Carrier’s union workers protested last year in Indiana over the company’s plans to shift jobs to Mexico. Donald Trump saved most jobs, but at what cost? (Photo by Joe Raedle/Getty Images)
Details of the deal, which Trump actually made with multi-national giant and Carrier owner United Technologies, are yet to be released.
But tax incentives are reportedly a big part of the package.
Incidentally, United Technologies earned a $7.6 billion profit last year thanks, in part, to more than $6 billion in defense contracts, according to published reports.
Last year, the company’s five highest-paid executives earn more than $50 million and spent $12 billion buying back stock. The move helps boost its share prices and, not coincidentally, pad their incentive bonuses.
Of course, any time a corporation get a subsidy, taxpayers have to foot the bill. Otherwise, losses to the U.S. Treasury will simply be piled onto the mounting U.S. debt.
Beyond monetary losses, however, Critics say the deal sets a costly precedent for the U.S. government. Savvy corporate chief executives will now hold jobs ransom to extract lucrative financial or regulatory concessions.
To honor his campaign pledge to save manufacturing jobs, Trump seems all too ready to roll over, no matter what the cost.
Carrier was set to export the jobs to Mexico to save an estimated $65 million a year on labor costs. Carrier’s Mexican workers make about $5 an hour compared with $25 per hour for U.S. workers.
It’s probably safe to assume Carrier will reap at least an equal amount in savings through tax-cuts and regulatory relief, meaning that Trump effectively agreed to pay $65,000 for each saved job. And, that’s a recurring cost. Talk about king of the deal!
“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,” charged former Democratic presidential candidate and Vermont Sen. Bernie Sanders in an opinion article.
Sanders zeroed in on Trump’s campaign hypocrisy:
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?”
Be that as it may, Trump in the short-term can proudly say he fulfilled a campaign promise. The long term is another matter.
“It certainly doesn’t seem like a sustainable way to adapt to the pressures of globalization. Somebody has to make up that wage differential, either taxpayers (subsidies), consumers (higher prices), or shareholders,” Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities, wrote in today’s Washington Post.
In the end, it may have been cheaper for taxpayers–and a better long-term policy–for the government to pay the workers a stipend while retraining them for jobs that won’t move overseas.