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As CEO of the $96 billion Sam’s Club, Latriece Watkins is testing her mettle at the warehouse retailer that produced CEOs for Walmart, Target, and Walgreens

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As CEO of the $96 billion Sam’s Club, Latriece Watkins is testing her mettle at the warehouse retailer that produced CEOs for Walmart, Target, and Walgreens

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Jeff Bezos wants the bottom half of earners to pay zero income tax—he says nurses making just $75K should save $12K a year

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As AI slashes white-collar jobs, Salesforce CEO Marc Benioff says almost no one is being hired—except in sales
FinanceU.S. economy

Trump wants to reopen the U.S. economy by May 1. But what can he open?

Jeff John Roberts
By
Jeff John Roberts
Jeff John Roberts
Editor, Finance and Crypto
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Jeff John Roberts
By
Jeff John Roberts
Jeff John Roberts
Editor, Finance and Crypto
Down Arrow Button Icon
April 16, 2020, 4:10 PM ET

Subscribe to Outbreak, a daily roundup of stories on the coronavirus pandemic and its impact on global business, delivered free to your inbox.

As the U.S. wrestles with how to contain the coronavirus while also saving the economy, President Trump declared this week he wants to implement “a very powerful reopening plan” in coming days—”maybe even before the date of May 1.”

The call for “reopening” is a response to governors in a large majority of states who have ordered most businesses to close. But already some governors have suggested May 1 is too soon to end their shutdowns, raising the specter of a collision between the White House and state leaders.

It also raises the question of what spaces in the country the President can or can’t open. On Monday, Trump declared he had “total authority” over when the states can restart their economies—a claim he has since walked back after legal scholars across the political spectrum claimed it had no basis.

“I share the view of pretty much everyone that the total authority claim is total nonsense,” said Deborah Pearlstein a professor of constitutional law at Cardozo Law School.

Pearlstein cited the Tenth Amendment of the U.S. Constitution, which reserves most powers—including over commerce and civil liberties—to the states. And while the federal government has power over interstate commerce, that power must be exercised by Congress not the President.

Even for key federal infrastructure such as ports, airports and Interstate highways, the President does not have the power to unilaterally open or close them, says Pearlstein. On Thursday, perhaps acknowledging this reality, Trump reportedly told the country’s governors “You’re going to call your own,” prior to issuing updated guidelines.

So does Trump have any power to “reopen” the economy? It turns out he does, but they are mostly indirect ones he can use to exert influence rather explicit legal ones. For instance, he can exert political pressure on governors through federal guidelines or, more informally, through his bully pulpit on TV and Twitter.

Pearlstein also notes that he could ask the Justice Department to sue states that don’t heed his demands they reopen, but that he would certainly lose in federal court. She says it’s more likely that the President would withhold equipment or federal funds from states that don’t comply.

But in the absence of an act of Congress, withholding funds for highways or health services would be illegal, Perlstein says, but adds that Trump may nonetheless attempt such tactics.

“One can imagine this President trying to withhold health care funds to the state of NY. That would be illegal and very troubling but the mechanisms that usually exist to prevent that, such as Inspectors General or Congressional subpoena power are substantially disabled,” Pearlstein says, explaining that Congress is out of session and that Trump has previously failed to heed Inspectors General.

There is also the President’s power over the military. While the armed services largely can’t be used for law enforcement, the military can play an important role in transportation and other logistics. As such, the President could deploy or withhold such resources—including Navy hospital ships or delivery of N95 masks—from states whose governors defy his request to reopen.

All of this means that, in coming weeks, the President will be able to exercise little direct authority to compel the country’s businesses to reopen. But he could nonetheless use considerable soft power to pressure states to do his bidding.

“It depends how much hardball he wants to play,” says Perlstein.

This story was updated at 4:30pm ET to reflect Trump’s remarks to the governors.

More personal finance coverage from Fortune:

—What to do if you can’t pay your bills this month
—Stimulus checks are depositing: How people are spending the money
—Couldn’t track your stimulus check? Errors and long waits plague IRS portal rollout
—What you should know about mortgage forbearance and skipping payments
—Everything you need to know about furloughs—and what they mean for workers
—Freelancers and independent contractors can now apply for SBA Paycheck Protection Program loans. What you need to know
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO

About the Author
Jeff John Roberts
By Jeff John RobertsEditor, Finance and Crypto
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Jeff John Roberts is the Finance and Crypto editor at Fortune, overseeing coverage of the blockchain and how technology is changing finance.

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