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Mitch McConnell Just Helped Trump Take Kentucky’s Cops and Teachers Hostage

“I would like you to do us a favor, though.”

There’s been a lot written about Mitch McConnell’s motives for refusing to give aid to states and localities whose budgets have been decimated by coronavirus response in the last round of COVID relief.

John Harwood described it as an anti-government effort, generally, though notes it could backfire among white working class voters.

Wealthy Republican donors disdain government as an unwelcome source of taxes and business regulations. They can purchase private alternatives to broad-based public services in realms such as education, health care and transportation.
Republicans in Congress see unionized government workers as hostile soldiers fighting against their reelection. Responsibility for financing the services those workers provide falls to governors and state legislators, not them.

The GOP infused those sentiments into the 2017 tax law that remains Trump’s principal legislative achievement. It limited deductions for state and local levies from federal tax bills — which both punished taxpayers in blue states that provide more services and made it harder for those states to finance those services.

The wild card in this constellation of forces is the party’s increasing dependence on working-class white voters. Republicans have long capitalized on their suspicion that many government programs benefit others, not them. Trump placed appeals to their racial resentments at the center of his 2016 campaign.

Axis of Evil expert David Frum described how, by forcing states into bankruptcy, Republicans hope to exercise power even after Trump has been defeated.

Republican plans for state bankruptcy sedulously protect state taxpayers. The Bush-Gingrich op-ed of 2011 was explicit on this point. A federal law of state bankruptcy “must explicitly forbid any federal judge from mandating a tax hike,” they wrote. You might wonder: Why? If a Republican Senate majority leader from Kentucky is willing to squeeze Illinois state pensioners, why would he care about shielding Illinois state taxpayers? The answer is found in the third of the three facts of American fiscal federalism.

United States senators from smaller, poorer red states do not only represent their states. Often, they do not even primarily represent their states. They represent, more often, the richest people in bigger, richer blue States who find it more economical to invest in less expensive small-state races. The biggest contributor to Mitch McConnell’s 2020 campaign and leadership committee is a PAC headquartered in Englewood, New Jersey. The second is a conduit for funds from real-estate investors. The third is the tobacco company Altria. The fourth is the parcel delivery service UPS. The fifth is the Eli Lilly pharmaceutical corporation. The sixth is the home health-care company, LHC Group. The seventh is the Blackstone hedge fund. And so on and on.

A federal bankruptcy process for state finances could thus enable wealthy individuals and interest groups in rich states to leverage their clout in the anti-majoritarian federal system to reverse political defeats in the more majoritarian political systems of big, rich states like California, New York, and Illinois.

[snip]

But McConnell seems to be following the rule “Never let a good crisis go to waste.” He’s realistic enough to recognize that the pandemic probably means the end not only of the Trump presidency, but of his own majority leadership. He’s got until January to refashion the federal government in ways that will constrain his successors. That’s what the state-bankruptcy plan is all about.

Andrew Cuomo recognized the same dynamic. Amid a rant noting that, as governor, he serves people of all (or no) party, he described the hypocrisy of bailing out airlines and small businesses but not cops and other first responders.

I understand that, but state and local government funds police and fire and teachers and schools. How do you not fund police and fire and teachers and schools in the midst of this crisis? Yes, airlines are important. Yes, small businesses are important. So police and fire and healthcare workers who are the front line workers, and when you don’t fund the state, then the state can’t fund those services. It makes no sense to me. Also, it makes no sense that the entire nation is dependent on what the governors do to reopen. We’ve established that. It’s up to this governor, it’s up to this governor, it’s up to this governor, but then you’re not going to fund the state government. You think I’m going to do it alone? How do you think this is going to work? And then to suggest we’re concerned about the economy, states should declare bankruptcy. That’s how you’re going to bring this national economy back? By states declaring bankruptcy? You want to see that market fall through the cellar?

Let New York state declare bankruptcy. Let Michigan declare bankruptcy. Let Illinois declare bankruptcy. Let’s California declare bankruptcy. You will see a collapse of this national economy. So just dumb. Vicious is saying, when Senator McConnell said, this is a blue state bailout, what he’s saying is if you look at the states that have coronavirus problems, they tend to be democratic states. New York, California, Michigan, Illinois. They are democratic states. So if you fund states that are suffering from the coronavirus, the democratic states, don’t help New York state because it is a democratic state. How ugly a thought. I mean, just think of what he’s saying. People died. 15,000 people died in New York, but they were predominantly Democrats. So why should we help them? I mean, for crying out loud, if there was ever a time for you to put aside your pettiness and your partisanship and this political lens that you see the world through Democrat and Republican and we help Republicans, but we don’t have Democrats. That’s not who we are.

It’s just not who we are as a people. I mean, if there’s ever a time for humanity and decency, now is the time. And if there was ever a time to stop your political, obsessive political bias and anger, which is what it’s morphing to, just a political anger, now is the time and you want to politically divide this nation now, with all that’s going on? How irresponsible and how reckless/ I’m the governor of all New Yorkers. Democrat, Republican, independent. I don’t even care what your political party is. I represent you, and we are all there to support each other. This is not the time or the place or the situation to start your divisive politics. It is just not.

Cuomo also noted that McConnell’s own state, Kentucky, is a net aid recipient, not New York.

Let’s talk about fairness, Mitch. NYS puts $116 billion more into the federal pot than we take out. Kentucky TAKES $148 billion more from the federal pot than they put in. But we don’t deserve help now because the 15,000 people who died here were predominately democrats?

David Sirota is the only one I saw who observed that McConnell’s own state of Kentucky would be one of the hardest hit states.

In a half-assed play to avoid looking like he’s deliberately enriching his elite financiers and starving the peasants, McConnell cast himself as a principled opponent of “blue state bailouts” — a seemingly shrewd anti-coastal framing for his own potentially difficult reelection campaign.

In reality, though, McConnell’s opposition to pension aid is even worse than a pathetic Gerald Ford impression. It is him giving the big middle finger to hundreds of thousands of his own constituents whose Republican-leaning state is now facing one of America’s worst pension crises after McConnell’s Wall Street courtiers strip-mined Kentucky’s public retirement system.

That’s right: for all the talk of pension shortfalls in blue states like Illinois and California, the bright red state of Kentucky has one of the most underfunded pension systems in the country. The gap between promised benefits and current resources has been estimated to be between $40 billion and $60 billion. One of the state’s pension funds is less than 15 percent funded.

Those shortfalls are not the product of Kentucky’s public-sector workers being greedy or lavishly remunerated — Kentucky teachers, for example, are paid 23 percent less than other workers with similar educational credentials, and they do not receive Social Security benefits.

No — the shortfalls are the result of 1) state lawmakers repeatedly refusing to make annual contributions to the system, 2) investment losses from the 2007 financial crisis and now the COVID downturn, and 3) especially risky hedge fund investments that generated big fees for politically connected Wall Street firms, but especially big losses for the state’s portfolio. (Executives from some of those specific firms are among McConnell’s biggest collective donors, and those firms could be enriched by other parts of McConnell’s federal stimulus bill.

The pension emergency in Kentucky has become so dire that teachers staged mass protests last year, resulting in national headlines and a PBS Frontline special, and a court case that ultimately overturned the Republican legislature’s proposed pension cuts, which the GOP literally attached to a sewer bill.

There’s another aspect of all this, however: leverage. Mitch McConnell says he won’t dole out aid for states and localities until the Senate comes back into session. That’ll give him the opportunity to resume packing the courts.

In addition (as I predicted), part of this is an effort to retain leverage with which to force states to reopen.

BUT FIRST … SENATE AND HOUSE DEMOCRATS have been pushing hard in negotiations for $150 billion in funds for state and local governments to pair with the hundreds of billions the administration wants in small business lending. But THE WHITE HOUSE and TRUMP ADMINISTRATION have been holding out because, in part, they believe if Congress keeps cutting checks for state and local governments, they will be disincentivized to open up their economies.

Trump tried and tried and tried to say he got to decide how to reopen the economy. And then the first state that tried — his ally Brian Kemp — made him look bad by ignoring the White House’s own guidelines.

To regain any control over this, short of Billy Barr making good on his suggestions that DOJ might start litigation, Trump needs something to withhold to force governors, of both parties, to take actions they otherwise wouldn’t.

Aid to keep states and localities running is one of the few things Trump has. Want to pay your cops? Okay, then, “but I would like you to do us a favor, though.”

And here’s where Mitch’s actions become really perverse. Kentucky’s own governor, Andy Beshear, is one of the red states with a Democratic governor. Under his leadership, Kentucky has a lower level of infections than any neighboring state but West Virginia (which is even more rural). Kentucky is a member of the Midwestern pact that, along with a bunch of Democratic governors that Republicans would like to damage ahead of the elections, also includes Mike DeWine, one of the three most proactive Republican governors. Of those states, Beshear might be most susceptible to pressure from nutjobs.

That is, among the governors that Mitch is helping Trump to blackmail — to withhold aid from until they give Trump a favor — is Mitch’s own state. Like all other governors, Beshear will need to make some devastating budgetary decisions, decisions that will hurt public workers in Kentucky, and those decisions will start immediately, affecting Beshear’s ability to serve the people of Kentucky.

This is an ugly, vicious ploy. But it’s also one that Mitch’s opponent, Amy McGrath, really ought to be able to use against him in November.

WaPo Should Go to Columbus To Find Out How Economy Will Reopen, Not Perpetuate Trump’s Myths about It

I complained last Friday about a long WaPo story describing how Trump thinks he’ll reopen the economy next month that, in its ninth paragraph, undermines the entire premise of the story by noting that, “The White House cannot unilaterally reopen the country.” The same paragraph falsely claims that states are following CDC guidelines, when the official social distancing guidelines fall far short of what most governors have now imposed.

In spite of all the focus this week on the fact that Trump doesn’t have that authority, WaPo continues to write stories like that.

This story, naming a rogue’s gallery of discredited economists (Hank Paulson, Stephen Moore, and Arthur Laffer) who are indulging Trump’s delusions about reopening immediately, admits in paragraph 8 that, “governors and mayors have the authority to impose or lift stay-at-home orders and to permit businesses and schools in their localities to reopen.” And this story, talking about a CDC/FEMA “plan” to start opening parts of the economy by geography (which is obviously just a slide show written to meet someone’s demand for a May 1 date, one that is not temporally possible), never actually informs readers that Trump has no authority to implement this plan. Instead, it just repeats Trump false claims to have that authority from yesterday’s presser unchallenged.

“The plans to reopen the country are close to being finalized,” Trump said at a White House briefing Tuesday.

He said he planned to speak with all 50 governors “very shortly” and would then begin authorizing individual governors to implement “a very powerful reopening plan” at a specific time and date for each state.

He said roughly 20 states have avoided the crippling outbreaks that have affected others, and he hinted that some could begin restarting their economies even before May 1.

“We think we’re going to be able to get them open very quickly,” Trump said.

He added: “We will hold the governors accountable. But again, we’re going to be working with them to make sure it works very well.”

WaPo did publish this story yesterday in which they admitted in the very first paragraph that Trump can’t reopen the economy.

President Trump’s inaccurate assertion that he has “total” authority to reopen a nation shuttered by the coronavirus is igniting a fresh challenge from governors scrambling to manage their states and highlighting a Republican Party reluctant to defy a president who has relished pushing the boundaries of executive power.

But it’s a horse race story that attempts to force Republicans to criticize Trump’s ridiculous comments, not a story claiming to report on how the economy will reopen. If the WaPo, in its stories purporting to describe how Trump will reopen the economy, only report that he can’t do so in asides buried deep in those stories, why would we expect Republicans to note how ridiculous the claim is?

My working theory is that WaPo continues to get suckered into reporting extensively on Trump efforts that are a sidelight to the story of how the economy will reopen because they have so many journalists with good sources in DC, but far fewer in the capitals of the states that actually matter. Gavin Newsom, Andrew Cuomo, John Bel Edwards, and Gretchen Whitmer have some of the hardest decisions to make (and Republicans’ aggressive efforts to put Whitmer on the defensive here in Michigan is an interesting political story). The possibility that Gregg Abbott, Ron DeSantis, and (to a lesser degree) Tate Reeves will undercut the efforts of mayors in their states by overriding their city-wide shut-down orders in an attempt to reopen their states is a possibility worth anticipating, especially since that’s one point of leverage Trump already appears to be working (I think Brian Kemp would normally be included here but suspect he has realized he has a real problem on his hands).

But the real story about how the country will reopen can likely be found in Columbus, OH, Annapolis, MD, and Boston, MA, where Republican governors who’ve been working closely with — and to a large extent, leading — their Democratic neighbors are pursuing their own path.

Because Ohio’s Mike DeWine was quoted in several of yesterday’s stories saying something that was far less substantive than he manages on Twitter, I went back to see what WaPo has reported on him. On Monday, they published this interview between WaPo’s superb horse race politics reporter, Bob Costa, and DeWine. It offers key lessons, not just about what DeWine is thinking, but also about why Costa (who, again, is a superb reporter) didn’t elicit the key policy questions that elsewhere WaPo seems to believe is the key story.

DeWine made six key policy points:

States and localities need direct payments

Three times, DeWine emphasized the importance of direct payments to states and localities so they can deal with their budgetary shortfalls. After that, Costa asked DeWine specifically about Nancy Pelosi’s fight with Republicans to do just that (which seemed like an unnecessary attempt to get DeWine to contradict Republicans). DeWine pretended not to know what was in Pelosi’s bill, but repeated, a fourth time, that states and localities need direct payments.

MR. COSTA: Final question, Governor. Really appreciate your time. I know you’re busy. There is a big issue here in Washington. Speaker Pelosi wants 250 billion on top of the 250 billion wanted by Senate Republicans for small business expansion of that loan program that was part of phase three legislation. Where do you come down on how urgent it is to get a deal done in Washington? What specifically would you like to see in that agreement if it does come to be this week in Washington?

MR. DEWINE: Well, look, I’ve not looked at everything that’s in those respective bills. What I mentioned earlier on is important. It’s important that local government have the money that they can actually run local government. It’s important that the state be able to supply money for education. I mean, if you ask me what I’m worried about at the state level, I’m worried about that we’re not going to have enough money to provide K-12, our local schools, 630-some schools district in the state of Ohio with money. So, you know, I’m concerned about that. And so the federal government being able to help in that area would certainly be very, very, very helpful and very important to us.

In the interview as a whole, DeWine avoided antagonizing Trump and other Republicans. But on this issue, he clearly backs the policy that Democrats are pushing.

States — and corporations — need testing

Unsurprisingly, DeWine emphasized the import of testing to reopening the economy. But he also suggested that corporations are also thinking along these lines:

The other thing that we have not talked about here but I know is on the minds of governors, and certainly on my mind, is testing, how extensive can we have testing, how extensive are we going to be able to do tracing, and do that maybe more–in a more sophisticated way. So, those are things that private employers are looking at. I talked to a person who has a large retail business today, a nationwide company, and these were the things that he was talking to me about that they’re already looking at. Irrespective of what the state does, they’re looking at these things: how are they going to protect their workers, how are they going to protect their customers, how are they going to assure their customers that when they enter their store, you know, they’re going to be in a safe situation.

The nationwide retailer here may be Kroger, which is headquartered in Cincinnati and plays a critical role in the country’s food supply chain. But this is a key insight (and one that accords with what I’m hearing in Michigan). Corporations are going to play a key role in the public health process here, testing their employees and contact tracing in an effort to avoid having to shut down stores. This is one reason this won’t work regionally, because if (say) Kroger can solve this, then it will have an impact across the country.

Of course, the testing isn’t there yet, which is why Trump’s claims to be reopening the economy should be reported as pure fantasy and an attempt to dodge the federal role in testing.

There won’t be a Midwestern task force but there will be cooperation

Because the West Coast states and some Northeastern ones set up task forces this week, Costa asked DeWine whether there would be a Midwestern one. DeWine suggested it won’t be formal, but there will be cooperation.

MR. COSTA: Is it Ohio alone? You saw the news a few hours ago. The governors in the Northeast have formed a taskforce to try to figure out decisions in a collective way. Do you envision Ohio making decisions about Ohio, and Ohio only, or could you see a Midwestern collection of governors in a taskforce in the coming days?

MR. DEWINE: Well, I don’t know if it’s going to be a formal task force or not, but I can tell you that I talk to the governors that surround Ohio quite frequently. I was on the phone, I guess it was Saturday night, or Friday night with the governors of Kentucky and Indiana. I talked to the Michigan governor quite a bit, and so West Virginia. So, we certainly share ideas, and we collaborate in that sense because our states are generally in pretty much the same shape. Michigan certainly has been harder hit with–in Detroit, but we’re all kind of going through it in real time at about the same time period. So that consultation and sharing of ideas is going to continue and is very important.

This cooperation has been clear for some time (and because of the way traffic works, it is necessary). If Midwesterners do anything, especially Michiganders, they’re going to drive through another states, often as not on Interstates 70, 71, 75, 80, and 90 through Ohio. The auto industry, with a supply chain that links the region with factories in Mexico and Asia, sprawls across the region (although also some key southern states, notably Alabama). Plus, the states demographically blend into one another, with the same kind of challenges tied to Appalachia or Rust Belt health issues.

It is unsurprising (and, in fact, public) that this cooperation exists. But it’s also a far more important story to how the country will reopen than what Trump says in a presser.

In the DeWine’s Midwest, COVID-19 is a bipartisan issue

DeWine refused Costa’s invitation to antagonize Trump and acknowledged his cooperation with his neighbors, including Democrats Gretchen Whitmer and Andy Beshear. In addition, he made several other nods to bipartisanship.

As he always does, he emphasized the import of his Health Direct Amy Acton, who worked with Obama.

MR. COSTA: Your health director, Amy Acton, she’s been at your side since day one, was part of your decision to have an early response to the coronavirus pandemic. You’ve seen the retweet by President Trump. You’ve seen the news conferences. Dr. Fauci has been there. There’s now this chatter among some of the President’s allies, fire Fauci. Would you advise the President against considering that idea?

MR. DEWINE: Well, I don’t give the President advice?

MR. COSTA: Why not? You’re a governor in a major state.

MR. DEWINE: Look, I think the doctor’s done a good job, and I think he has a relationship with the American people. You know, Dr. Acton in Ohio has established really a relationship with the people of the state. And when I picked her, you know, she was the last member of my cabinet to pick, and I was going to be very, very careful of who I picked for that position. I wanted someone who had a background in public health, who was a medical doctor, but I also wanted someone with a passion to do it and someone who had an ability really to communicate with the people. And I made that decision having absolutely no idea that we were going to be dealing with this horrible coronavirus.

But that is important, the ability to communicate and talk to people. And I kind of jokingly tell people that, you know, I figured since Dr. Acton could explain it to me, if she could explain it to me, then she will have no trouble explaining it to the people of the state. So, but she has been by my side, and I’ve relied on her and other medical advice, you know, as we’ve gone through this. As we look to come out, we’ve put together a business group also to go along with our medical advice to help us as we move forward.

And he applauded the work of both Rob Portman and Sherrod Brown (and, not by name, the entire Congressional delegation).

You know, our two senators in our congressional delegation have done a very, very good job, Rob Portman, Sherrod Brown and the members of the House of Representatives, both Democrat and Republican. So, we work with them very closely just like we work with our local mayors. So that collaboration is important. We appreciate what they’ve done.

This is not a very sexy story in today’s DC, and it totally contrasts with Trump’s efforts to make COVID response into a series of transactions that benefit him, personally, but unlike the West Coast and Northeast coalitions of blue states, COVID in the Midwest is necessarily bipartisan, even if Republicans in KY, OH, and MI are focusing their efforts on challenging such bipartisanship in these states.

That doesn’t mean DeWine is conceding the election — he dodged a question about mail-in voting (though in part by repeatedly pointing out that no-excuse absentee voting makes that possible without more legislation). But DeWine is doing a lot to retain the ability to work in bipartisan fashion on COVID response.

DeWine doesn’t see reopening working like Trump wants it to

DeWine stated that “I don’t know that [Ohio’s reopening is] going to be geographical phases.” Trump’s entire “plan” is premised on such a geographical approach (and Stephen Moore, who’s not an epidemiologist, anticipates it rolling out by zip code). It seems to me an alternative approach — especially at the state level (though even at the national level if we had someone competent who believed in government) — would be to first shore up essential services like health care and food supply chain, and then slowly roll out each less essential part of the economy after we can prove the ability to do the former safely. In any case, I’d love to know more about what DeWine has in mind.

DeWine also said it’s not going to work the way “some people” think, with everything reopening all the way.

I think it’s not going to be coming back like some people think. And part of my job, I think, is to explain to the people of Ohio that we’re really not going to be all the way back–I said this today at our press conference–we’re not going to be all the way back until we have a vaccine that is available to everyone in the state.

[snip]

[I]t’s particularly dangerous to people with medical conditions, people over 60, over 65, 70, and people are going to have to be exceedingly careful. And some people are going to have to be more careful, frankly, than other people are.

This is consistent with what Anthony Fauci has said: we’re going to stop shaking hands, possibly forever. And, for seniors and those with pre-existing conditions, it will take a lot longer to get back to normal.

Prisons and nursing homes present key challenges

During the interview, Costa passed on a question about prisons from an Ohioan. DeWine responded by discussing prisons and nursing homes in the same way, as populations in which you can’t social distance.

MR. DEWINE: Well, we are releasing people and we are going to continue to look and see who we frankly feel safe in releasing. You know, these are not easy calls. They’re not easy calls because, you know, we don’t want to really turn back the sex offenders and murderers and others. But there are other people there.

For example, we just made a decision to–there’s an Ohio law provision which says that the director of prisons, if there is overcrowding, can release people within 120 days of their sentence ending. In other words, people who would have gotten out anyway within the next 120 days. We came with a whole group that we have recommended to be released. The legislative committee will look at that tomorrow, and I expect that, you know, they will be released. But we are continuing to look at that. We’re doing very significant testing in the prisons that have COVID-19, Marion Prison and our Circleville Prison. So, we are very, very focused on it.

And, you know, if you ask me of the things we worry about, at this stage of this epidemic, it’s any kind of congregation. Our nursing homes, we have put together a strike force to work with our nursing homes. But we’re very concerned about them. We’re concerned about our prisons. And any time that we’ve got people, a lot of people–a lot of people together where distancing is difficult, we have to worry about and should.

This has been an important point that — while Bill Barr has been making at times stumbling efforts to decarcerate (Josh Gerstein has been covering this closely) — hasn’t gotten sustained focus federally. Indeed, the federal government is not tracking nursing home outbreaks, at least not publicly.

You can have essential workers (including prison guards and nursing home workers) get back to work all you want, but each of these facilities has the ability to seed a new cluster of cases, not just within a prison or nursing home, but in the surrounding communities. And any head of government that is thinking seriously about how to reopen the economy needs to have a plan in place for that. Donald Trump doesn’t have one. Mike DeWine is at least working on it.

The Washington Post either thinks it’s really important to tell their readers how the country will reopen or they’ve been snookered by Trump’s aides into perpetuating a myth that that process will be led by the White House. If it’s the latter, that strand of reporting (which is separate from a great deal of good WaPo journalism on how Trump fucked up) is just as negligent as Trump’s own actions are, because such stories misinform about how this will work. If it’s the former, then WaPo would do well to send some journalists to work full time in Columbus, Annapolis, and Boston, or better yet, bring on some laid off reporters who know how those state houses really work. Because a handful of key Republican governors are the ones who’ll be making some of the most important decisions about how the country will reopen.

Update: As noted above, I named Larry Hogan as another of the GOP Governors where journalists should look to understand how the economy will really reopen. Hogan has just rolled out his plan. Unlike Trump’s plan, Hogan’s includes testing and means to limit transmission. It also does not yet include a date (not least, because as Hogan admits, the DC-Maryland-Virginia region still has a growing caseload.

Update: In spite of what DeWine said earlier this week, the Midwest just formed a pact. Maybe yesterday’s stupid protests in KY, OH, and MI forced this issue?

If New York Got a Late Start, Then Trump Hasn’t Even Started Yet

One of President Trump’s current attempts to dodge accountability is to blame New York’s spiking COVID-19 deaths on its late start.

New York — and the nation, and the world — would have been far better off if Andrew Cuomo had imposed a shut-down on March 7, when he declared an emergency. But that was six days before Trump declared an emergency, perhaps because he was busy throwing a party on March 7 at which COVID was probably spread among his guests.

New York would have been far better off if it had imposed a state-wide shutdown instead of imposing a containment zone in New Rochelle on March 10. It would have been better off had Cuomo issued a stay-at-home order on March 16 instead of simply shutting down non-essential businesses and canceling gatherings of more than 50 people. But from that day on, Cuomo’s measures were more severe than anything Trump has recommended, which to this day only recommends seniors and those with pre-existing conditions stay at home.

It was probably too late when Cuomo issued a full stay-at-home order on March 20. Nevertheless, it was just one day after California’s, the only earlier full-state stay-at-home order, and it was actually before Washington’s (Tuesday Dr. Birx repeatedly commended Washington’s response).

So yes, New York didn’t respond as early as it should have (and Bill De Blasio in particular was irresponsible and slow).

But New York has always been — and remains — far ahead of what Trump has done.

So if Trump wants to accuse New York of responding slowly, he should first explain why he has always lagged New York’s response.

Trump’s Promise of Only 100,000 Deaths Assumes We Ignore Him

Court transcribers like Peter Baker and Mike Allen were very impressed with what they deemed a very somber new Donald Trump in yesterday’s COVID rally. At it, Trump warned that we’re going to have a hard two weeks ahead of us (and then, over an hour later, admitted in an offhand comment it might actually be three). He warned there were going to be a lot of deaths — then stepped aside so someone not up for election could explain that means upwards of 100,000 deaths. And so, Trump implored while promising everything would get better in two weeks (or maybe three), we need to follow White House 30 Days to Slow the Spread guidelines to ensure we can limit deaths to 100,000.

There are a couple of major problems with that.

First, those guidelines ask for 30 days, but Trump is just asking for two more weeks (or three, if you manage to watch over an hour of this stuff).

Then, as Dr. Deborah Birx noted repeatedly, that 100,000 best case scenario is based off the IHME projections. But the IMHE projections are based off adopting a more stringent level of social distancing than White House 30 Days to Slow the Spread guidelines — basically, stay at home orders — and they assume those orders will remain in place until the end of May, not April.

To be fair, starting before the time Trump was pushing to reopen the economy, a bunch of governors (most of them Democrats, including people like Jay Inslee, whom Trump has repeatedly attacked) decided to impose more stringent requirements than Trump was recommending. As of yesterday, 29 Governors had stay-at-home measures in place to match the IMHE projections. Republican die-hards Doug Ducey of Arizona and Greg Abbott of Texas even capitulated yesterday and imposed state-wide orders (though on second review Abbott’s is just a non-essential business closure).

But even as this presser was going on, Trump’s closest ally among the governors, Ron DeSantis, was digging in, claiming that the White House task force had never suggested to him that they should impose a stay-at-home.

“I’m in contact with (the White House task force) and I’ve said, are you recommending this?” DeSantis said. “The task force has not recommended that to me. If they do, obviously that would be something that carries a lot of weight with me. If any of those task force folks tell me that we should do X, Y or Z, of course we’re going to consider it. But nobody has said that to me thus far.”

Trump was even asked about this. In a presser where Trump and Birx suggested that New York had been really late in adopting social distancing (that’s not true: Andrew Cuomo imposed an order more stringent than Trump’s current guidelines on March 18, just two days after Trump first called for social distancing, and imposed a full stay-at-home on March 20, effective March 22, which was among the earliest full state shut-downs), Trump and Mike Pence also had nice things to say about DeSantis, with Georgia’s Brian Kemp, the last of the major state governors not have one.

Reporter: I wanted to ask you about individual states issuing stay at home or what do you think, for instance, in Florida, Ron DeSantis has resisted urges to issue one of those, but he said moments ago that if you and the rest of the task force recommended one, that would weigh on him heavily. What sort of circumstances need to be in place for you to make that call and say this is something you should consider?

Trump: Different kind of a state, also great Governor, knows exactly what he’s doing, has a very strong view on it, and we have spoken to Ron. Mike, you want to just to tell him a little bit about that.

Pence: Well, let me echo our appreciation for Governor DeSantis’ leadership in Florida. He’s been taking decisive steps from early on and working closely with our team at the federal level. But let me be very clear on this. The recommendation of our health experts was to take the 15 days to slow the spread, and have the President extend that to 30 days for every American. Now, that being said, we recognize that when you’re dealing with a health crisis in the country, it is locally executed by healthcare workers, but it’s state managed. And so we continue to flow information to state governors. We continue to hear about the data that they’re analyzing and consult with them. But at the President’s direction, the White House Coronavirus Task Force will continue to take the posture that we will defer to state and local health authorities on any measures that they deem appropriate. But for the next 30 days, this is what we believe every American and every state should be doing at a minimum to slow the spread.

Trump: So, unless we see something obviously wrong, we’re going to let these governors good. Now, it’s obviously wrong, I mean, people can make things, they can make a decision that we think is so far out that it’s wrong, we will stop that. But in the case of DeSantis, there’s two thoughts to it, and two very good thoughts to it, and he’s been doing a great job in every respect, so we’ll see what happens. But we only would exercise if we thought somebody was very obviously wrong.

Aside from some rural states and Georgia, just about the only entity in the country not telling DeSantis to shut his state full of especially vulnerable seniors down is the President.

According to the IHME projections (and assuming those aren’t hopelessly optimistic because of a known lag of test results in places like California), we might still make that 100,000 projection if DeSantis imposes a true lockdown within seven days. But he says he’ll only do that if President Trump gives him political cover to do so.

Effectively, then, the allegedly sober President yesterday said we might only have 100,000 deaths if people ignore him and one of his closest political allies, Ron DeSantis.

Update: DeSantis is announcing a stay-at-home order within the hour.

Trump Threatens to Withhold Disaster Declaration for Michigan because Gretchen Whitmer Was Mean to Him

Update: According to NBC’s Geoff Bennett, Trump has now approved the request.

Last night, Donald Trump suggested that he might withhold a disaster declaration for Michigan requested by Governor Whitmer on March 26 because he doesn’t like Governor Whitmer’s public comments about the Federal government’s failures.

“We’ve had a big problem with the young — a woman governor. You know who I’m talking about — from Michigan. We don’t like to see the complaints,” President Trump told Sean Hannity during a FOX News interview on Thursday.

Gov. Whitmer has been openly critical of the federal response to the coronavirus outbreak, voicing her frustration with not having enough COVID-19 test kits and a lack of “clear and concise guidance from the federal government.”

The comments from President Trump come on the same day Gov. Whitmer requested a major disaster declaration for Michigan over the coronavirus outbreak.

“She doesn’t get it done, and we send her a lot. Now, she wants a declaration of emergency, and, you know, we’ll have to make a decision on that,” President Trump continued. “I don’t know if she knows what’s going on, but all she does is sit there and blame the federal government.”

Here are the states for which Trump has declared an emergency with the number of positive cases on the date Trump made that declaration and the party of their governor.

As of yesterday, Michigan has had 2,856 people test positive for COVID-19. Dr. Deborah Birx pointed to SE Michigan’s Wayne County (which includes Detroit and the mostly working class suburbs), along with Cook County, IL, as the alarming hotspots in the country.

And yet Trump doesn’t want to approve a disaster declaration because a girl was mean to him.

Christie’s Quarantine Over-Reaction Ignores How Ebola is Transmitted

While Chris Chrisite toasted fellow quarantine advocate Rick Scott at a fundraiser in Florida on Sunday, Kaci Hickox met with her attorney to prepare a legal challenge to her quarantine.

While Chris Chrisite toasted fellow quarantine advocate Rick Scott at a fundraiser in Florida, Kaci Hickox met with her attorney to prepare a legal challenge to her quarantine.

It’s really difficult to say which poor response to Ebola has done more damage to the public health system in the United States. First, we had the series of unforgivable errors at Texas Health Presbyterian Dallas that resulted in Thomas Duncan being sent home with Tylenol and antibiotics when he first presented with Ebola symptoms. This was followed up after he was admitted by Nina Pham and Amber Vinson coming down with the disease after they treated him. Now, we have Kaci Hickox, who treated Ebola patients in West Africa, confined to an unheated tent in a New Jersey hospital for 21 days even though she is asymptomatic and has tested negative for Ebola. Twice.

The hysteria over retracing the steps of Craig Spencer in New York City just before he developed his fever illustrates the way the US press has misled the public about when and where Ebola risk exists. Abundant evidence from this and previous Ebola outbreaks demonstrates clearly that there simply is no risk of transmission from asymptomatic patients and that transmission risk grows through the course of the infection.

We see that principle demonstrated very clearly in Duncan’s case history. See this terrific ABC timeline for relevant dates quoted below. Duncan arrived in Dallas September 20. No passengers on any of the flights he took have developed Ebola. The incubation period has elapsed, so we know that no transmission of the virus occurred during any of his flights. Duncan had symptoms on his first hospital visit on September 26 but was sent home. He was later admitted on September 28. No patients or personnel from the hospital became infected from his visit September 26. The incubation period has expired, so we know for certain that transmission did not occur for anyone near Duncan that day. Similarly, even though they were in the apartment with him for days after he developed symptoms, none of the residents of or visitors to the apartment where Duncan was staying in Dallas became infected. The incubation period for that exposure also has expired. From this timeline developed by the New York Times, it appears that Pham and Vinson treated Duncan on the day before he died, which would be at the time when the amount of virus being produced by his body was nearing its maximum.

The load of virus in a patient’s blood over the course of Ebola infection has been studied. In this CDC review, we have a graph showing the amount of virus over time: Read more

Sandy’s Teachable Moment on Infrastructure

In a remarkable development, the devastation from Sandy now is finally moving a least a portion of the national conversation onto the very important topic of infrastructure and how we need to renew our degrading infrastructure in addition to hardening it against new waves of damage due to weather extremes brought on by climate change. Consider this bit of truth-telling from Connecticut Governor Dannel Malloy on Rachel Maddow’s show last night:

But it’s not just Malloy who sees the need to have the future in mind during the recovery from Sandy. Today’s New York Times carries an article in which New York Governor Andrew Cuomo discusses how preventive steps need to be taken in the near future:

On Tuesday, as New Yorkers woke up to submerged neighborhoods and water-soaked electrical equipment, officials took their first tentative steps toward considering major infrastructure changes that could protect the city’s fragile shores and eight million residents from repeated disastrous damage.

Gov. Andrew M. Cuomo said the state should consider a levee system or storm surge barriers and face up to the inadequacy of the existing protections.

“The construction of this city did not anticipate these kinds of situations. We are only a few feet above sea level,” Mr. Cuomo said during a radio interview. “As soon as you breach the sides of Manhattan, you now have a whole infrastructure under the city that fills — the subway system, the foundations for buildings,” and the World Trade Center site.

The Cuomo administration plans talks with city and federal officials about how to proceed. The task could be daunting, given fiscal realities: storm surge barriers, the huge sea gates that some scientists say would be the best protection against floods, could cost as much as $10 billion.

It is sad that such a level of devastation is needed before there is talk of action. As recently as last month, the Times carried yet another warning that exactly this type of damage was becoming increasingly likely:

But even as city officials earn high marks for environmental awareness, critics say New York is moving too slowly to address the potential for flooding that could paralyze transportation, cripple the low-lying financial district and temporarily drive hundreds of thousands of people from their homes.

Only a year ago, they point out, the city shut down the subway system and ordered the evacuation of 370,000 people as Hurricane Irene barreled up the Atlantic coast. Ultimately, the hurricane weakened to a tropical storm and spared the city, but it exposed how New York is years away from — and billions of dollars short of — armoring itself.

“They lack a sense of urgency about this,” said Douglas Hill, an engineer with the Storm Surge Research Group at Stony Brook University, on Long Island.

Instead of “planning to be flooded,” as he put it, city, state and federal agencies should be investing in protection like sea gates that could close during a storm and block a surge from Long Island Sound and the Atlantic Ocean into the East River and New York Harbor.

And it was exactly that storm “surge from Long Island Sound and the Atlantic Ocean into the East River and New York Harbor” that flooded lower Manhattan and the New York subway system. Considering that estimates yesterday on the financial impact of Sandy were already going as high as $25 billion (and I expect that number to go up by a lot as more damage is discovered), an investment of $10 billion for a surge barrier, coupled with a massive push for revitalizing and hardening the electrical and transportation systems behind the barrier, looks like a very wise investment. Sadly, though, as Malloy points out, half the country doesn’t believe in infrastructure investment. At least, that was the case before Sandy. Will infrastructure scrooges who were directly impacted by the storm finally see the importance of being proactive, or will yet another teachable moment be lost?

Promontory Financial Group Describes a New “Risk-Based” Approach to Anti-Money Laundering

In light of the recent Standard Chartered Bank flap, Saturday’s report that Deutsche Bank is under investigation for similar behavior, and today’s report that RBS (as well as two other banks, one of which is Sumitomo Mitsui) is as well, I want to look at an article on Anti-Money Laundering enforcement a Promontory Financial Group exec, Michael Dawson, published in American Banker just one week before NY’s Superintendent of Financial Services, Benjamin Lawsky, filed an order against SCB alone.

Around the same time Dawson was writing this, remember, his company was involved in a review of SCB’s laundering of Iranian funds that would show a tiny fraction of the total exposure that SCB would ultimately admit to. That is, Dawson’s comments probably provide a glimpse into what PFG was seeing not just in Citibank and Commerzbank enforcement actions, which he discusses, but also in SCB. And it might help to explain why other regulators were so intent on crafting an SCB settlement based on just $14 million in violations rather than $250 billion.

Dawson reports seeing a change in recent AML/BSA enforcement actions, away from a “rules-based approach” toward a “risk-based approach.” He suggests that regulators are demanding not a broad-based examination of the scope of AML violations, but instead more targeted information about who posed the biggest risk laundering money and what they were doing.

Instead of requiring expensive reviews of extended periods of time for a broad range of potential suspicious activity, the latest enforcement actions emphasize a risk-based approach to AML compliance, with several of the actions requiring a risk assessment or enhancements to an existing assessment.

[snip]

The level of specificity required is noteworthy and includes, among other things, detail on the volumes and types of transactions and services by country or geographic location as well as detail on the numbers of customers that typically pose higher BSA/AML risk. The actions also require a more holistic approach, requiring the results of the bank’s Customer Identification Program and Customer Due Diligence program to be integrated in the risk assessment. [my emphasis]

This sounds like the regulators are interested not in discovering how banks are complicit in money laundering, but rather using the banks to get details on key people who money launder and the tactics just those key people (terrorists, cartel kingpins, mean Iranians) use. (Note, I think something similar, but even more significant, happened last year when JPMC got busted for trading with Iran, but no one seems to remember that happened.)

After making these broad statements about the general direction of AML enforcement, Dawson distinguishes between what the Office of the Comptroller of the Currency is requiring and what the Fed is. OCC has not only shortened the period which it requires banks to examine problematic behavior, but it has also permitted banks to conduct their own reviews (which seems to have Dawson worried about losing the business of providing such services for banks).

Where the OCC required lookbacks, it asked for risk-based, targeted reviews, rather than comprehensive look-backs that were sometimes found in earlier enforcement actions. The recent actions either specify a shorter look-back period than has been specified in the past or, in the case of the Citibank action, no explicitly specified period, subject to the ability of the regulator to expand the look-back depending on the results of the more limited period.

Also, the OCC actions allowed the institutions to conduct the review themselves and either do not explicitly mention an independent consultant or limit the role of the independent consultant to “supervising and certifying” the look-back.

The OCC, at least, doesn’t sound like it’s doing “smarter” enforcement, but rather doing lax enforcement. Remember, though, that OCC got a newly-confirmed Comptroller during this period, who talked aggressively at the recent Permanent Subcommittee on Investigations hearing on HSBC’s egregious AML problems–though that talk partly echoed what Dawson has to say about “flexibility” and a “holistic” approach.

Meanwhile, according to Dawson, the Fed doesn’t seem to be offering quite as much flexibility. Dawson describes the Fed employing this new risk-based approach, but it is still requiring longer reviews (though not all that long, at 16 months) and outside consultants to complete the reviews.

The Fed, in its action against Commerzbank requiring a lookback, also showed some flexibility. Read more

Corporatist Dems Killing another Public Option

This story is several days old. But I wanted to go back and show how, after a pack of lobbyists killed one attempt to get government to use its power to save money and improve health care, another pack of lobbyists are trying to do the same with higher education.

Eric Lichtblau (who, IMO, does much better at digging out DOJ scandals than reporting legislative battles) describes how the plan to replace privatized student loans–in which the government guarantees student loans that lenders then repackage and profit off of–with direct loans form the government is in political trouble.

But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.

House and Senate aides say that the administration’s plan faces a far tougher fight than it did last fall, when the House passed its version. The fierce attacks from the lending industry, the Massachusetts election that cost the Democrats their filibuster-proof majority in the Senate and the fight over a health care bill have all damaged the chances for the student loan measure, said the aides, who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.

The effort to return to using direct loans to students rather than using government guarantees to support student loans stems from a series of scandals under the Bush Administration. Loan companies gave school administrators kick-backs to make their loans preferred at the schools, regardless of whether those loans made sense for the students. Lenders manipulated a subsidy (and churned some loans) to take advantage of a 9.5% profit guarantee that they weren’t otherwise entitled to. And, given a revolving door between the industry and DOE, students had little protection against fraud. As a result, students were paying far more than they should have for loans, and when they ultimately faced default, they had far fewer options for getting out of that debt assumed under what were basically fraudulent conditions.

By passing government-backed loans through private companies rather than lending money directly, students became captive consumers to an industry with little real competition and even less protection against fraud. The whole scheme turned college education from a necessary step to achieve a middle class lifestyle (and more broadly, to keep America competitive internationally) into a mere profit center for the finance industry.

The legislation before the Senate would curtail that system, replace a corporate welfare program, and use the savings to support the same number of loans plus many more education programs.

The money that would be saved by cutting out the private-industry middlemen — about $80 billion over the next decade, according to a Congressional Budget Office analysis — could instead go toward expanding direct Pell Grants to students, establishing $10,000 tax credits for families with loans, and forgiving debts eventually for students who go into public service, administration officials say.

The bill would also shift tens of billions of dollars in expected savings to early learning programs, community colleges and the modernization of public school facilities.

So back to my parallel with the battle over the public option.

The choices now being made in health care risk making the same mistake we’ve made in the student loan industry. Captive consumers will be asked to support higher overhead (20% or more, in the case of the Senate bill) without adequate regulatory controls to make sure those consumers get the health care they’re paying for in return. A public option would have served as one check on this system by offering consumers one option that didn’t include that 20% overhead that also benefited from more direct government oversight. It would have saved $100 billion–in the same neighborhood of savings we’ll get by reverting the student loans to direct government assistance. But corporatist Senators like Ben Nelson and Joe Lieberman killed that plan, and as a result, we have to hope (assuming a bill passes at all) the HHS Secretary proves better at regulating a powerful industry than the Secretary of Education under Bush.

And now, having seen how easy it was to kill the public option, a solution that would save the government money and better achieve the underlying goal–health care (as distinct from insurance)–some of the very same corporatist Senators are turning their sights on direct student loans.

Read more

Time to Get Geithner under Oath on AIG

Edward Liddy, AIG’s CEO, will testify before Barney Frank’s committee tomorrow (10AM, CSPAN3, and yes, we’ll be liveblogging it).

But after reading the letter Andrew Cuomo just sent to Chairman Barney, I think the guy we need under oath is Tim Geithner. After all, over the weekend Geither allowed himself to be convinced that AIG had to pay out its retention bonuses. But today, we learn the following:

  • [Cuomo’s] Office has reviewed the legal opinion that AIG obtained from its own counsel, and it is not at all clear that these lawyers even considered the argument that it is only by the grace of American taxpayers that members of Financial Products even have jobs, let alone a pool of retention bonus money.
  • AIG was able to bargain with its Financial Products employees since these employees have agreed to take salaries of $ I for 2009 in exchange for receiving their retention bonus packages. The fact that AIG engaged in this negotiation flies in the face of AIG’s assertion that it had no choice but to make these lavish multi-million dollar bonus payments.
  • [N]umerous individuals who received large "retention" bonuses are no longer at the firm [including one person whose bonus of $4.6 million made him one of the top seven receipients of bonuses].
  • [T]he contracts under which AIG decided to make these payments … contain a provision that required most individuals’ bonuses to be 100% of their 2007 bonuses.

Now, presumably, Tim Geithner knew all these details from his conversations with Liddy over the weekend. Hell, he should know the details from when, as NY Fed President, he negotiated the bailout last year.

Yet he came to the American people and claimed we simply had to pay these bonuses. Why?