Trump’s deal with Carrier moves 1,300 jobs to Mexico
The deal announced Thursday to preserve 800 jobs at a Carrier factory in Indianapolis that was planning on shipping those jobs to Mexico was classic Trump. He gushed over his election victories in Indiana, blustered about building a wall on the border with Mexico, threatened other companies about moving jobs, and basked in the adulation of workers at the plant who were “all crying” at his dealmaking prowess.
But Trump offered few specifics. Like his dodgy business empire, it’s what’s behind the curtain that matters more than the smoke and mirrors on stage. Trump’s deal shows that his plan to “Make America Great Again” is based on accelerating the race to the bottom for American workers.
Take the agreement itself. Trump crowed about saving 1,100 jobs, but the Wall Street Journal reported that includes “300 research and headquarters positions that weren’t slated to go to Mexico.” That means the number of jobs being saved is 800 out of a total of 2,100 jobs that were to be transferred. In other words, 1,300 workers will still get the boot from two Carrier facilities in Indiana.
So when Trump told the crowd at Carrier, “All of the workers [will] have a great, great Christmas,” he was erasing the many more workers whose jobs will be eliminated.
Few will find another job that pays up to $30 an hour, and government will be stuck with the bill from Carrier. Larry Cohen, chair of the board of directors for Bernie Sanders’ “Our Revolution,” says the government will have to pay for “18 months of extended unemployment benefits and retraining” for the fired workers.
That’s just one downside. Other details leaking out make the deal look even shadier. Carrier’s parent company, United Technologies, will receive $7 million in incentives from the state over a 10-year period, or nearly $9,000 per job saved. But that pales in comparison to the $65 million in labor costs Carrier would have saved by moving to Mexico.
So it wasn’t about the money, what’s the real story? Former Indiana Lt. Gov. John Mutz, a “prominent” member of the Indiana Economic Development Corp., which will fork over the aid to Carrier, told the Indianapolis Business Journal the agreement was more influenced by “United Technologies Corp’s desire to keep its hefty federal contracts” that amount to some $6 billion annually.
Larry Cohen approves of playing hardball with corporations, but laments, “It’s a sad day when you have to depend on Donald Trump for this.” Cohen says the Obama White House “should have been doing this for years.” He points out that United Technologies expects to get those federal contracts “with giant profits baked in” while being free to “devastate this country by costing the city of Indianapolis at least 2,000 jobs.”
Also overshadowed by the Trump reality show is the fact Bernie Sanders deserves substantial credit for the deal, according to Cohen. He says Sanders “campaigned to keep Carrier in Indianapolis, introduced legislation aimed at including the jobs record as a factor in government contracts, and scheduled an NBC town hall in Indianapolis next week” to ramp up the pressure on Carrier.
The proposed legislation was unveiled on Nov. 26, nearly a week before the Carrier deal. Called the “Outsourcing Prevention Act,” Sanders says it will prevent “companies that outsource jobs from receiving federal contracts, tax breaks, grants or loans.” The bill includes anti-outsourcing policies aimed at all federal contractors, any company that receive federal benefits, imposes a tax on corporation that outsources jobs equal to or greater than its estimated savings—so in the case of Carrier, it would pay a fine of at least $65 million if it moved the jobs—and it prohibits executives from profiting off outsourcing.
Such policies would strike at outsourcing, showing it is a profit-making scheme and not some force of nature. But it’s also dubious to accept corporations’ rationale that they need to cut labor costs to compete. Writing in the Washington Post, Sanders noted that United Technologies recently lavished “a golden parachute worth more than $172 million” on its former chief executive, it paid five executives more than $50 million,” and in 2015 it upped its stock buyback program by a staggering $12 billion that has no purpose other than inflating its share price. The stock buyback alone is nearly 200 times the savings Carrier would have realized by shipping jobs to Mexico.
Trump, meanwhile, made the jobs announcement about him. In Indianapolis he said, “We’re going to have a lot of phone calls to companies that say they’re thinking about leaving this country, because they’re not leaving this country. Leaving the country is going to be very difficult.”
He gets to play the strongman bestowing largesse on the little people. The Obama White House needled Trump, pointing out he would have to replicate the Carrier deal at least 804 more times to match the number of manufacturing jobs created since 2010. And it would take nearly 1,900 Carrier deals to match the 1.5 million jobs estimated to have been saved by the auto industry bailout.
But Trump did outline some policies in Indianapolis. He said, “We’re going to do great things for business. … Your taxes are going to be at the very low end” by slashing the corporate tax rate from 35 percent to 15 percent. He also said he would hack away at federal regulations, as “most of the regulations are nonsense.”
Most regulations, however, concern workplace safety, consumer safety, and the environment. That’s the real story, not 800 jobs saved. Trump is telegraphing his plans for an unrelenting assault on all American workers, their wages, their quality of life and health, and their right to organize. Trump’s message to corporate America is they don’t need to move jobs to some impoverished, environmentally trashed country ruled by business-friendly despots because he is going to create those conditions here.
The New York Times said the deal shows, “Mr. Trump is a different kind of Republican, willing to take on big business, at least in individual cases.” The only thing different is Trump’s transparent machinations.
Trump has talked of a tax holiday so corporations can repatriate up to $3 trillion in profits squirreled overseas. This could give him the funds for a sugar-rush burst of infrastructure to help him get re-elected. But his fiscal policies will cripple federal spending, which has been the right’s dream for decades, and drag down fail the economy over the long term. When companies were last given a tax holiday in 2004, they were allowed to bring booty home at a paltry 5.25 percent rate. But, as the Times reported, “they used very little of their repatriated money to create jobs or develop new businesses or technologies. Most of the cash simply flowed to investors in the form of buybacks and dividends.”
That’s a missing part of the Carrier puzzle. Trump was signalling to United Technologies it may be able to bring back $38 billion it’s sheltered and use it to fatten dividends and profits.
Expect Trump to roll out more one-off “deals” that allow him to garner laurels even as he remakes America into a Koch Brothers-style utopia. But there won’t be any policies that hammer corporations in the bottom line to staunch outsourcing or improve the lives of American workers, including those of his supporters.