Week in Review

IN THE NEWS

• The U.S. Senate unanimously approved a $2 trillion stimulus package. The act will provide $1,200 to most Americans, extend unemployment coverage at full pay for four months, increase funding for the health care system, and provide loans for small businesses harmed by the pandemic. Senator Lindsey Graham (R-S.C.) had reportedly criticized the bill for “incentivizing taking people out of the work force at a time when we need critical infrastructure supplied with workers.” Representative Nancy Pelosi (D-Calif.) stated, “The best way to protect our economy in this crisis is to protect workers and families.”
• The Federal Reserve Board took the unprecedented step of announcing that it will purchase unlimited government-backed securities in an effort to prevent economic depression. This announcement expands on the Board’s promise last week to purchase $700 million in securities. Former Chair of the Board of Governors Janet Yellen reportedly responded to the announcement by saying “this is not about helping Wall Street, this is about helping Main Street. The availability of credit for households and businesses is essential to protect people from the worst possible economic effects.”
• President Donald J. Trump issued an executive order prohibiting price gouging and hoarding of medical and other critical supplies. The order allows U.S. Department of Health and Human Services Secretary Alex Azar to determine which supplies to designate as critical, and a memorandum subsequently released by Attorney General William Barr indicated possible criminal sanctions for violators. Reports indicate that state attorneys general are receiving an unprecedented number of price gouging complaints, and several states lacking adequate price gouging laws pre-COVID-19—including Maryland and New York—have passed or introduced new legislation targeting the practice.
• Because of a national hand sanitizer shortage, the U.S. Food and Drug Administration (FDA) issued a temporary policy expanding the number of companies that can produce hand sanitizer. FDA stated that it does not intend to take action against alcohol-producing companies that begin to manufacture hand sanitizer, so long as the companies follow FDA’s guidance. In addition to this guidance, FDA loosened regulations for researchers who want to study the blood of recovered COVID-19 patients, and the agency issued an update reassuring Americans that the food supply chain remains safe from viral contamination for both people and animals.
• A coalition of 34 state attorneys general sent letters to Amazon, Craigslist, eBay, Facebook, and Walmart urging the companies to fight price-gouging on their online retail platforms during the COVID-19 pandemic. The coalition recommended that the companies implement policies prohibiting price-gouging, develop tools to detect and respond to price spikes, and create a customer complaint portal. “We appreciate the efforts these companies are making during this difficult time and are hopeful that they will continue to work with state attorneys general to do more to root out price gouging online and protect consumers,” District of Columbia Attorney General Karl Racine said.
• The Center for Food Safety (CFS) and a coalition of other groups sued the U.S. Environmental Protection Agency (EPA) for re-approving the chemical glyphosate—an ingredient in Bayer-Monsanto’s popular Roundup pesticide—as not dangerous to humans. “EPA’s half-completed, biased, and unlawful approval sacrifices the health of farmworkers and endangered species at the altar of Monsanto profits,” CFS legal director George Kimbrell said in a statement. In its decision re-approving the chemical, EPA stated that it had found “insufficient evidence to conclude that glyphosate plays a role in any human diseases.”
• Texas has suspended abortions as a nonessential medical operation. Texas Attorney General Ken Paxton stated that abortions were not medically necessary, so “postponing surgeries and procedures that are not immediately medically necessary will ensure that hospital beds are available for those suffering from COVID-19.” Planned Parenthood and the Center for Reproductive Rights sued Texas, stating that the suspension violates women’s due process and equal protection rights under the 14th Amendment. The Center for Reproductive Rights stated that “abortion is an essential, time-sensitive procedure that cannot be delayed.”
• The U.S. Senate passed an act to lower excise tax from health care costs. Previously, the excise tax imposed a 40 percent tax on the health benefits of many families. Representative Joe Courtney (D-Conn.) stated that “various studies show that the number of plans that are expected to hit the current thresholds will increase over time” and that 62 percent of people said they are planning to change health care because of high excise taxes.
• The U.S. Drug Enforcement Administration (DEA) issued a proposal to amend Controlled Substances Act regulations to permit more cultivation of cannabis for medical research. The proposal would streamline the process for growers to be legally permitted to grow cannabis for research, allowing for approval of several long-pending applications for licensed grower status and expanding the variety and improving the quality of marijuana available for research purposes. DEA Acting Administrator Uttam Dhillon said the agency “is making progress to register additional marijuana growers for federally authorized research, and will continue to work with other relevant federal agencies to expedite the necessary next steps.”
• The U.S. District Court for the Central District of California denied a challenge by the American Society of Journalists and Authors (ASJA) and the National Press Photographers Association (NPPA) to a California law that requires employers to extend benefits and other employee protections to workers classified as independent contractors. In their complaint, the ASJA and NPPA had alleged that a provision in the law requiring freelancers who submit more than 35 pieces of content to a single employer to be classified as employees infringed on their constitutional rights. The groups are “considering an appeal.”

WHAT WE’RE READING THIS WEEK

• Economists Sergio Correia of the U.S. Federal Reserve, Stephan Luck of the Federal Reserve Bank of New York, and Professor Emil Verner of the Massachusetts Institute of Technology studied the 1918 flu pandemic and its impact on the economy. They found that localities that instituted harsh regulatory measures had the greatest improvement in their economy in the long run, whereas localities that failed to implement harsh regulatory measures suffered the most economic impact. They described how increased flu cases resulted in a reduction of total manufacturing output by almost a fifth.
• In a forthcoming article for the University of Pittsburgh Law Review, Professor Joshua Galperin of the University of Pittsburgh School of Law argued that the existence of “elected administrators” undercuts the modern notion that presidential control over government bureaucrats is necessary to preserve democratic accountability. By way of example, Galperin pointed to the U.S. Department of Agriculture’s so-called farmer committee system, under which local farmers elect representatives to administer federal programs. Insisting on presidential control over such elected administrators in the name of democratic accountability, Galperin argued, amounts to a “one-dimensional oversimplification of democracy” that elides the “intentional constitutional complexity” of the American system of governance.
• Does the United States tax code favor investment in automation over investment in human capital? A new Brookings Institution conference paper by Daron Acemoglu and Andrea Manera of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University argued that it does. Acemoglu and his coauthors concluded that the tax code encourages too much investment in automation, eliminating jobs at the expense of limited improvements in efficiency. They recommended significant changes to tax rates on capital investment in equipment and software and to tax rates on labor so as to recalibrate investment incentives.

FLASHBACK FRIDAY

• In a 2019 essay for The Regulatory Review, Benjamin A. Barksy considered the constitutionality of federal quarantine laws. He highlighted research that asks whether extreme deprivations of liberty could be constitutionally justified in low-risk, low-fatality situations. Barksy acknowledged that the U.S. Supreme Court had already held that involuntary commitment does not violate the constitutional rights of people who present a danger to others. But, Barksy noted, federal regulations to contain the spread of Ebola and MERS could have gone a step beyond constitutional standards by quarantining people involuntarily for indefinite periods.