Some simple advice for Trump in dealing with coronavirus: Just let the experts speak. You’ll look stronger and more presidential for deferring to their wisdom.
We need to remember this week what should have been learned from the 2008-2009 downturn when financial markets were badly stressed. As Federal Reserve Chairman Ben Bernanke understood it then, the problem was a classic banking panic: Traders didn’t trust their counterparties; they didn’t know the value of the assets in their portfolios or those of their clients; they were scared and desperate.
Confidence slowly returned when the federal government demonstrated that it could handle the crisis. The Fed hosed the markets with liquidity so that institutions could accommodate high volumes and volatility. The Fed and Treasury signaled that they would be buyers of last resort for institutions in crisis. Congress stood behind the administration, and politics were generally put aside to pass necessary bailout legislation, even in a presidential election year.
Democratic presidential candidates Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) have looked back at the 2008-2009 crisis and demonized the financial rescue — arguing that the panic was a function of Wall Street greed. Perhaps more people should have gone to jail for financial misdeeds, but that shouldn’t be the main takeaway. The recovery from the Great Recession is an example of government policy working to stem a crisis.
Coronavirus requires a similar demonstration of good public policy. Trump did a smart thing Wednesday night by inviting medical experts to share the stage at his briefing on coronavirus, including Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases, and Anne Schuchat, the principal deputy director of the Centers for Disease Control and Prevention. They issued clear, measured warnings and practical advice — what the public needs right now. (Unfortunately, according to the New York Times, Fauci has been told by the White House not to comment publicly without approval.)
Also on the podium were Alex Azar, a former pharmaceutical lobbyist who heads the Department of Health and Human Services, and Vice President Pence, the former Indiana governor who Trump said would oversee the anti-virus effort. Pence delegated the coordinator role Thursday to Deborah L. Birx, who currently heads HIV and AIDS prevention.
Trump made a bad mistake when he seemed to endorse a questioner’s suggestion that the CDC was “exaggerating” the threat. “I think they are,” he said. “I’d like it to stop.” That unwise comment probably spooked the markets.
The danger of heavy-handed presidential intervention is that it can drive experts underground when their advice is most needed. Sadly, there are some signs that that’s been happening with the experts in the intelligence community, which has been pounded by Trump since he took office. The CIA and other agencies are said to be warier of issuing analytical reports for fear they might rile the president.
The chilling effect is clear in the request from the CIA and the Office of the Director of National Intelligence to deliver this year’s “Worldwide Threat Assessment” testimony in private. Last year, these agencies stated public positions on North Korea and Iran that contradicted Trump, drawing presidential ire. If our truth-tellers get gun-shy, we’re all in trouble.
Trump understandably fears that coronavirus — and the sharp market reaction this week — could tarnish what had been a positive economic outlook. Who knows, but the epidemic may indeed push the global economy into recession. Trump will be tempted to play a partisan blame game, bashing the news media for spreading bad news, as he did this week. But he knows better than most that markets go up and down, and artificial fixes don’t work.
There’s a useful self-restraint mechanism at work here, which Trump ignores at his peril. The more the White House intervenes and tries to displace experts, the more negatively Wall Street is likely to react. Markets will clear when traders feel they have all the information — and public policy is calm, well-managed and fact-based. This is a situation where Trump could truly be his own worst enemy.