Dec

2016 5







During the 2016 campaign season, Donald Trump promised to make a lot of “really great deals.” It’s starting to look like his first one is a bust.

Trump is giving $6 million in tax subsidies and $1 million in training grants to Carrier, an Indiana company owned by United Technologies, over 10 years. In exchange, the furnace and air conditioning manufacturer will keep one of its factories open in Indiana. But even though Trump managed to prevent roughly one thousand jobs from going to Mexico, the terms he negotiated are taking heat from both sides of the political aisle:

Even before Trump and Pence can take their victory lap, the deal — the first major test of the anti-trade stance that helped them win the Rust Belt and the election — is already coming under fire. Economists are pointing out that saving 1,000 positions with state tax credits does nothing to stem the global economic forces that are moving an estimated 300,000 U.S. factory jobs abroad annually. And Indiana lawmakers and union officials are bristling at being kept in the dark.

Many suspect Carrier only took the deal because it was afraid to lose $6.7 billion in federal contracts. Conservatives, in particular, are livid. They accuse Trump of using the government’s weight to tip the scales:

Claude Barfield, an expert on international trade at the American Enterprise Institute, said brokering aid packages with individual companies is far from a conservative approach.

“For market-based economists or analysts, this is really a version of crony capitalism, and it’s the kind of thing you really don’t want to get into,” Barfield said. “…So you get the situation where decisions are not made in terms of their economic sense, but in terms of gaming the political system.”

Even Sarah Palin, an early supporter of Trump’s, was shocked at what she called “crony capitalism”:

“When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent,” Palin wrote in an op-ed for the Young Conservative website…”We know special interest crony capitalism is one big fail.”

As for the workers being impacted by the deal? They were shut out of the talks:

The union’s exclusion from the process is significant, since the whole problem the company had was that it thought its labor costs were too high ― and a core function of unions is to negotiate labor costs with companies. Instead of seeking concessions from the union as part of the deal, the negotiators decided to fire fewer of its members in return for $7 million worth of tax breaks from the state of Indiana. Obviously, the union wouldn’t have had much leverage to bargain with since Carrier had already decided to lay everyone off.

It was the kind of surprise you wouldn’t wish on any worker:

“We met with the company at noon,” Jones said, “and then we found out what the numbers actually reflected was, they weren’t keeping our 1,283 bargaining unit members, they were going to keep 730.”

In the words of Trump himself: Sad!