The brutal competition for everything from ventilators to masks to personal protective equipment comes at a time when scarcity provides lucrative business opportunities in the private sector and power to the deep-pocketed federal government, but puts states and cities at risk of helplessly watching their health systems become overwhelmed and their citizens die.
“It’s like being on eBay with 50 other states, bidding on a ventilator,” a frustrated New York Gov. Andrew Cuomo, a Democrat, said Tuesday morning, adding that the Federal Emergency Management Agency’s bids are pushing the cost of medical supplies higher. “I mean, how inefficient. And then, FEMA gets involved! And FEMA starts bidding! And now FEMA is bidding on top of the 50 [states]. So FEMA is driving up the price. What sense does this make?”
In recent weeks, the federal government’s career and political officials have become better partners to state and local governments on some matters, according to people familiar with the coronavirus response, and the president is holding frequent calls with governors to ask — and sometimes provide — what they need. But where there is scarcity or opportunity for business development, they say, Trump has taken a ‘Hunger Games’ approach that forces them to fight for survival.
“We are competing against every other state and the federal government,” an aide to a Democratic governor said, asking to remain anonymous to avoid angering the White House. That dynamic is inflating prices and exacerbating shortages, and “more than once, it’s been the federal government that is buying out these supplies,” the aide said.
The president has said no one is upset with the situation.
“People are very happy with what we’re doing,” Trump said of the nation’s governors Monday. “Now, the circumstances are so terrible because of what’s going on, but I think they’re very impressed by the federal government.”
But his demand for competition is creating deep frustration in two areas: the bids for medical equipment, and the development of tests for COVID-19 , the disease caused by the coronavirus, and drugs to treat it. State and local agencies aren’t as equipped as the federal government to vet the safety of drugs and the efficacy of tests, nor are they as familiar with many of the companies coming forward to sell their solutions.
For state and local officials, the process of buying medical supplies is like a blind auction, with service companies playing middlemen between sellers and bidders. One broker company, Every Ancillary, lists goods such as thermometers, masks, scanners for detecting fevers in crowds, and test kits online. Bids are submitted through the broker to the unseen seller, along with proof of ability to pay and a two-way nondisclosure, noncircumvention agreement, which basically prevents the parties from revealing their relationship or cutting out intermediaries.
Some products have to be ordered in amounts of one million at a time.
Meanwhile, Trump has used his bully pulpit to tout favored companies, including in a Rose Garden press briefing Monday where CEOs from various companies spoke from a podium bearing the presidential seal.
As the economy has cratered during the pandemic, and corporate behavior has become an issue in the wake of a rescue plan that could put taxpayers on the hook for $5 trillion in loans to corporations, Trump has become increasingly invested in pointing to the contributions corporate America is making to the coronavirus fight. Monday’s carousel of CEOs featured Michael Lindell, a major Trump donor and campaign trail surrogate, who announced he will produce masks from a pillow company that laid off workers last year.
So far, the administration has offered little in the way of an explanation for why Trump has not exercised more of his authority to produce supplies, keep prices down and allocate resources across the country except for a belief in “federalism.” The idea that less power should be held at the federal level, and more at the state and local level, was at the heart of the original “war between the states” — more commonly known as the Civil War — and was first tested when South Carolina and other states attempted to “nullify” the federal government’s authority by ignoring its laws.
Of course, competition among makers of drugs and devices, and the offer of a major payday, can drive innovation in critical areas of testing and treatment, but so can the desire to save lives and protect the country from calamity.
If the notion now is to prevent the federal government from gaining too much power, Trump’s entry into the marketplace and his promotion of corporations that are selling their goods and services have had the opposite effect, tilting the market toward the government and its favored companies at the expense of everyone else. Moreover, if there’s broad agreement across the political spectrum about a time when the federal government should be at its most powerful, it is in the defense of the nation during a war.
Sen. Chris Murphy, D-Conn., told The Washington Post’s Greg Sargent this week that his entreaties to the White House to get money for supplies from Congress and provide them to the states were ignored in early February, and that the federal government’s approach to coordinating the effort has not improved despite trillions of dollars of aid moving through Congress since then.
“There is no national response,” Murphy told Sargent.
If Trump were to use all of his authority under the nation’s Defense Production Act, he could simply force companies to produce medical supplies and have the federal government buy and allocate them without prices spiraling upward. Instead, states and cities are bidding against each other to buy protective gear for their first responders, lifesaving equipment and innovative drugs to treat patients, and test kits, all while the biggest purchaser in the world — the U.S. government — competes in the same marketplace.
One thing state and local officials didn’t count on in Trump’s war on the coronavirus is that there would be victims of friendly fire.