President-elect Donald Trump and Vice President-elect/Indiana Governor Mike Pence went to Indianapolis to announce their first successful job-saving deal. It was at the Carrier Corporation's furnace manufacturing plant, which had planned to send 800 jobs to its new plant in Mexico. Good for Trump/Pence that, even before taking office, they are saving jobs.
But it was puzzling that they refused to announce the details of the deal they had worked out, and now we know why: the deal sounds a lot better than it is -- and, according to USA Today's Tony Cook, it's "the kind of agreement Trump slammed on the campaign trail."
In exchange for keeping 800 jobs in Indiana, Carrier will receive $5 million in tax credits over 10 years, plus $1 million in training grants, and up to another $1 million in additional tax credits based on already-planned plant investments.
That's good news for workers who will keep their jobs, although about 400 other Carrier workers weren't so fortunate. Those jobs, as well as 700 others at a related company nearby are gone, meaning 800 jobs saved but 1,100 going to Mexico.
In addition, Cook says, the aim of economic development incentives is usually to bring in new jobs, not retain existing ones -- and some experts fear this will set a troubling precedent. Steve Weitzner of a consulting firm told Cook: "It’s a potentially dangerous policy where you reward a company that threatens to leave. . . . Why wouldn’t every other company make the exact same pitch?" Others say it has to be an individual assessment of the particular circumstances; you can't legislate all the details.
On the campaign trail, however, Trump was highly critical of using such incentives, saying of such tax abatement: "It doesn’t work, folks. That’s not what they need." Instead, Trump said he would impose tariffs as high as 35% on products made by companies that move their factories outside the U.S. He even threatened that against Carrier.
Other experts say the incentives played only a minor role, that maintaining a good relationship with the future Trump administration was a more important factor, given that Carrier's parent company, United Technologies, gets federal contracts for billions of dollars a year.
Nevertheless, Trump campaigned on punishing companies that outsource; now he's rewarding one and pretending to be the hero who saves jobs. So in the end it's Trump being the bullshit artist again, the con man. Selling something as one thing, then switching and delivering something else; and then bragging that he really delivered.
Or, as Steven Rattner, Wall Street executive and contributing opinion writer for the New York Times, put it: "That highlights the conundrum of Trumponomics: He is offering an economic plan devoid of policies that would help the voters who elected him."
Have you noticed how this applies in his cabinet appointments? "Drain the Washington swamp" was the battle cry. Bring back the jobs. Get rid of the lobbyists, the Wall Street financiers, the old government hands. So far, I don't see anyone who is going to stand up for "the forgotten workers," the struggling middle class.
It's a cabinet made up of extremely wealthy, Wall Street friendly plutocrats; aggressive, hawkish ex-generals instead of civilian control of the military; an avid advocate of privatizing schools, who has never been involved as an educator, to head Education; a climate change skeptic for the EPA; a racist to administer Justice; a doctor who wants to cut and privatize health care, Medicaid, Medicare, and Social Security to head up Health and Human Services.
But people haven't caught on yet that we're being conned. "Saving jobs" sounds good. But it's really a small time bribe for a small number of jobs. There's no policy here that's going to save large numbers of jobs. As Paul Krugman pointed out in yesterday's New York Times, "at the rate of one Carrier-size deal a week, it would take Mr. Trump 30 years to save as many jobs as President Obama did with the auto bailout."