POLITICO NIGHTLY: CORONAVIRUS SPECIAL EDITION

By Renuka Rayasam and Ben Weyl

THE POLITICAL SYSTEM IS GETTING TESTED like never before, as Washington scrambles to protect the economy from the coronavirus. It's a shift after weeks of focus on whether the public health system can handle the outbreak.

Congress and the White House are now moving quickly to try to cushion businesses and workers from what could be a deeply damaging downturn.

Here's what to watch Wednesday:

— WHAT'S IN PLAY. The parties are already clashing on what should be in the economic stimulus package, with President Donald Trump pitching a payroll tax cut and Democrats focused on securing new funds for children's school lunches and expanded unemployment insurance.

But there is some overlap: paid sick leave for some employees, which will be crucial as workers are forced to stay home to quarantine or recover from the virus. Targeted assistance for the travel and tourism industries, which are already getting hit hard by the outbreak, is also likely.

— THE TWO MOST IMPORTANT PEOPLE. Trump and Nancy Pelosi aren't exactly on speaking terms, so he's deputized Treasury Secretary Steven Mnuchin to handle talks with the speaker. It's a partnership that has worked in the past — the two inked a major budget agreement just last year — and there's reason to think it can succeed again. Mnuchin isn't known as a conservative ideologue and Pelosi is a veteran deal-maker. Senate Majority Leader Mitch McConnell, the most powerful Republican in the Capitol, has also blessed the effort.

The biggest wild card is the mercurial Trump. But if a deal gets brought to him with broad bipartisan support and the country is still in crisis mode, it's hard to imagine he doesn't sign off.

— THE TIME CRUNCH. Congress is looking to act fast — not just because of the emergency facing the public, but because a weeklong recess is scheduled to start at the end of this week and lawmakers are eager to show results. Still, it's not clear both parties will be able to come together on a big deal before then. That could disappoint financial markets, which surged in the final hour of trading amid signs that Washington was springing into action on a stimulus package. Congress could always cancel its recess to try to get something to Trump's desk and avoid shaking confidence on Wall Street, but such a move is rare.

Lawmakers are also not particularly eager to stay in Washington any longer than they have to. Members of Congress — who skew older and are more vulnerable to the virus — are deeply concerned the outbreak could breach the Capitol. Some lawmakers have even suggested they could stay away and vote remotely, an idea Pelosi has rejected. "We are the captains of the ship," she told Democrats. "We are the last to leave."

Welcome to POLITICO Nightly: Coronavirus Special Edition. We'll provide a nightly intelligence brief from our global newsroom on the impact of the coronavirus on politics and policy, the economy and global health. Reach out: rrayasam@politico.com and @renurayasam.

Talking to the Experts

The U.S. economy catches the coronavirus: We talked to POLITICO tax reporter Brian Faler and financial services reporter Victoria Guida, who point out that Congress is largely recycling stimulus ideas.

This old menu includes cutting payroll taxes, boosting unemployment insurance, providing targeted relief for airlines and cruise liners and covering certain health care costs. But the urgency and unprecedented nature of the crisis may force much more dramatic measures.

Jason Furman, Obama's top economic adviser, told us the ensuing recession will be unlike any that the country has seen in about a century. This time it's a pullback in consumer spending — not business spending — that could tip the country into a downturn. Just a 5 percent decline in spending would lead to a recession.

Cutting interest rates isn't going to help a whole lot right now, Furman argues. If he were in control of the country's economic levers, Furman said he would cut people checks, Andrew Yang style. That would give people some breathing room if they miss a paycheck and encourage people to spend.

"Normally economists are pouring through data to figure out what's going on," he said. But just a look around at the conference cancellations and empty flights points to a much deeper, long term impact. "This is a case where data is a useless rearview mirror."

A person sanitizes a classroom | Petr David Josek/AP Photo

Palace Intrigue

Trump tries to lead the fight — He's launching an ambitious plan to inject billions of dollars into the economy. But first he'll have to win over his own party . Trump's desire for sweeping economic stimulus is directly at odds with a Republican Party that has built its brand on belt-tightening. GOP senators who met with Trump on Capitol Hill Tuesday seemed cool to the idea. Even Trump's own aides — including Mnuchin, who has been enlisted to run point on Pelosi talks — said it was too early to consider such moves.

And even more administration members are going off-script, taking the president to task. On Tuesday CDC Director Robert Redfield disputed Trump's assertion that a border wall will halt the spread of an outbreak in an appearance before House lawmakers.

Watch for more palace intrigue on Wednesday — Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases — who hasn't been afraid to speak his mind — is testifying to the House in the morning . (ICYMI: Check out POLITICO's recent profile of Fauci.) Meanwhile, House Democrats will grill the Department of Homeland Security's Ken Cuccinelli, who has been using the crisis to build support for his immigration hardline policies, in the afternoon. And the White House will convene representatives from the largest technology companies to discuss ways the federal government and industry can coordinate their response to the unfolding coronavirus outbreak.

Exclusive

TESTING FAILURES CONTINUE — Redfield told POLITICO that U.S. labs are likely unequipped to test for the virus . Testing failures have already hampered the country's response to the outbreak, obscuring the extent of the virus' spread. Now Redfield tells David Lim and Brianna Ehley that labs across the country are facing a shortage of supplies that they will need to extract genetic material from any virus in a patient's sample.

The comments contradict promises from other administration officials, continuing a pattern of inconsistent responses from the White House. Health secretary Alex Azar told lawmakers that testing capacity could grow to 20,000 people a day by the end of the week. One official on the White House's coronavirus task force said that the group knows about the looming shortage and is working on it, but didn't provide details. But Redfield said he isn't entirely sure how CDC would handle a shortage of RNA extraction kits.

Meanwhile hospitals, which for years have faced economic pressures to cut costs and reduce inpatient treatments, are warning that there may not be enough beds, equipment and staff for a surge in coronavirus patients.

By the Numbers

While scientists try to determine how readily the coronavirus is transmitted, POLITICO's Patterson Clark looks at how this outbreak stacks up against consequential diseases throughout history. Numbers are still fluid, but signs point to the coronavirus being more fatal than the seasonal flu, but not reaching the level of SARS or MERS.

An explainer on how the coronavirus compares to deadly airborne illnesses | Patterson Clark/POLITICO

Around the Nation

Local officials try to head off crisis — States and counties are realizing that it's too late to stop the coronavirus — early testing failures meant that infected people have been circulating for weeks. Now they're trying to keep the damage to a minimum . Silicon Valley's Santa Clara County, which is fast becoming California's crisis epicenter, is banning large public gatherings for the next few weeks. So far pro sports leagues have largely ignored the warnings, but that could change after California's Gov. Gavin Newsom slammed them for playing in packed stadiums.

In New York, National Guard troops are being deployed to New Rochelle to create a containment area, delivering food and cleaning public spaces. Gov. Andrew Cuomo called coronavirus the single greatest public health challenge in the state.

Meanwhile universities and colleges across the country are continuing to cancel classes or move them online, and March Madness games could be played inside empty arenas. And local officials are worried about how they will feed low-income students as schools close.

The Global Fight

Uneven progress around the world — Progress in the fight against the coronavirus depends on where you look: In China, President Xi Jinping visited Wuhan , the virus' epicenter, as the country reported only 19 new infections Tuesday, on the third straight day new domestic cases were restricted to Wuhan. (Supply chains in China, however, still may take a long time to recover.)

In Europe, however, countries are struggling to contain the crisis. Italians adjusted to the first full day of their nationwide lockdown, with the government trying to channel a civic spirit a la London's Blitz as restaurants and public spaces stood empty. But doctors throughout the country faced tough challenges, facing instructions to prioritize younger patients amid a shortage of beds and respirators. The U.K.'s health minister has also announced that she's tested positive for the virus.

In the Americas, Canada is preparing a broader response to fill gaps in the country's health resources and address economic pressures. And officials from the U.S., Morocco, Tunisia and Senegal are scaling back a major military exercise in Africa.

Parting Words

The Gridiron Club & Foundation also announced it would cancel annual white-tie gathering of politicians, press and Washington's elite. Scoff if you will at this mild inconvenience to the inside the Beltway set, but consider this: The dinner has only ever been called off twice in its 135 years — both times because of world wars.

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Renuka Rayasam @renurayasam

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