Kudlow says White House wants a back-to-work bonus for unemployed Americans

Larry Kudlow: ‘US probably hasn’t peaked in unemployment, pandemics not over’

White House economic adviser Larry Kudlow White House tells ‘Fox and Friends’ America will continue to face hardships amid the coronavirus crisis but the virus is ‘flattening’ and there are ‘glimmers of hope and growth.’

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A showdown is looming between Democrats and Republicans over the next coronavirus relief package.

White House economic adviser Larry Kudlow on Friday endorsed a back-to-work bonus for unemployed Americans returning to their jobs — an alternative to the extra $600-a-week in unemployment benefits supported by most Democrats

"We've got to reward individuals for coming back to work," Kudlow said during a "Fox & Friends" interview. "There will be some kind of re-employment bonus. We're not going to go to the $600, that's a disincentive to work."

One such proposal from Sen. Rob Portman, R-Ohio, would provide $450 weekly to laid-off Americans returning to work, in addition to their wages. The money would last through July 31, the same date on which the extra $600-a-week unemployment benefit expires.

Another proposal from Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, would allow workers to receive up to $1,200 if they find a job, according to The Washington Post, citing three people familiar with White House discussions.


House Democrats, meanwhile, passed a $3 trillion economic-relief package in May that would expand the boosted unemployment benefits through the end of January. But Republicans have declared the bill dead on arrival, and Senate Majority Leader Mitch McConnell has said additional jobless benefits will not be included in the next package.

Republicans have voiced concern that the sweetened benefits are actually discouraging some workers from returning to their jobs. Roughly two-thirds of workers on unemployment are earning more from the government aid than they did at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute.

Once the $600-per-week expires at the end of July, the typical unemployment check — which varies by state — will return to below $400 per week.

The Federal Reserve's region-by-region roundup of anecdotal information known as the Beige Book, released on Wednesday, found that business owners struggled to bring workers back as a result of the boosted benefits. A separate Fed study found that about 40 percent of Americans earning less than $40,000 per year lost their job in March.


"Contacts cited challenges in bringing employees back to work, including workers' health concerns, limited access to childcare, and generous unemployment insurance benefits," the report said

The U.S. unemployment rate surged to 14.7 percent in April, the highest level since the Great Depression, and economists are warning of an even grimmer situation in May. More than 40 million workers have lost their jobs since the lockdown began in mid-March.

"We probably haven't peaked in unemployment," Kudlow said.

So far, Congress has passed four rounds of aid totaling nearly $3 trillion, including the $2.2 trillion CARES Act signed into law at the end of March.


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Former Trump Official Won Contract To Give Masks To Navajo Hospitals. Some May Not Work.

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A former White House aide won a $3 million federal contract to supply respirator masks to Navajo Nation hospitals in New Mexico and Arizona 11 days after he created a company to sell personal protective equipment in response to the coronavirus pandemic.

Zach Fuentes, President Donald Trump’s former deputy chief of staff, secured the deal with the Indian Health Service with limited competitive bidding and no prior federal contracting experience.

The IHS told ProPublica it has found that 247,000 of the masks delivered by Fuentes’ company — at a cost of roughly $800,000 — may be unsuitable for medical use. An additional 130,400, worth about $422,000, are not the type specified in the procurement data, the agency said.

What’s more, the masks Fuentes agreed to provide — Chinese-made KN95s — have come under intense scrutiny from U.S. regulators amid concerns that they offered inadequate protection.

“The IHS Navajo Area Office will determine if these masks will be returned,” the agency said in a statement. The agency said it is verifying Fuentes’ company’s April 8 statement to IHS that all the masks were certified by the Food and Drug Administration, and an FDA spokesperson said the agency cannot verify if the products were certified without the name of the manufacturer.

Hospitals in the Navajo Nation, which spans Utah, New Mexico and Arizona, have been desperate for protective supplies as the numbers of coronavirus infections and deaths have grown quickly. As of Friday, the Navajo Nation reported 4,434 COVID-19 cases and 147 deaths, a crisis that has prompted outcries from members of Congress and demands for increased funding.

Fuentes initiated email contact with officials at IHS, a division of the Department of Health and Human Services, the agency said. After the contact, the agency informally solicited prices from a handful of face mask providers and chose Fuentes of the six companies that responded because his firm offered the best price and terms, IHS said. Fuentes also benefited from government procurement rules favoring veteran- and minority-owned businesses, the procurement data shows.

Fuentes said political connections to the Trump White House played no role in his company’s selection. “Nobody referred me from the White House. It was nothing like that,” he said. “Emphatically no.”

The White House did not respond to a question about Fuentes’ contract.

IHS told ProPublica that Fuentes’ company reported that the masks were made in China, but the agency did not specify the manufacturer. Federal contracting records show without explanation that Fuentes refunded $250,000 to the IHS this month, and he said in an interview last week that he gave back money when he procured masks at a slightly reduced cost.

“We went back to IHS and said, ‘We were able to get this cheaper,’” Fuentes said. “We will never gouge our customers.”

Fuentes referred questions about the mask manufacturer and FDA certifications to his consultant, Sia N. Ashok, a business school classmate. In a phone interview, Ashok declined to name the manufacturer because it could violate the company’s contract, she said.

Ashok said the company lived up to the terms of its contract with IHS and has all the FDA certifications it needs in place.

“If the customer or IHS or anyone has any issues with anything, we would be more than happy to replace,” she said.

Fuentes’ contract price of $3.24 per mask is more expensive than the pre-pandemic rate of about $1 per mask, but far less than what some government entities have paid at the height of the crisis. Mask costs can vary widely depending on availability, demand, quality and exact specifications.

Fuentes is a retired Coast Guard officer and protege of former White House chief of staff John Kelly. He formerly served as Kelly’s military aide while he was secretary of the Department of Homeland Security, and Fuentes followed Kelly to the White House. In December 2018, as Kelly prepared to leave, The New York Times reported that Fuentes had told associates he planned to “hide out” in a vague role at the White House until he qualified for a Coast Guard early retirement program. Fuentes retired in January from the Coast Guard after 15 years of service. He said his retirement was for medical reasons.

He jumped into the federal contracting world in April at a time of great opportunity — and high risk. The coronavirus pandemic loosened many federal procurement rules as agencies scrambled to respond to a national emergency. But as supplies of personal protective equipment ran out and many countries restricted exports, delivering on contracts became more difficult, and agencies have wrestled with incomplete orders, cancellations and possible counterfeit goods.

N95 masks were so scarce that the FDA in April allowed the use of some Chinese masks that had not been certified by U.S. regulators. But in recent weeks, the FDA narrowed its guidance after tests indicated that some of the products were not as effective as they should be, and it tightened restrictions on the use of Chinese masks by hospital and medical personnel.

Fuentes formed Zach Fuentes LLC as the emergency regulations were evolving.

In April, the FDA authorized the use of masks made by close to 90 manufacturers in China.

But the masks made by some of those manufacturers did not pass CDC tests because they did not filter out enough fine particles. In some cases, the masks failed utterly.

This month, the FDA rescinded its authorization for the vast majority of the Chinese manufacturers, published a much smaller list of respirators made by 14 approved manufacturers and tightened the standards for evaluating Chinese masks.

Eleven federal agencies, including IHS, have reported buying either KN95 masks, or N95 masks made outside the United States, according to contract data. Of those, Fuentes’ contract with IHS is the second-largest that mentions KN95 masks specifically. The largest contract was struck by FEMA, for $3.9 million, on May 4.

Overall, IHS has spent $85.4 million to respond to COVID-19 as of May 22, signing 318 contracts with 211 vendors, according to federal procurement records. The masks provided by Fuentes went to five IHS medical facilities and to a government warehouse.

Fuentes’ new company has also received a much smaller contract from the Bureau of Prisons to provide 10,000 N95 masks for $1.31 each, according to a BOP statement to ProPublica and procurement documents.

One IHS hospital slated to receive masks from Fuentes is the Gallup Indian Medical Center in New Mexico. A doctor there, who declined to be named because he was not authorized to speak publicly, said the facility initially had a shortage of protective equipment. Conditions have improved thanks to federal purchases and donations, he said, though staffers still have to reuse masks up to five times each, he said.

“IHS facilities have sufficient quantities of N95 respirators at this time,” an agency spokesman said.


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Southern States Push to Reopen With Economic Pressure Rising

Southern Republican governors who were among the last to institute shelter-at-home orders are now pushing to become the first to lift them. Tattoo parlors, movie theaters and nail salons in Georgia will begin opening up this week along with beaches, florists and shoe shops in South Carolina.

The announcements came Monday afternoon after Georgia Governor Brian Kemp spent the weekend talking to his fellow Republican governors in the South about how best to restart their economies in response to guidelines issued last week by the White House.

South Carolina Governor Henry McMaster said he was forming an “Accelerate South Carolina” task force to look at quickly and safely opening up the state’s economy. “We must be ready to stomp on the gas when the green light comes up,” McMaster said. Retailers were allowed to reopen at 5 p.m. Monday as long as they enforce social-distancing requirements.

Coming just four days after President Donald Trump issued the guidelines, the announcements raised questions about whether the states were moving too quickly. Dr. Deborah Birx, the U.S. State Department immunologist and one of Trump’s top medical advisers, said Monday evening that it was up to governors to determine whether they are meeting the criteria set by the White House last Thursday.

“We have asked every governor to follow the guidelines, just as we’ve asked every American to follow the guidelines,” she said. “But each of the governors can decide for themselves whether they’ve reached specific guidelines in specific areas.”

At a news briefing in Atlanta, Kemp said the state was opening “in the same way that we carefully closed” on April 1, which was about three weeks after many other states issued their shelter-at-home orders. He said the decision to allow the reopening of many businesses on Friday comes as new data suggest Georgia’s outbreak may have plateaued.

Kemp said Covid-19 emergencies had declined and that new diagnoses “appear to have flattened.” He also detailed efforts to expand testing and screening of potential infections, including a mobile app developed by Augusta University that will allow any Georgian to input their symptoms and get approval for a test if needed.

The reopened businesses will have to comply with social distancing and other measures. “I think our citizens are ready for this,” Kemp said. “People know what social distancing is.”

The White House Coronavirus Task Force last week issued recommendations for states to meet prior to a phased reopening. These include proof of decreasing signs of illness among residents, a health-care system capable of keeping up with demand, and either a downward trajectory of documented cases in a 14-day period or a downward trajectory in positive cases, as a percentage of total cases, in that same period — with the volume of tests either staying flat or increasing.

Recommendations, not Requirements

Public-health experts say all of these conditions should be met before a state considers reopening.

With the virus still spreading across the country, states would be hard-pressed to meet all of these criteria. But because they are only recommendations, not requirements, states can proceed with reopening their economies.

In Georgia, the public health department reports a peak of 811 confirmed cases on April 6. Cases show a downward trajectory since then, though April 14 came close to the peak with 779 confirmed cases. A decrease of 32 cases is still a decrease, but not one which would necessarily leave public-health experts feeling confident in a state’s ability to reopen.

The state’s public-health department referred questions to the governor’s office, which declined to comment further on whether the state meets the White House Task Force criteria.

South Carolina appears to also be on a downward trajectory, but the state’s public-health department releases weekly numbers, rather than daily. There has been a drop off since the week ending in April 11, but it is unclear if that proves a consistent 14-day downward trajectory in daily cases. The state’s public health and governor’s offices did not reply to requests for comment.

In Tennessee, the state has seen 17 consecutive days of single-digit percentage increases in the number of cases, said Laine Arnold, a spokesperson for the governor’s office. “We continue to work closely with the White House for a phased reopening approach,” Arnold said, adding that the state has been aggressive on testing and reported lower hospitalization rates than the national average.

Tennessee public-health department data show cases declining from an April 1 peak, but cases on April 17 soared.

Other states have not yet been able to meet the White House guidelines, despite Trump’s optimism that they could. Hawaii and Wyoming were both name-checked by him last week as being able to reopen imminently. Reached for comment about this by Bloomberg News, both states said they do not meet all of the task force requirements.

In any case, the guidelines are merely suggestions. If the states decline to follow them, they won’t be held liable by the federal government.

The swift reopening in Georgia is premature, said Harry Heiman, an associate professor at Georgia State University’s School of Public Health.

“On the one hand,” Heiman said, Kemp and his team “seem to understand the elements that need to be in place. On the other hand, those elements don’t seem to be in place.”

Even the contingencies in the governor’s order — like hair dressers wearing masks if masks are available — are haphazard, he said. So is the stepped-up testing, because it relies heavily on a new app that hasn’t yet been tested in the field.

Georgia, gyms, fitness centers, tattoo parlors, barbers, hair salons, and massage therapists can resume operations in a limited way beginning Friday, Kemp said. He also indicated the state is ready for a restart of elective surgery and medical procedures that are deemed essential, as well as restaurants and supper clubs. Bars and nightclubs will remain closed for now.

In South Carolina, which has had just over 7,000 diagnosed cases, McMaster lifted restrictions put in place early this month, including on furniture and sporting goods stores and florists, effective Tuesday.

“In light of the common sense being shown by the great people of South Carolina, we are ready to take some steps that will help South Carolina assure that our economic health is as strong as our public health,” McMaster said.

In Tennessee, Governor Bill Lee announced a more measured plan to reopen. One of five Republican governors Kemp called over the weekend, Lee said he would not extend his stay-home orders beyond April 30. He cited “single-digit increases” in the rate of growth of the Covid-19 epidemic in the state, which he called “very encouraging.” But he added that the “economic outlook tells a very different story” including a record spike in unemployment.

The openings come as other regions of the country — in the Midwest, the West, and the Northeast — have formed coalitions to weigh re-opening timelines and protocols. Most are opening on far slower timelines.

— With assistance by Paul Shukovsky, Andrew Ballard, and Josh Wingrove

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