The Wall Street Journal - 28.03.2020 - 29.03.2020

THE WALL STREET JOURNAL. *** Saturday/Sunday, March 28 - 29, 2020 |A

A project to track Covid-
patients via their phones is be-
ing launched by Massachusetts
Institute of Technology research-
ers, potentially the first large-
scale project in the U.S. to trace
their movement and that of
those with whom they interact.
The project requires both
people who have the illness
caused by the novel coronavirus
and those who don’t to volun-
tarily download an app to their
phones. The collected data is
scrambled so that individuals
can’t be identified, the research-
ers said.
Such measures are aimed at
alleviating the privacy concerns
that in the U.S. have surrounded
the prospect of this type of sur-
veillance, the researchers said.
Amid the pandemic, location
tracking is increasingly common
in other parts of the world
where there are fewer protec-
tions for civil liberties.
The researchers said they are
in negotiations for backing from
the World Health Organization
about how the technology
should be deployed. They also
are working with the U.S. De-
partment of Health and Human
Services and have had several
conversations with the White
House, according to people fa-
miliar with the matter.
Representatives for those
agencies didn’t respond to re-
quests to comment.
Health officials and scientists
have increasingly realized that
more testing and so-called con-
tact tracing—figuring out how
to track people who have come
in contact with the virus—is the
key to stopping its rapid spread.
In South Korea and China,
governments used tracking de-
vices for surveillance of citizens,
a move that helped those coun-
tries identify and treat patients.
Privacy advocates in the U.S.
have said the pandemic calls for
extraordinary measures but
worry that once adopted, sur-
veillance technologies will be
hard to roll back.
The MIT project’s success is
dependent on amassing a large
number of participants, and
whether that is attainable in the
U.S. isn’t yet clear.
The MIT research group says
it is also joining with big tech
companies and large health-care
systems, such as the Mayo
Clinic and the Big Four account-
ing firm Ernst & Young, to ag-
gregate as much data as possi-
ble through the app, called
Private Kit. Several Facebook
Inc. engineers are donating
their time to the project, which
is led by Ramesh Raskar, a for-
mer Facebook executive who
also worked at Alphabet Inc.’s
Google X unit.
“Stopping epidemics is a
game of numbers. It’s not about
getting everybody or nobody
(quarantined),” said Dr. Raskar,
who has a doctorate in com-
puter science. “The models
show that even at 10% there will
be gains.” He also said it is criti-
cal to develop contact-tracing
strategies in locations before the
virus takes hold. “In New York,
it’s probably too late,” he said.
The MIT effort comes as a
host of startups and research-
ers are racing to develop new
technology to fight various as-
pects of the novel coronavirus.
Few have gained significant
traction thus far.
The Wall Street Journal re-
ported last week about various
proposals that have been con-
sidered, including the use of fa-
cial technology to identify peo-
ple who have come in contact
with patients with Covid-19.
Facebook and Google are
among the companies that have
cooperated with a White House
task force looking at technolo-
gies such as location tracking.
The companies have said they
are working with the govern-
ment to develop solutions to
help mitigate the pandemic.
Right now in the U.S., when
individuals are diagnosed with
Covid-19 they are interviewed
by public-health officials and
asked whom they have come in
contact with over the last sev-
eral days. Those people are
then reached by phone. This
process can take several days
for each individual.
The lack of testing and visi-
bility into who is infected has
prompted widespread shut-
downs of schools and busi-
nesses, with massive economic
ramifications.

BYDOUGLASBELKIN
ANDKIRSTENGRIND

MIT

Launches

Tracking

Project

THE CORONAVIRUS PANDEMIC

Fed Weighs Support for States

Local governments

are confronting

skyrocketing

borrowing costs

The Fed has dramatically expanded its balance sheet over the past two weeks. Above, Fed Chairman Jerome Powell earlier this month.

ANDREW HARRER/BLOOMBERG NEWS

ing-heavy states of the Mid-

west.

“This whole crisis is a vindi-

cation of President Trump’s

tariff policies, which over the

last three years have already

begun to bring some of our

supply chains and jobs home,”

White House trade and manu-

facturing adviser Peter Na-

supply of the cleaner fuel from

the market.

In the same announcement,

the EPA also said it intends to

extend ethanol-blending com-

pliance deadlines for small re-

fineries, and won’t revisit

prior exemptions given to

them that were brought into

question by a recent court rul-

ing. It says it is prioritizing

rules connected to potentially

acute risks and imminent

threats during the pandemic

and calls revisiting these etha-

nol exemptions for small refin-

ers a low priority.

had already asked the EPA to

step in for clarity across the

country, said Tom Kloza, the

top analyst at IHS Markit Ltd.’s

Oil Price Information Service.

Mr. Kloza expects that with

travel limited by the pandemic

April gasoline demand will

drop to levels unseen since the

1960s, off seasonal norms by

more than 40%.

The EPA says that if distrib-

utors aren’t able to sell off the

backlog of winter gas in their

storage tanks, they won’t be

able to start putting summer

gasoline into them, blocking

from the environmental group

Defend Our Future, an arm of

the Environmental Defense

Fund, which said it would

weaken public-health protec-

tions at a time when air pollu-

tion may make people more

vulnerable to the pandemic.

“This decision could lead to

more pollution and worse air

quality, which will jeopardize

human lives,” the group’s Matt

Oberhoffner said in a state-

ment.

States make the transition

to summer gasoline between

April 1 and May 1, and several

nal reported on Tuesday that

such a move was likely.

The EPA said Friday it

would waive requirements to

sell the cleaner fuel until May

20, giving wholesalers and re-

finers at least about three ex-

tra weeks to sell off a backlog

of the winter blend.

The action delays an annual

switch in the spring to

cleaner-burning blends of gas-

oline designed to keep air pol-

lution levels from rising

sharply in hotter, sunnier

months.

The action drew objections

WASHINGTON—The Envi-

ronmental Protection Agency

is delaying the changeover to

summer gasoline by several

weeks, saying otherwise the

coronavirus pandemic could

cause a fuel shortage.

Lobbyists have described

this as possibly the biggest of

several waivers the Trump ad-

ministration is giving to indus-

try and water authorities while

they keep many workers at

home to slow the pandemic’s

spread. The Wall Street Jour-

BYTIMOTHYPUKO

EPA Delays Switchover From Winter to Summer Fuel

the administration is backing

away from the use of trade

barriers to defend domestic in-

dustry. Trade experts say the

combination of the 2020 presi-

dential election and a possible

recession suggests the admin-

istration would face a political

backlash if it removed the tar-

iffs, including in manufactur-

officials said the White House

was now moving to stop the

collection of tariffs, while leav-

ing the tariffs in place.

A spokesman for Robert

Lighthizer, the U.S. trade rep-

resentative, didn’t immediately

reply to a request to comment.

The plans for tariff-payment

delays doesn’t by itself mean

partment in the Obama

administration, has been hired

by the Fed to advise on muni

markets, according to people

familiar with the matter.

Among the questions Fed

officials are considering:

Whether to expand existing fa-

cilities to accommodate other

municipal debt or to launch a

new facility devoted to state

and local finance. Fed officials

will have to decide which mu-

nicipal debt might be eligible

for support and on what terms.

There are limits to how far

the Fed can lend using its

emergency authorities. Its

loans must be well secured,

which the Fed typically satis-

fies by restricting borrowing

to highly rated issuers.

The Fed and Treasury

brainstormed on ways to sup-

port hard-hit state and local

treasuries after the 2008 fi-

nancial crisis, but opted

against doing so.

maintained by the Securities

Industry and Financial Markets

Association.

Monday’s announcement by

the Fed to include more munic-

ipal debt in existing lending fa-

cilities appears to have made

only a small dent, bringing the

index, which tracks bonds

that adjust their rates weekly

according to what investors are

willing to pay, to 4.7% down

from 5.2% the prior Wednesday.

Interest rates on other

short-term muni debt that

spiked last week have fallen af-

ter the Fed said Monday it

would purchase some munici-

pal variable rate debt. Rates on

water, power and sewer bonds

issued by New York City and

Los Angeles fell back to their

typical rates of between 1% and

2% Thursday after hitting

nearly 8% on Friday.

Kent Hiteshew, who estab-

lished an office of state and lo-

cal finance at the Treasury De-

a toe into muni-debt markets

by expanding a money-market

lending backstop to include

certain types of municipal

debt—and by purchasing some

highly rated municipal debt in

a facility backing the market

for very short-term commer-

cial debt.

As of Wednesday, short-term

interest costs on variable-rate

municipal bonds have more

than tripled compared with

two weeks ago and are now

higher than the rates govern-

ments typically pay on 30-year

bonds, according to an index

gram for municipal finance.

State and local govern-

ments are confronting sky-

rocketing borrowing costs

even as they are straining to

pay expenses associated with

the spread of the virus. House

Speaker Nancy Pelosi told Fed

Chairman Jerome Powell last

week “to think big and help

our states,” she said in an in-

terview on PBS this week.

“They are taking a big bite of

this wormy apple and they

need much more in terms of

resources.”

Under its governing law, the

Fed can’t directly buy corpo-

rate debt, and it is limited to

purchasing municipal debt of

six months or less.

But it can work around

these restrictions by creating

lending facilities that lend or

purchase debt, subject to ap-

proval of the Treasury secre-

tary.

The Fed has already dipped

Federal Reserve officials are

reviewing new ways to sup-

port financing for state and lo-

cal governments, many of

which are on the front lines of

the coronavirus pandemic and

will face huge borrowing

needs as revenues plunge, ac-

cording to people familiar

with the matter.

The economic-rescue legisla-

tion Congress approved this

week asks the Fed to charge

headlong into areas it has long

considered taboo—supporting

lending to businesses, cities

and states.

The Fed traditionally

avoided intervening directly in

credit and fiscal policy, prefer-

ring to leave such matters to

Congress and the White House.

That is changing now be-

cause of the fast-moving eco-

nomic crisis—and because Con-

gress has essentially directed

the Fed to get more involved by

providing $454 billion to the

Treasury to cover any losses in

new Fed lending programs.

The Fed has dramatically ex-

panded its balance sheet over

the past two weeks, by nearly

$942 billion to $5.25 trillion as

of Wednesday. The central bank

has lent freely to help firms

avoid a wave of defaults that

could turn a recession into

something much worse.

Over two weeks, the Fed has

unveiled six lending facilities,

five of them enjoying a total of

$50 billion in support from the

Treasury. Those programs have

freed up cash for major Wall

Street institutions and will back-

stop money-market funds and

markets for commercial debt.

Democratic lawmakers have

made support for city and state

borrowing a priority in recent

legislative talks, and the latest

bill directs the Treasury secre-

tary to seek a Fed lending pro-

BYNICKTIMIRAOS

ANDHEATHERGILLERS

varro told the Journal last

week.

On Friday, Mr. Navarro was

appointed by Mr. Trump to

oversee government efforts to

arrange private production of

essential items during the pan-

demic. Mr. Navarro couldn’t

immediately be reached by

phone Friday.

Mr. Trump has imposed

global tariffs on steel and alu-

minum imports, as well as tar-

iffs on hundreds of billions of

dollars of Chinese products in

a trade war sparked off by

China’s treatment of American

intellectual property and trade

secrets.

Other imports also face du-

ties based on findings of for-

eign “dumping” or subsidies,

and the U.S. maintains usually

low tariffs on a host of prod-

ucts from most countries un-

der international agreements.

Washington and Beijing in

January signed a “phase one”

agreement that serves as a

truce in the trade war. The U.S.

didn’t remove tariffs on any

Chinese products under that

pact, they only reduced the

rates of some tariffs.

The pact requires China to

buy $200 billion more in U.S.

exports than it previously did,

and Mr. Trump has said he ex-

pects the pact to be upheld.

The two countries have re-

cently seen tensions grow over

the virus, which spread from

China, as well as a spat that

has seen both nations reduce

the number of foreign corre-

spondents permitted from the

other country.

WASHINGTON—The Trump

administration is preparing to

suspend collection of import

tariffs for three months to give

U.S. companies financial relief

amid the coronavirus pan-

demic, according to adminis-

tration officials.

“Customs duties will be sus-

pended for three months,” a

senior administration official

said Friday.

Companies would still be li-

able for the tariffs at a later

date, which hasn’t been deter-

mined, another official said.

There would be no formal

changes to tariff policy, offi-

cials said.

Asked about The Wall

Street Journal’s report at a

news briefing late Friday, Mr.

Trump called the report “fake

news.”

Mr. Trump signed a roughly

$2 trillion economic-stimulus

bill Friday as the economy has

been brought to a standstill by

the coronavirus pandemic.

Business groups have called

for tariff relief. They have

faced resistance from trade

hawks and domestic industries

such as steel calling for protec-

tion from what they see as un-

fairly traded imports.

U.S. Customs and Border

Protection in recent days sent

out a formal notice saying it

would provide temporary de-

lays for customs duties on a

case-by-case-basis, only to re-

scind the offer on Thursday.

Even so, the administration

BYALEXLEARY

ANDWILLIAMMAULDIN

Tariff Collections to Be Paused, Officials Say

The U.S. is moving to suspend customs duties for three months. Above, a steel plant in Pennsylvania.

MICHAEL RAYNE SWENSEN/BLOOMBERG NEWS

The Federal Reserve

has expanded its

balance sheet to

$5.25 trillion.