 Controversy: Trump’s latest verbal attack on Sweden has reignited a debate on whether the country’s relaxed approach to fighting Covid-19 is madness or genius. Trump yesterday sought to direct attention toward developments in Sweden. “Despite reports to the contrary, Sweden is paying heavily for its decision not to lockdown,” he tweeted. Johan Carlson, the director general of Sweden’s public health agency, said Trump’s comments weren’t weighing on his deliberations. “The important thing is that you make sure you keep the disease under control so that the health-care system isn’t overloaded, and so far we’ve managed that,” he said, according to a report in Aftonbladet. Read more from Morten Buttler and Nick Rigillo.

Warren Urges SEC to Require Climate Change Disclosures: Sen. Warren is urging the SEC to require public companies to discuss the impact and risk of climate change as the regulator considers overhauling its rules for management disclosures. In an April 28 letter to Jay Clayton, the Securities and Exchange Commission chairman, Warren writes the agency is missing an important opportunity to arm investors with details about climate risks, information key to investment decisions. Read more from Amanda Iacone.

Afghan Civilian Casualties Fell While U.S. Seeks Deal: Civilian casualties in Afghanistan declined during the first quarter of the year even as attacks by the Taliban increased while the insurgent group negotiated a deal with the U.S. meant to help American forces leave the country. The U.S.-led coalition reported 1,268 civilian casualties through March 31, a 32% drop from the previous quarter and a 16% decrease compared to the same period last year, the U.S. Special Inspector General for Afghanistan Reconstruction, or Sigar, said in a report publis hed late yesterday. Read more from Glen Carey.

 

Today on the Hill

 

White House

  • 11:00 am – In-House Pool Call Time
  • 11:30 am – Trump receives his intelligence briefing
  • 12:30 pm – Trump has lunch with Pence
  • 2:00 pm – Press Secretary Kayleigh McEnany holds a briefing
  • 4:15 pm – Trump participates in a Presidential Recognition Ceremony Hard Work, Heroism, and Hope
  • 5:00 pm – Trump departs the White House en route to Camp David
  • 5:30 pm – Trump arrives at Camp David

Senate

  • Senate to return next week

House

  • Lawmakers aren’t scheduled to return to D.C. next week as planned, but negotiations and drafting of next stimulus bill can take place without most lawmakers in town

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