GP Insights

GP Insights # 340, 18 April 2020

The US Re-opening: Trump's decision leads to differences with Federal governments
Vivek Mishra

What happened?
In one of his recent press briefings, President Trump claimed that he has the ultimate authority to open up the economy, ridding over states' powers. 

Specifically, President Donald Trump declared that he has "total" authority to order states to relax social distancing and re-open their economies, and warned that governors who refuse would face political consequences. In his words, "the authority of the president of the United States having to do with the subject we're talking about is total."

After Trump took an unequivocal stand that the ultimate authority to open up the economy lies with him, legal minds have challenged the decision on a constitutional basis. The 10th Amendment to the US Constitution has been invoked to press the point that the clause reserves for states all powers that are not specifically granted to the federal government.

Perhaps owing to this legality and advise from his team, Trump seems to have backed down. In the latest announcement, Trump has laid out a three-pronged strategy for opening up the economy which puts the onus on the state Governors. This not only ends the Federal government's tiff with the States but gives the states the leeway to plan a graded opening up.

What is the background?
Even as an unprecedented epidemic sweeps the United States, glaring differences remain on the ground, between several states and the Federal government. While most state economies are shut, the Trump administration has insisted on an early opening of the national economy. 

From the very beginning, as this is the election year and the toll on the US economy of the epidemic is without precedent. However, states like New York, California, Michigan and a few others, which have been hit hard by the epidemic, are not on the same page with the President of the United States on the opening of the economy. 

Opening of the economy will be one of the most critical decisions of Trump's presidency, as it will shape how the US economy picks up after a debilitating impact due to the ongoing epidemic. As the lockdown continues, it has sent the US economy in a tailspin with stumbling stocks and unprecedented job losses. Across states, workers have been laid off or furloughed. 

What does it mean?
Initially, Trump wanted to open up the economy by the Easter Sunday but he has now extended the lockdown until 30 April, targeting 1 May 2020 as the potential date for opening the economy. However, given the varied nature of the impact of the epidemic on various states, a nation-wide opening would be difficult. 

However, even though it seems that Trump might have backed down, for now, his series of Tweets that followed on 17 April give alternate impressions. Trump took a potshot at three Democratic Governors by tweeting, 'LIBERATE' Michigan, Virginia and Minnesota. With his series of Tweets targeted at the differing Democratic governments in three states, the President has been accused of 'fomenting rebellion'. It remains to be seen, how this difference is resolved.

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