Trump to halt funding for WHO pending review; could complicate Congress’s rescue efforts
President Trump announced Tuesday that the Administration will stop making payments to the World Health Organization for 60 to 90 days while the White House conducts a review into the WHO’s role in “mismanaging and covering up” the ongoing pandemic. This move was praised by some Republicans, but criticized by Democrats, public-health experts, and other international partners including the E.U. and Germany. The move is widely viewed as Trump’s effort to shift blame to China for the pandemic, rather than taking responsibility for the Administration’s response during Q1 of 2020. (Notably, circumstantial evidence has also surfaced to support the conclusion that the coronavirus that causes Covid-19 originated in a laboratory in China, rather than in a market.)
The White House will likely require any withheld funds to be “reprogrammed,” i.e. redirected from the WHO to other similar purposes, in order to comply with spending rules set by Congress. In the case of America’s contribution to the WHO ($400 million in 2019, the largest amount from any single nation and amounting to one-fifth of the organization’s budget), Congress does not explicitly appropriate those funds to the WHO; rather, the State Department allocates money designated to multilateral organizations, through its Bureau of International Organizations. For this reason, the White House can likely redirect the funds without violating an act of Congress. (By way of comparison, the White House was found to have violated the law in 2019 for withholding funds explicitly designated by Congress for Ukraine’s security, which formed one of the grounds for President Trump’s impeachment.)
Congress could, however, explicitly restore the funding to WHO, and one could imagine Democratic lawmakers might insist on this as rescue packages worth trillions of dollars continue to be enacted throughout the spring. Speaker Nancy Pelosi said yesterday that Trump’s WHO decision is “illegal and will be swiftly challenged.” The Democrats prevented a Republican bill from moving through the Senate last week, after the Republicans refused to add funds for hospitals, as well as state and local governments. (The GOP bill would have added $250 billion to a rescue fund for small businesses that is supposedly empty as of yesterday.)
Meanwhile, both the House and the Senate have announced that they will remain in recess until May 4 at the earliest. However, Congress can still enact legislation, as long as no lawmaker objects. Congress will likely enact another large rescue package in May, and continue to replenish the various programs enacted last month in the CARES Act. Democrats will continue to push for the issues outlined above, as well as for resources for election security, and additional support for the U.S. Postal Service. Another issue worth watching is using the package to encourage the shortening of supply chains — particularly from China. Sen. Josh Hawley (R-Missouri) is advocating for “strong local-content requirements for all industries essential to our crisis response,” as well as “generous financing for all businesses looking to move back home” from China and other overseas locations.
Economic projections worsen; no concrete plans yet to restart economy
The International Monetary Fund has now projected for 2020 the worst economic downturn since the Great Depression, with global GDP shrinking by three percent. The IMF also predicts that the U.S. economy will shrink by 6 percentage points in 2020. Many projections from weeks ago deemed “worst case” are now the new base case. For example, JPMorgan Chase’s lead U.S. economist now projects American unemployment to reach 20 percent this month. U.S. Treasury Secretary Steven Mnuchin had warned Senators four weeks ago that unemployment could reach 20 percent “without government intervention,” helping to prompt the passage of the CARES Act. U.S. jobless claims have now hit 17 million within the last three weeks and will spike again today when the U.S. Department of Labor releases last week’s figures. By way of comparison, the total jobless claims during the Great Recession of 2009 were 15.3 million.
A robust political debate has emerged about how quickly to “reopen” the U.S. economy. Trump and many Republican allies want to do so soon, despite health risks — in order to soften the economic damage. Gary Cohn, Trump’s top economic advisor during the first 18 months of his presidency, has cautioned against moving too quickly and said it must happen in stages. Trump has now empaneled a “Council to Reopen America,” comprising mostly business leaders, as a counterweight to his public-health team. Nevertheless, on the group’s first conference call (held yesterday), many of these business leaders urged Trump to dramatically increase testing before restarting businesses. (To date only 3 million Americans — less than one percent of the U.S. population — have been tested.) On a separate track, governors of seven states on in the northeast (including New York) as well as three states on the west coast (including California) have begun to establish frameworks for restarting their economies separate from Trump’s.
Federal recommendations on social distancing currently run through April 30 and will likely need to be extended. Governors and mayors ultimately have the authority to issue orders impacting their states and cities, and many vary from the federal guidelines. The model of the University of Washington (frequently relied upon by the U.S. government) now shows that social distancing has helped slow the spread of Covid-19 and will lower the American death toll to roughly 60,000 by August (instead of 100,000 which had been predicted weeks before).
Joe Biden Becomes Presumptive Democratic Nominee
Sen. Bernie Sanders has exited the presidential race, making Joe Biden the last Democratic candidate in the race and the presumptive Democratic nominee. Absent extraordinary circumstances, the Democratic Party will nominate Biden in August, and he will face Trump in the general election on November 3. Sanders has now also endorsed Biden, as have all of the other Democratic candidates, including Elizabeth Warren. Barack Obama also endorsed Biden this week.
This gives the Democratic party seven months to build its infrastructure in support of Biden’s campaign, without the divisions that plagued the party in 2016 between Hillary Clinton and Sanders. An additional item to watch will be whether prominent Republicans ultimately also endorse Biden, as Secretary of State Colin Powell did in 2008 when he endorsed Barack Obama. (One group of notable conservatives outside of government endorsed Biden this week.)
Biden is now actively courting left-leaning Democratic voters, through the formation of six working groups with Sanders (on the economy, climate, health care, criminal justice, immigration, and education). Biden had already adopted two new policies to attract new voters before Sanders left the race — including lowering the eligibility age for Medicare (health insurance for retirees) from 65 to 60.
The Medicare proposal in particular could be achieved with a simple majority in the Senate, under the budget-reconciliation process, suggesting that this idea is not merely an olive branch to the progressive Democratic base but rather a tangible goal that could be realized within the first 100 days of a Biden presidency. Budget reconciliation is the procedure that the Republicans used twice in 2017: first, unsuccessfully, to try to repeal Obama’s health law, and then successfully, to enact the Tax Cuts and Jobs Act (Trump’s tax reform).