Through the deal that Donald Trump and Mike Pence have made with the Carrier division of United Technologies, Indiana workers will lose approximately 1300 jobs and taxpayers will be forced to give a $7 million bribe to the corporation so that it will not ship some 800 jobs to Mexico.
Yet on Tuesday, Trump tweeted that it was a victory.
And on Thursday, Trump and Pence held a front-page-news-making press conference in Indianapolis to further pat themselves on the back.
Trump said that when he takes office, any company moving overseas will suffer “consequences.”
However, the only “consequence” United Technologies/Carrier will “suffer” for moving jobs to Mexico is that it will get a huge tax break.
In reality, the deal cut by President-elect Trump and Vice-President Pence is a public relations victory for Trump and Pence at the expense of the Indiana workers who they sold out.
This past February, United Technologies announced that beginning next year it would shut down two factories in Indiana run by its Carrier division, a manufacturer of air conditioners and heating equipment – one in Indianapolis employing 1,400 workers and another in Huntington employing 700.
All but about 300 research and administrative jobs were to be shipped to Mexico, where the corporation could pay workers some $3 an hour instead of paying American workers over $26 per hour.
A video recording of Carrier employees reacting to the company’s announcement went viral.
Trump exploited the situation throughout his presidential campaign. For example, according to The Washington Post, at a rally in Indiana in July Trump promised, “We’re not going to lose Carrier air conditioning from Indianapolis. …When people and countries take our companies and take our jobs, there’s going to be consequences.”
Trump pledged that if United Technologies moved, it would have to “pay a damn tax.”
However, “instead of a damn tax, [Trump and Pence] will reward the company with a damn tax cut,” Senator Bernie Sanders (D-VT), said in a Washington Post op ed.
In return for keeping 800 of the 2,100 Carrier jobs in Indiana, Carrier will receive $7 million in tax breaks over 10 years. Trump will also exempt the company from some federal regulations.
“It is not good enough to save some of these jobs,” Sanders wrote. “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.”
Sanders pointed out that “United Technologies is not going broke. Last year, it made a profit of $7.6 billion and received more than $6 billion in defense contracts. It has also received more than $50 million from the Export-Import Bank and very generous tax breaks.”
Nevertheless, Trump tweeted that giving the corporation $7 million in taxes breaks “is a great deal for workers. Thanks, Carrier.”
For Trump and Pence, the Carrier deal is a public relations two-fer. Trump gets an opportunity to brag about his negotiating prowess. Pence can now claim he did not desert workers in his home state.
However, as a precedent for setting policy, the deal is bad.
The Washington Post’s Jim Tankersley explains, “[The Carrier deal] is a major publicity score for Trump who had previously criticized Carrier and other manufacturers on the campaign trail. But putting pressure on individual businesses doesn’t make for a winning long term strategy.’
Sanders adds, [Trump] 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…
“And who would pay for the high cost for tax cuts that go to the richest businessmen in America? The working class of America.”