Last week Donald Trump went back on the road. He had had enough of thinking about governing. And who’s surprised? His big news last week was that Carrier Corporation was cajoled not to move a thousand jobs it planned on moving out of Indiana. How was that news met? Unsurprisingly, Bernie Sanders said Trump sold out to big business. Someone else said it shows that Trump has Putin’s style. And others say, big deal—the job loss was Mike Pence’ fault anyway.
OK, fine. Trump is not going to satisfy the left. But RealClearPolitics says the Carrier deal is “scary” to business, the Wall Street Journal called the deal a “shakedown,” and (wait for it. . .wait for it. . .) Sarah Palin says it’s the worst kind of Crony Capitalism. No wonder he went out looking for friendly faces.
Bernie Sanders thinks Trump—and we—were duped. And the deal is a promise broken, not kept.
President-elect Donald Trump will reportedly announce a deal with United Technologies, the corporation that owns Carrier, that keeps less than 1,000 of the 2,100 jobs in America that were previously scheduled to be transferred to Mexico. Let’s be clear: It is not good enough to save some of these jobs. Trump made a promise that he would save all of these jobs, and we cannot rest until an ironclad contract is signed to ensure that all of these workers are able to continue working in Indiana without having their pay or benefits slashed.
In exchange for allowing United Technologies to continue to offshore more than 1,000 jobs, Trump will reportedly give the company tax and regulatory favors that the corporation has sought. Just a short few months ago, Trump was pledging to force United Technologies to “pay a damn tax.” He was insisting on very steep tariffs for companies like Carrier that left the United States and wanted to sell their foreign-made products back in the United States. Instead of a damn tax, the company will be rewarded with a damn tax cut. Wow! How’s that for standing up to corporate greed? How’s that for punishing corporations that shut down in the United States and move abroad?
In essence, United Technologies took Trump hostage and won. And that should send a shock wave of fear through all workers across the country.
Trump has endangered the jobs of workers who were previously safe in the United States. Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives. Even corporations that weren’t thinking of offshoring jobs will most probably be reevaluating their stance this morning. And who would pay for the high cost for tax cuts that go to the richest businessmen in America? The working class of America.
Well, that’s Bernie. But the real surprise is Sarah Palin—whom Trump is reportedly considering to head the second largest agency in the country (Veterans’ Affairs). She’s against the deal, too. Writing for Young Conservatives, she basically says Trump is destroying capitalism.
When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Meanwhile, the invisible hand that best orchestrates a free people’s free enterprise system gets amputated. Then, special interests creep in and manipulate markets. Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail.
Politicians picking and choosing recipients of corporate welfare is railed against by fiscal conservatives, for it’s a hallmark of corruption. And socialism. . .
But know that fundamentally, political intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist, versus establishing policy incentivizing our ENTIRE ethical economic engine to roar back to life, isn’t the answer. Cajole only chosen ones on Main St or Wall St and watch lines stretch from Washington to Alaska full of businesses threatening to bail unless taxpayers pony up. The lines strangle competition and really, really, dispiritingly screw with workers’ lives. It’s beyond unacceptable, so let’s anticipate equal incentivizes and positive reform all across the field – to make the economy great again.
When Bernie Sanders and Sarah Palin agree—on anything—it should give one pause. One concern about the Carrier deal is that it gives the company $7 million for doing—frankly, and specifically—nothing. But we don’t know the whole deal, explicit and implied. Carrier is only a small part of United Technologies, which has hundreds of billions in defense contracts. Some think that’s where we will really pay for this deal.
The Wall Street Journal calls the deal a “shakedown.”
Carrier wanted to move the production line to Mexico to stay competitive in the market for gas furnaces. If the extra costs of staying in Indianapolis erode that business, those workers will lose their jobs eventually in any case. . .
Mr. Trump’s Carrier squeeze might even cost more U.S. jobs if it makes CEOs more reluctant to build plants in the U.S. because it would be politically difficult to close them.
Mr. Trump has now muscled his way into at least two corporate decisions about where and how to do business. But who would you rather have making a decision about where to make furnaces or cars? A company whose profitability depends on making good decisions, or a branding executive turned politician who wants to claim political credit?
But is Trump really acting like his buddy, Vladimir Putin?
It’s good that about 1,000 Carrier Corp. workers will not be losing their jobs. But there is a whiff of Putinism in the combination of bribery and menace that may have affected Carrier’s decision — the bribery of tax breaks, the menace of potential lost defense contracts for Carrier’s parent company, United Technologies.
If this were to become the U.S. government’s standard method of operation, the results would be Russian, too: dwindling investment, slowing economic growth, fewer jobs. . .[In Russia,] government-controlled television continually features Russia’s president interrogating or berating factory directors and petty officials.
“If prices have spiked, or salaries are low, or costs have gone way over budget, then Putin lays into the unfortunate bureaucrat — ‘What’s wrong with your head?’ ‘Are you crazy?’ ‘What are you saying?’— as the cameras roll and the Russian president’s quarry stammers and squirms.”
American Enterprise Institute scholar Jimmy Pethokoukis agrees, as he told business channel CNBC.
President-elect Donald Trump’s speech about his deal to keep Carrier jobs in the United States was “absolutely the worst speech by an American politician since 1984 when Walter Mondale promised to reverse Reaganomics.”
“The idea that American corporations are going to have to make business decisions, not based on the fact that we’ve created an ideal environment for economic growth in the United States, but out of fear of punitive actions based on who knows what criteria exactly from a presidential administration. I think that’s absolutely chilling,” he said.
Fortune Magazine notes that more than half the jobs will still go to Mexico, and that the jobs that were saved were actually low-paying jobs, anyway.
Hayes explained that the jobs were lower-wage and had high turnover, and the move was necessary to keep the plant competitive, according to the source. He said the plan would save the company $65 million a year. . .
Some 1,300 jobs will still go to Mexico, which includes 600 Carrier employees, plus 700 workers from UTEC Controls in Huntington, Ind.
Of course, Breitbart praised the deal, but Breitbart is pretty much Trump’s PR arm. However, The Daily Caller calls it brilliant politics.
The announcement that Donald Trump has already saved roughly 1,000 Carrier jobs from being moved from Indiana to Mexico struck me as probably bad policy and bad precedent, but definitely brilliant politics. And while few are disputing that, I’m not sure people realize exactly how significant this accomplishment is.
Here you have a guy who isn’t even president yet, and he’s already fulfilling one of his campaign promises. . . The fact that this is a fairly small number of jobs actually enhances the impact—it shows the public how much he cares about saving even a few jobs in what the political elites smugly refer to as “fly-over country.”
Some say that Mike Pence, as governor of Indiana, was the cause of Carrier’s plans to move the jobs in the first place, because he helped kill an energy-saving program that made the state more efficient—and more importantly, led to sales of new Carrier units.
Vice-president-elect Mike Pence turned down a request from Carrier two years ago to veto a bill that rolled back the state’s energy efficiency program, a move the furnace maker warned would hurt its business there and lead to job cuts.
In a March 2014 joint letter, Carrier’s parent company, United Technologies Corp., along with GE, Johnson Controls and Honeywell, asked the Indiana governor to oppose the bill, warning that ending the energy program would eliminate about 380 direct jobs and more than 1,200 indirect jobs, as well as $500 million in annual economic investments. . .
Energizing Indiana offered buyers reduced costs for lighting products, free residential walk-through efficiency audits and rebates to businesses for installing energy efficient equipment such as the HVAC parts and furnaces Carrier makes. In its first year, the program provided up to $5.49 in savings for each dollar spent by commercial and industrial customers, the Indiana Utility Regulatory Commission said in an August 2014 report. And in 2014, the program reaped 404 gigawatt hours of energy efficiency beyond the 591 gigawatt hours the utilities’ programs provided, the Midwest Energy Efficiency Alliance said in an April 2015 presentation. . .
Twenty-five other states have efficiency programs, said Martin Kushler, senior fellow at the American Council for an Energy-Efficient Economy, and Indiana is the only one to have stopped its effort. While Carrier has remained silent on the extent to which efficiency standards affected their decision to shutter the plant, the state “repealed those energy efficiency targets and shortly thereafter Carrier said they’re leaving town,” Kushler said.
It’s no surprise that Trump hit the road, to look into the faces of adoring fans. He won’t get that kind of response anywhere in Washington.