Under pressure, the president signed an executive order delegating power under the act to the Department of Health and Human Services, but has resisted putting its powers into full effect. When asked Wednesday why he had not, the president deflected that “governors are supposed to be doing a lot of this work and they are doing a lot of this work. The federal government is not supposed to be out there buying vast amounts of items and then shipping. You know,” he shrugged, “we’re not a shipping clerk.”
Yet American history shows that in times of crisis, one of the most vital powers of the federal government is precisely to coordinate resources and ensure critical needs are met. Today, the Defense Production Act remains one of the most potent legal tools — maybe the only tool — to help the government serve that obligation and make sure our medical professionals have the tools they need.
The Defense Production Act was a product of the early Cold War. In earlier 20th century conflicts, the economically decentralized United States cobbled together wartime mobilization regimes after crises had already begun. These trial-and-error efforts often struggled to meet the scale that emergencies required.
During World War I, the Wilson administration assembled a confusing assortment of ad hoc agencies to handle what was increasingly known as the science of logistics: the War Industries Board to coordinate corporate production with Army needs, the Food Administration to ensure troops overseas didn’t march on empty stomachs, the Fuel Administration to ensure availability of coal, oil and natural gas, and, critically, the Railroad Administration, under Treasury Secretary William McAdoo, to nationalize the nation’s hopelessly dysfunctional transportation network.
The wartime mobilization problems the United States faced were rarely about actual productive capacity and instead about distribution — there was no national shipping clerk. In the winter of 1917-18, a clogged network of railroad cars owned and operated by scores of competing companies prevented coal from moving from where it sat in abundance to where it was desperately needed. Americans in the freezing northeast lacked fuel to heat their homes.
McAdoo temporarily nationalized railroads while Harry Garfield at the Fuel administration issued its “closing order,” preventing coal consumption for all but the most essential uses. Through their work, McAdoo and Garfield used the federal government to accomplish what the free market was unable to do on its own. “Yes, it’s the worst order ever issued,” noted Secretary of the Navy Josephus Daniels, “but it was the worst situation that ever existed.”
The mobilization task during World War II was even greater and longer lasting. A dizzying array of emergency agencies sprung up to manage the industrial mobilization that consumed as much as 40 percent of the entire economy. The War Production Board, the Office of War Mobilization, the National War Labor Board, the Office of Scientific Research and Development, the Office of Price Administration — the proliferation of these bodies revealed that mobilizing for a national emergency was not something that could be accomplished without federal direction.
Yet after both these war emergencies, the ad hoc federal agencies quickly disbanded as American industry chafed under centralized control.
After World War II, the rapid emergence of the Cold War led the Truman administration to conclude that the impromptu mobilization strategies that had worked — barely — during the two previous wars ought to be made permanently available. War with the Soviet Union could break out in an instant as American war planners imagined Soviet tanks rolling into Western Europe or even bombers crossing the Atlantic. Meanwhile, postwar strikes threatened to disrupt the resumption of a peacetime economy and hobble future military needs. The outbreak of the Korean War provided the final impetus for the September 1950 passage of the Defense Production Act.
The DPA’s original title captures the extraordinary scope of the law: “An act to establish a system of priorities and allocations for materials and facilities, authorize the requisitioning thereof, provide financial assistance for expansion of productive capacity and supply, provide for price and wage stabilization, provide for the settlement of labor disputes, strengthen controls over credit, and by these measures facilitate the production of goods and services necessary for the national security, and for other purposes.”
In other words, power to mobilize the entire American economy for emergencies.
In the years that followed, presidents would invoke the Defense Production Act to meet a range of Cold War defense needs, including wartime mobilization for the wars in Korea and Vietnam. (In the Supreme Court’s landmark Youngstown Sheet & Tube decision of 1952, the court majority faulted President Truman for not properly invoking the Defense Production Act in his attempted nationalization of the nation’s steel industry.)
Notably, during the Arab Oil Embargo of 1973-74, when oil prices rapidly quadrupled, President Richard Nixon became the first president to invoke the DPA for more general national needs, arguing that military readiness even outside of war justified using the Act’s provisions. The Act’s powers were vast, allowing the president to require American oil companies to sell to the government before private markets, whether they already held federal contracts. The government could allocate needed fuel according to national need, not market dynamics.
Ultimately, Nixon used the act to charge 22 oil companies with providing the government some 20 million barrels of oil to meet the emergency. In so doing, Nixon stopped short of full scope of the DPA’s powers, but the successful use of the law during this crisis later led the Reagan administration to argue the government no longer had any need to own giant, reserve oil fields for national emergencies (as it had since the early 20th century), and, in 1998, President Clinton presided over the sale of the vast Elk Hills oil field. Why own a vital resource when this law allowed the government to more nimbly step directly into markets to mobilize for national emergencies?
In its present form, the act allows the government to prioritize essential contracts, and even require American companies to produce critical goods and services to meet national needs, as well as offer financial incentives to stimulate production. While the Department of Defense routinely uses contracting provisions to ensure its needs are met, the broader powers of resource allocation — turning the federal government into a shipping clerk — have rarely been invoked but remain available precisely for use in emergencies like the current one.
Today, congressional oversight of the DPA rests with the House Committee on Financial Services, whose chairwoman, Democrat Maxine Waters, has called for deploying its powers to ramp up vaccine development and the production of medical supplies like critical N95 masks that protect against coronavirus, and with the Senate Committee on Banking, Housing, and Urban Affairs, whose chairman, Republican Mike Crapo, has not.
Democratic Sen. Edward J. Markey introduced a Senate resolution last Wednesday pleading with the president to invoke the DPA with precise details of how it should be used. The resolution, co-sponsored by 13 other Democrats including Sens. Elizabeth Warren, Sherrod Brown, Doug Jones and Cory Booker, was sent to the Banking Committee and no further action has been taken. House Speaker Nancy Pelosi has reiterated these calls.
Hopefully, recent reports suggest the president may be reconsidering his reluctance to take these steps but what, if anything has been done remains unclear, and as of Saturday afternoon, he continued to resist the federal government assuming this essential role in place of the private market.
The United States holds enormous productive capacity and boundless ingenuity, yet 40 years of denigration of government competence and exaltation of the genius of the market have let Americans forget how federal authority is not just helpful but essential in times of national crisis. The Trump administration should have taken these steps two months ago. But taking them now will be better than not taking them at all.
We need the federal government to be our shipping clerk — and financial backstop, and organizer of national resources. These are among the most important roles the government can play. And right now, it’s not.