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What's the deal with the Defense Production Act?

Will Trump use the Defense Production Act?
Will Trump use the Defense Production Act? 02:45

As the coronavirus threatens the capacity of the nation's hospitals, the Defense Production Act seems to be the buzzword in daily Coronavirus Task Force press conferences at the White House, on talk shows and in the halls of Congress. The president has announced he would be invoking the act, but says he doesn't want to have to use it. "The concept of nationalizing our businesses is not a good concept," he said last week.

Democrats have been urging the president to exercise the law immediately, particularly to address the lack of critical equipment like protective masks and ventilators.

So, what is it and how is it, or isn't it, being used?

What is the Defense Production Act?

The Defense Production Act, or DPA for short, was enacted in 1950 under then-President Harry Truman in reaction to the Korean War, and it was meant to make sure the country had the military equipment and supplies it needed. 

The law authorizes the president to require companies to sign contracts or fill orders for products needed for the nation's defense. It also lets the president make sure price gouging doesn't occur and gives the president freedom to incentivize the expanded production, with loans and purchase commitments, for instance.

Since its enactment, the definition of national defense needs has expanded. In this ongoing national emergency, the president can use the law to order companies to produce needed medical equipment and supplies, particularly ventilators, respirators and masks that are already in short supply in many hospitals. 

The Defense Production Act was used periodically during the Cold War to increase production of defense supplies. In early 2001, Presidents Bill Clinton and George W. Bush both used it to make sure shippers delivered natural gas equipment and electrical equipment to California, which was in the middle of an energy crisis. 

In 2003, Bush ordered the prioritization of supplying GPS receivers to British military personnel in Iraq. And President Obama used the DPA to fast-track the development of some high-tech defense products he deemed necessary. 

Is Trump using the Defense Production Act?

After much urging from outside experts, Democrats and some Republicans, the president announced Wednesday that he would invoke the Defense Production Act "just in case we need it." Later Wednesday, the White House confirmed the president had indeed invoked the law.

"To ensure that our healthcare system is able to surge capacity and capability to respond to the spread of COVID-19, it is critical that all health and medical resources needed to respond to the spread of COVID-19 are properly distributed to the Nation's healthcare system and others that need them most at this time," the president's executive order invoking the DPA said. 

But the messages on the Defense Production Act have been mixed. Mr. Trump has been hesitant to pull the trigger on the law and put it into use, saying he will only direct companies to produce the necessary equipment if that's needed, and compared utilizing the law to "nationalization," even as governors urge him to implement the DPA. 

"The fact that I signed it, it's in effect," Mr. Trump said. "But you know, we're a country not based on nationalizing our business. Call a person over in Venezuela, ask them how did nationalization of their businesses work out? Not too well."

On Sunday morning, Federal Emergency Management Agency Administrator Peter Gaynor confirmed to CNN's Jake Tapper that the president had not yet directed companies to manufacture the needed supplies like n95 masks, ventilators and respirators. Asked if the administration had yet ordered any companies to do so, Gaynor responded, "No, we haven't yet." 

The president has yet to explain fully why he isn't using his full authority under the law, even as some of the president's allies urge him to use it to make sure the country has the equipment it needs. It would likely take companies weeks, if not longer, to ramp up the necessary production of such equipment, and the number of confirmed coronavirus cases in the U.S. is skyrocketing. 

The U.S. has at least 35,530 confirmed cases, as of 12:30 p.m. Monday, according to Johns Hopkins data. One week ago, that number was 6,400.

Still, the administration is working on sending necessary medical equipment to hardest-hit states like New York and Washington, and private companies are stepping up. Honeywell, for instance, is expanding its operations in Rhode Island to produce more N95 masks. 

White House trade adviser Peter Navarro said that the U.S. is, on a voluntary basis, already "seeing the greatest mobilization of the industrial base since WWII."

"The Defense Production Act, in this context, has two primary functions," Navarro told reporters during a Coronavirus Task Force briefing on Sunday. "One is mobilization of the industrial base - in this case, the public health industrial base. And the other is allocation of resources, both from the supply chain to the manufacturers, and from the manufacturers to the end users, such as the healthcare professionals. Now, what we're seeing on a purely voluntary basis, based on the leadership of this administration - we're seeing the greatest mobilization of the industrial base since WWII."

Streamlining procurement

Meanwhile, the president has urged governors to try to get necessary medical equipment on their own first, and an argument for invoking the DPA comes into play here, too, in particular, its priorities and allocations authority.

"Governors are supposed to be doing a lot of this work and they are doing a lot of this work," the president said Thursday. "The federal government's not supposed to be out there buying vast amounts of items and then shipping, you know, we're not a shipping clerk. The governors are supposed to be, as with testing, the governors are supposed to be doing it."

But governors such as Massachusetts' Charlie Baker have pointed out to the president that they're competing against the federal government on orders for needed medical supplies. Baker told the president his state has lost out on several big orders to the feds. The president said later the federal government would work to ensure states don't lose out to the federal government. 

The governors have been pushing the president to invoke the DPA for reasons beyond increasing production, as Baker, New York Governor Andrew Cuomo and Illinois Governor J.B. Pritzker have all mentioned. They're looking for help on price gouging and streamlining the distribution process.

"I am competing with other states. I'm bidding up other states on the prices," Cuomo said Monday, explaining how manufacturers are pricing their products. "California offers them $4. And they say, 'Well, California offered us $4,' and I offer $5. Another state offers $6."

On NBC News' "The Today Show," Pritzker complained Monday that "in one case we're competing for ventilators with FEMA and the federal government, so Illinois is bidding for ventilators against federal government." He said, "The federal government needs to say to all the companies in the United States that produce these goods that they're going to buy them all together distribute them across the states." The DPA, he argued, "allows the federal government to be a single purchaser for everybody, to bring down prices."

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