The Morning Dispatch: Senators Under Fire

Happy Friday! We officially made it through our first full week of social distancing—only an as-yet-to-be-determined amount to go! Elbow bumps for everyone.

Quick Hits: Today’s Top Stories

• As of Thursday night, there are now 14,250 confirmed cases of COVID-19 in the United States (a 124 percent increase since Tuesday) and 205 deaths (a 90 percent increase since Tuesday). With 3,405 reported deaths, Italy has now passed China for the highest reported coronavirus death toll worldwide. 

• California became the first state to issue a complete shutdown and mandate all residents remain at home, with exceptions for purchasing groceries and receiving health care. Gov. Gavin Newsom said at the current rate, without these changes, California would see 56 percent of its population affected in eight weeks— some 25.5 million people.

• The State Department has issued Level 4 travel advisories—the highest possible warning—for every country in the world. “The Department of State advises U.S. citizens to avoid all international travel due to the global impact of COVID-19,” the warning states.

• Senate Republicans’ economic stimulus package has been released, and proposes direct payments of $1,200 to Americans making under $75,000 a year with an additional $500 per child. The amount would decrease for those making $75,000 or more and workers with annual wages of $99,000 or more won’t receive any funds. Speaker Pelosi and Minority Leader Schumer criticized the plan for being “not at all pro-worker.”

• About 18 percent of American workers have been laid off or had their hours reduced because of coronavirus. The crisis is affecting 25 percent of those who make under $50,000 a year and 14 percent of those making more than $50,000.

• In his daily press briefing yesterday, President Trump announced that the FDA had approved the use of chloroquine, an anti-malaria drug, for use in the fight against coronavirus, calling the development a potential  “game-changer.” The FDA quickly clarified that chloroquine had not yet been approved. Trump also signaled support for a ban on companies using stimulus funds for stock buybacks.

• Rep. Tulsi Gabbard suspended her presidential campaign and endorsed former Vice President Joe Biden.

• The shutdown of businesses is real:

  Phil Mattingly @Phil_Mattingly

  Yikes.

  Goldman Sachs economists: Next week’s initial unemployment claims report will show 2.25 million Americans filed for their first week of unemployment benefits this week – eight times the number of people who filed last week and the highest level on record.

  March 20th 2020

  32 Retweets56 Likes

Senators Under Fire for Recent Stock Selloff

Senate financial records show multiple senators selling off millions in stock in the days after the Senate Health Committee hosted a private, all-senators briefing on COVID-19 with administration officials on January 24.

North Carolina Sen. Sen. Richard Burr, chairman of the Senate Intelligence Committee, faced a wave of criticism late Thursday after news surfaced that he had “sold off a significant percentage of his stocks, unloading between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions,” according to Pro Publica’s reporting on his most recent financial disclosure. 

And yet just days before the selloff, Burr published an op-ed on Fox News.com February 7 in which he assured Americans that “we are not only ready to face the coronavirus today but new public health threats in the future.”

Georgia Sen. Kelly Loeffler, who is facing a special election in November, reported selling off between $1.2 million and $3.1 million in stocks starting on January 24, the day of the private briefing she attended on the potential fallout from the virus. Loeffler, who is reportedly worth close to $500 million, also reported purchasing “stock worth between $100,000 and $250,000 in Citrix, a technology company that offers teleworking software and which has seen a small bump in its stock price since Loeffler bought in as a result of coronavirus-induced market turmoil.”

In a statement posted to Twitter, Loeffler wrote: “This is a ridiculous and baseless attack. I do not make investment decisions for my portfolio. Investment decisions are made by multiple third-party advisors without my or my husband’s knowledge or involvement.” She added: “As confirmed in the periodic transaction report to Senate Ethics, I was informed of these purchases and sales on February 16, 2020 — three weeks after they were made.”

Burr’s day had already been rough after NPR obtained a recording of a private meeting that Burr held with a North Carolina business roundtable on February 27. As the president was still publicly downplaying the potential impact of COVID-19, Burr had a very different message for his audience: “There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history. It is probably more akin to the 1918 pandemic.” It does not appear that Burr ever made any similar comments publicly that would have contradicted the president. 

In his response, Burr called NPR’s reporting “purposefully misleading” and “journalistic malpractice,” highlighting NPR’s own reporting in the days before his meeting and the president’s press conference from February 26 in which President Trump said “I think every aspect of our society should be prepared … just in case. … We don’t think we’re going to be there … it’s starting to go in the other direction.” 

This wasn’t the first time Burr has faced criticism for personal financial decisions. Based on Politico’s reporting back in 2009, Burr “told his wife to pull the family’s cash out of an ATM at the height of last fall’s financial crisis—but he advised North Carolinians not to panic when Charlotte-based Wachovia was taken over by Citigroup in an emergency transaction around the same time.”

Reports on senators’ stock trades are now publicly available after the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, which was designed to “outlaw trading on nonpublic information by members of Congress, the executive branch and their staffs” and “expand financial disclosures and make all of the data searchable so insider trading and conflicts of interest would be easier to detect.”

In a statement, a Burr spokesperson said: “Senator Burr filed a financial disclosure form for personal transactions made several weeks before the U.S. and financial markets showed signs of volatility due to the growing coronavirus outbreak. As the situation continues to evolve daily, he has been deeply concerned by the steep and sudden toll this pandemic is taking on our economy. He supported Congress’ immediate efforts to provide $7.8 billion for response efforts and this week’s bipartisan bill to provide relief for American business and small families.”

The potential political ammunition this reporting gives Democrats was apparent immediately. Former Obama White House Communications Director Dan Pfeiffer offered a preview of coming attacks.

But it was Republicans who made clear that Burr’s future might be in jeopardy. Tucker Carlson, for example, said on Fox News that Burr should either provide an “honest explanation” or “resign from the senate and face prosecution for insider trading.”

The Coronavirus and Your Local Grocery Store

If you’re anything like your Morning Dispatchers, you’ve likely been confronted by crowded aisles, picked-over shelves, and long lines at your local grocery store. But while some items—hand sanitizer, toilet paper, N95 masks—have sold out and remained difficult to find, other items are fully restocked within a day or two.

“The food supply chain being as resilient as it is, a lot has to do with the multiple sources that are available from a component standpoint,” says Doug Baker, vice president of industry relations for the Food Industry Association, a trade association that represents the interests of grocery stores and food wholesalers. “Manufacturing facilities have multiple locations across the country … There’s primary, secondary, and tertiary sources of supply that are out there. So we have had to make some adjustments and maneuvers, potentially, if one of the sources was in … a foreign country. We’ve had to come back to the U.S. to be able to source that, or at least to North America to be able to source that. But fortunately anything that we would purchase within the global supply chain, we’re also able to secure within the domestic supply chain.”

Supply chains across a variety of sectors have been in flux in recent years due to the Trump administration’s implementation of tariffs and renegotiation of existing trade deals. Industry groups have, for the most part, fought these additional barriers to global enterprise, citing higher costs for American consumers and businesses. But in a global pandemic, yesterday’s “tax on American consumers” just might be today’s fortuitous development.

“It’s funny, nobody’s actually outright said that, but I guess you could say there was probably some benefit to having to look at the supply chain in anticipation of some of these negotiations dragging on,” Baker said. “We’d had to make some of those decisions during the tariff negotiations. So companies were already sort of rejiggering the way they were sourcing their product around the world and then bringing it back closer to home.”

Baker said the food supply chain typically holds about 26 days worth of product at any one time, and manufacturers of goods highly sought after in times of crisis—think canned goods, pasta, etc.—often carry what’s called “safety stock” to prepare for the worst. Those manufacturers could hold “as much as 12 weeks of safety stock if it’s a shelf-stable item that doesn’t perish,” Baker added.

But what if this near economy-wide shutdown continues for longer than that? The Trump administration this week reaffirmed the food supply industry’s “critical infrastructure” role, issuing additional COVID-19 guidance stating it has “a special responsibility to maintain [its] normal work schedule.” So the sector itself isn’t going anywhere—though certain products might need to be sourced differently, if the coronavirus situation stretches late into the summer.

The pump in most hand sanitizer bottles, for example, is manufactured in China; packages are starting to be shipped with a flip cap that is produced domestically. “We’ll have to start looking for how those sources of supplies will be replaced.”

Replacing them would likely cost more for wholesalers and manufacturers—there’s a reason parts of these supply chains moved to China in the first place. But Baker doesn’t see many increased costs being passed on to consumers. “If there is, it’s going to be extremely modest and extremely rare,” Baker said. “Grocers are very attuned to when we’re in the time of a disaster like this, and consumers are in need of those basic essentials, that this is not a time to be taking those price increases. So most of them will absorb that into their margin.” Grocery store profit margins typically fall between 1 and 3 percent.

The American Farm Bureau—another food-supply advocacy organization—sent a letter to Agriculture Secretary Sonny Perdue outlining additional concerns facing the industry, including a potential labor shortage. “With the State Department’s announcement to suspend all processing of new, non-emergency visa applications in Mexico, U.S. farms and ranches could face a serious labor shortage at a critical time for planting and harvesting crops essential to the domestic food supply,” a March 18 press release said. “U.S agriculture depends on more than a quarter-million H-2A workers every year, and Farm Bureau is calling on the Administration to find a safe measure to ensure these skilled workers can come to our farms and ranches.”

On Thursday, Perdue responded, announcing that the Agriculture and Labor departments would work to identify existing H-2A workers eligible to be transferred to agricultural sector employers. “Ensuring minimal disruption for our agricultural workforce during these uncertain times is a top priority for this administration,” Perdue said.

The Trump administration has also cut some regulatory red tape to help food suppliers continue to meet demand. The Department of Transportation’s Federal Motor Carrier Safety Administration, for example, relaxed hours-of-service regulations, allowing truck drivers transporting food and goods related to the pandemic to reach their destinations more quickly. Baker pointed out that some states are providing SNAP and WIC program waivers, allowing low-income customers to find substitutions if stores are out of eligible goods. 

But the bottom line: “The existing supply chain is flowing and it’s healthy,” Baker said. “There’s no disruptions in it.”

“I think some of the shopping behaviors that we’re seeing right now are because people are afraid that those stores are going to be closed and/or that products are not going to be available … we just need to keep reinforcing to people that those stores aren’t going to close and they will be able to get food, whether it’s at the store or online.”

Worth Your Time

• Among the many questions discussed across the country during these unprecedented times is this one: When will things return to normal? In MIT’s Technology Review, Gideon Lichfield has an answer: Never. The way to beat coronavirus is to lengthen the time you have to battle it—to “flatten the curve” so that hospitals and other medical facilities have the capacity to treat the sick. Many of the adjustments we will have to make over the course of this effort will last beyond the fight with the virus itself.  “This isn’t a temporary disruption. It’s the start of a completely different way of life.”

• The Technology Review piece builds its analysis on a recent study from researchers at Imperial College, who predict things will get worse for the West, even as they seem to be improving in Asian countries. For The Atlantic, Aaron Carroll and Ashish Jha outline the differences in how the East and the West are approaching the virus, and how Western countries can improve their predicted outcomes.

• “Crises are political only until they are personal,” the New York Times’ Elaina Plott writes in her piece on Heaven and Mark Frilot, first reported by Ramon Antonio Vargas for Nola.com. Mark—an otherwise healthy 45-year-old lawyer in Kenner, Louisiana—contracted COVID-19 and has become deeply ill, putting a real face to the disease that his community had been told by conservative media was no big deal. “Since Friday, March 13, Mark Frilot has managed just two breaths on his own.” Well worth your time and, if you have friends and relatives still skeptical that coronavirus is serious, well worth a share.

Presented Without Comment

Something Fun

Social distancing level: EXTREME.

Toeing the Company Line

• The latest Advisory Opinions podcast is out. Sarah and David are joined by bankruptcy court judge David Jones to discuss the impact COVID-19 is having on the system, before our two hosts dive into the future of Bernie Sanders’ movement. Plus, tune in here for an exciting announcement!

• In Thomas Joscelyn’s latest Vital Interests newsletter (🔒), he details China’s “dangerous coronavirus disinformation campaign.” Joscelyn writes: “Xi Jinping’s minders want to control reporting during a time of crisis. And coronavirus threatens to undermine the legitimacy of the Chinese Communist Party (CCP) both at home and abroad.”

• David’s latest French Press (🔒) grapples with the strange tensions we’re seeing play out in our daily lives. We’re living through a global crisis, and the best thing we can be doing to fight it is … watch Netflix on our couch? “The need for social distancing and isolation in the face of a pandemic is colliding with the American desire for decisive action,” David writes. “The American spirit of self-reliance and our increasing distrust of institutions is colliding with the necessity for trust even when the danger isn’t obvious.”

• And on the website, a bracing and authoritative report from Alec Stapp on the bureaucratic breakdown that led to America’s coronavirus testing shortage. Even as the crisis became more acute, the CDC and FDA, among others, were operating at a normal bureaucratic pace, with infighting and miscommunication inside and between these crucial government agencies. As the results of the testing shortage become clearer every day—in the growing numbers of Americans infected and killed by the virus—there will be more scrutiny on just what happened to cause. it. Start here.

• Also on the website today, Danielle Pletka and Derek Scissors look at our need to source critical goods—pharmaceuticals especially—from somewhere other than China.

Let Us Know

We’ve got another long weekend of not-leaving-our-homes in front of us—let us know in the comments what movies or TV shows you’ll be watching to pass the time. We Morning Dispatchers need some recommendations.

Stay safe out there, all. See you on Monday.

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Alec Dent (@Alec_Dent), Sarah Isgur (@whignewtons), and Steve Hayes (@stephenfhayes).

Photo by Tom Williams/CQ Roll Call.