Senator-elect Cynthia Lummis, a Republican from Wyoming, stands for a photo at the U.S. Capitol in Washington, D.C., November 9, 2020.
Stefani Reynolds | Pool | Reuters
A Republican member of the Senate’s Commerce and Banking committees on Wednesday urged President Joe Biden to take several unilateral actions that she argued will help ease U.S. supply chain disruptions ahead of the holiday season.
Sen. Cynthia Lummis of Wyoming told Biden in a letter that those steps would have “an immediate and measurable impact” to improve the transportation of goods by truck drivers, railroad workers and other shippers.
Specifically, she encouraged Biden to allow 18-year-olds to drive trucks in interstate commerce, direct the Department of Defense to find potential storage sites on the West Coast and do away with vaccine mandates that could discourage freight workers from seeking jobs.
The letter from Lummis comes as the freshman senator works to establish herself as a leading voice on economic and financial issues. She has focused on financial innovation and digital currencies, and co-authored a bipartisan amendment popular with the cryptocurrency industry that would have refined the definition of a broker in the infrastructure legislation.
“With the holiday season rapidly approaching, consumers are now facing the likelihood of empty shelves in stores and delayed shipping for online purchases,” Lummis wrote. “Removing barriers that allow the private sector to operate efficiently is the best path forward to rebolster our supply chains.”
The U.S. is struggling with a combination of raw materials scarcities and staffing shortages that hamper the broader U.S. supply chain and have caused headaches for businesses across the country.
The impact has been overwhelming for American retailers and manufacturers, causing inventory problems and shipping delays at companies as diverse as clothing stores and cellphone makers.
Biden addressed the supply chain issues on Sunday during the annual gathering of G-20 leaders.
“Supply chains are something that most of our citizens never think twice about until something goes wrong. And during this pandemic, we’ve seen delays and backlogs of goods from automobiles to electronics, from shoes to furniture,” he said. “We have to take action now, together with our partners in the private sector, to reduce the backlogs that we’re facing.”
The White House said in a blog post Wednesday that it will update Americans twice a month on the health of the U.S. supply chain at the port of Los Angeles and Long Beach, California, which together handle about 40% of the nation’s containerized imports.
Normally, there are only a “few” container ships waiting to dock outside those two cities, the administration said. On Friday, there were 75. Still, Biden’s Supply Chain Disruptions Task Force said it expects unprecedented demand for goods to decline and spending on services to rise in the coming months.
“We are already seeing that with spending on goods in September well below its April 2021 peak, but we still have a ways to go,” the task force wrote. “In the meantime, our supply chains are moving record volumes of goods – and being asked to continue to do so.”
The White House did not immediately respond to CNBC’s request for comment on Lummis’ letter.
The problems have been so severe that many Americans are doing their holiday shopping earlier than usual an in effort to avoid any last-minute delays. In a recent note, Bank of America’s chief U.S. economist, Michelle Meyer, joked to clients that Christmas arrived in September this year.
“Retailers have been urging shoppers to begin shopping for the holidays early this year given concerns over low inventory, shipping delays and an-already large backlog of orders,” Meyer wrote on Sept. 30. The risk there, she added, is that “the shopping season ends up being pulled forward, leaving less activity at the end of November and December.”
The mismatch between demand and supply has also fueled inflation, or the rate at which prices increase, to multidecade highs.
Core PCE inflation — the Federal Reserve’s preferred gauge of price growth — jumped 3.6% in September on a year-over-year basis, its fastest pace since 1991.
Lummis and her Republican colleagues have raised concerns that Democrats’ $1.75 trillion social safety net and climate bill could aggravate the disparity between strong demand and weak supply.
Instead, the GOP would prefer the Democrat-controlled House pass a separate $1 trillion bipartisan infrastructure bill that, they contend, could help soothe supply chain bottlenecks.
“My hope now, again, is that we allow the infrastructure bill to be viewed on its own merits, bring it up for a vote. If that happens, it will pass because it has bipartisan support,” Sen. Rob Portman, R-Ohio, told CNBC’s “Squawk Box” on Wednesday. “It is counter-inflationary at a time we have high inflation. It will help the economy at a time we have low growth numbers.”
While the Covid-19 pandemic upset supply chains across the globe, economists blame the ongoing U.S. pains on American workers’ reluctance to return to work following the 2020 recession.
Some of the country’s largest labor unions say that hesitation is in part due to the Biden administration’s efforts to mandate coronavirus vaccines.
The White House has directed the Occupational Safety and Health Administration to draft a rule that would force private companies with 100 or more employees to ensure they are all immunized or tested weekly for Covid. The rule is expected to be published within days.
The AFL-CIO and about two dozen other major unions representing teachers, service employees, meat processing plant, auto and steel workers voiced their concerns to administration officials last month that the rules could keep workers at home.
“We stressed the importance of mitigation measures,” Rebecca Reindel, who represented the AFL-CIO on the call, told CNBC. “We really need to be getting ahead of the transmission piece of the virus. It takes a while to get vaccinated — we need protections in the meantime.”
With companies eager to hire, any policy actions that could prove a hurdle to worker recruitment and retention could aggravate the nation’s logistics woes, Lummis wrote. She noted that the OSHA rule could have serious consequences in the freight industry and “result in up to one third of employees leaving their jobs.”
The Labor Department’s latest jobs report showed that U.S. payroll growth fell to its slowest pace of the year in September and that many workers gave up looking for jobs and exited the labor force. Those exits had the paradoxical effect of causing the unemployment rate to fall to 4.8% from 5.2% in August.
Truck transportation, which employed about 1.52 million in February 2020, is still about 250,000 workers shy of its pre-pandemic levels, according to the Bureau of Labor Statistics.
“While I would urge your administration abandon this effort entirely, an exemption for those individuals critical to freight movement such as truck drivers would drastically reduce the number of disruptions that such a mandate would create,” Lummis wrote of the OSHA rule.
The government is scheduled to release October’s employment figures on Friday.