Trump Brings Us The Corporate Welfare Version Of "I'll Have What She's Having"
That's that scene in the Carnegie Deli from "When Harry Met Sally" -- the one where Meg Ryan fakes an orgasm at the deli table. Afterward, an older woman -- the director's mom, I believe -- says, wryly, "I'll have what she's having."
Well, any big corporation should say exactly the same thing to Trump -- in the wake of the taxpayer welfare he just extended to Carrier. Mark J. Perry writes at AEI:
Team Trump dishes out generous corporate welfare to Carrier using taxpayer money before it even take office
He did a bit of a redo of a CNN story. An excerpt:
Carrier said the deal is "preserving more than 1,000 jobs" in Indiana in the short-run, even though its higher labor costs in the US pretty much guarantee a loss of the company's market share and jobs in the long-run. The Carrier plant in Indianapolis employs 1,400 workers. A nearby plant owned by the same parent company, United Technologies Electronic Controls, employs 700, and had also announced plans to move to Mexico to serve the interests of the company's customers and shareholders. That plant was not part of the new deal to receive corporate welfare as a payment to compensate Carrier for higher US labor costs, financed with money coercively extracted from state taxpayers.
From a piece at The Hill by Rebecca Savransky:
Carrier's parent company will receive $7 million worth of tax breaks over a decade as part of the deal to keep jobs in the U.S., while Carrier will also reportedly invest $16 million to keep operations in the state. Still, hundreds of jobs will still move to Mexico."I want to let all the other companies know that we are going to do great things for business, there's no reason for them to leave anymore," Trump said from Carrier's plant in Indianapolis.
"Their taxes are going to be at the low end and the unnecessary regulations are going to be gone."
This is like those Ponzi schemes on the street in New York, except that American taxpayers are the chumps.
I think I would prefer that the tax breaks go to Carrier rather than having billions of dollars flushed directly down the toilet by so called called clean energy companies like Solyndra. .
https://en.m.wikipedia.org/wiki/Solyndra
And Jon Corzine belongs in prison.
Isab at December 1, 2016 9:04 PM
While I recognize that Trump is a jerk, don't let your personal dislike blind you. That's the bias reflected in the media's reporting.
Higher labor costs do not necessarily mean higher per unit cost for each unit manufactured, or a loss of market share.
Moving jobs from one plant to Mexico can mean that older equipment is being moved. That would continue production of an older, possibly obsolete for the US market models. Investment in the remaining plant can mean increasing worker productivity and/or producing newer models.
These can also be temporary measures until Trump and the incoming Congress enact reforms to US tax, labor and other laws, and regulations are repealed or reformed, to make manufacturing in the US more competitive, to eliminate the penalties for companies bringing profits to the US to invest, and to pressure foreign nations to eliminate barriers to US exports.
While this deal with Carrier, like the earlier one with Ford, is largely symbolic, it shows a new attitude. Business and workers are no longer the enemy of government. Work will be promoted over welfare. Growing the economy will be promoted over redistribution. Right now, Trump is using the Bully Pulpit of the President (elect). The increase in confidence is reflected in the surge the stock market. The contrast with the BHO administration, or the tired socialist slogans of Senator Sanders, or the immaturity of the Clintonistias, is very marked. I'd rather see tax breaks keeping 1400 blue collar Americans working in a factory, than federal student loans paying for crying circles, coloring books, Play Doh and "safe rooms" at so-called institutions of higher learning.
Wfjag at December 2, 2016 12:53 AM
Amy, it's about hope and change. These "deals" go on every thriving city, county, or State.
Even my small city had to go after a windmill company that did not fulfill its agreement to receive perks for opening an assembly plant.
"Of the nearly 700 counties that twice sent Obama to the White House, a stunning one-third flipped to support Trump."
https://www.washingtonpost.com/graphics/politics/2016-election/obama-trump-counties/
OT: I'll believe everyone is concerned about these "deal" when stadiums are not funded by taxpayers, and the NFL is forced to be a for-profit organization. Until then it's white noise yada yada yada.
Bob in Texas at December 2, 2016 5:34 AM
President-designate Trump could cure cancer, perfect cold fusion and bring peace to the Middle East, and some people would still bitch, including Amy Alkon.
roadgeek at December 2, 2016 6:01 AM
I need to read up on the details of this, but I've heard that it requires Carrier to make some rather large investments in factory upgrades. And yes, state and local governments provide tax incentives to industries all the time. Where I live, there are several places in town that are "tax islands" -- the property is officially outside the city limits, and therefore the city cannot tax the property or what takes place on it. Most of them are no longer being used for their original purpose, and there's been some debate about what to do. (Which is one of the hazards of these types of deals.)
I'm all in favor of states competing for economic activity, to the extent that they want to. And I'm here to tell you: the industry that gets more breaks than anyone, not only on taxes and incentives but also on being excused from labor laws, is the entertainment industry. As Bob mentioned, professional sports are heavily subsidized in most cities. Most states will provide free services and direct subsidies to movie and film crews that come to their state, despite the fact that such activities provide zero jobs once the shoot is complete. States should be able to do what they want with this sort of thing, with one caveat: if a state screws up badly and needs to be bailed out by the federal government, a loss of sovereignty will be part of the deal. No one should be rewarded for voting for irresponsible government.
Cousin Dave at December 2, 2016 6:25 AM
Well, Bob, I agree with you about the stadii. Ask the city and county of St. Louis and presumably the state of Missouri what happens when the NFL team leaves for better pastures while you're still making payments on the stadium debt. And will be until 2024.
And now, no anchor tenant. Whoops.
Speaking of welfare: http://www.npr.org/2016/12/01/503954976/gao-report-student-loan-forgiveness-will-cost-nearly-200-billion
I R A Darth Aggie at December 2, 2016 6:29 AM
He isn't even president yet. He doesn't have any authority yet. Which taxes are they getting a break from? Because it looks like these are state based tax breaks that involve Pence in his current role as governor. Trump can claim all the credit he wants but he really isn't involved in this. And while I don't like the practice this is a normal part of state governance. Pence isn't even doing anything unusual.
Talk about your biased reporting.
Ben at December 2, 2016 6:29 AM
Even when they don't leave stadium deals are non-economic IRA. Sports venue deals are vanity projects.
Ben at December 2, 2016 6:31 AM
Deer Hollywood, please pay your fair share!
http://www.washingtonexaminer.com/sunday-reflection-repeal-the-hollywood-tax-cuts/article/2503964#.ULLQmOOe_qd
I R A Darth Aggie at December 2, 2016 6:41 AM
San Francisco regularly waives its payroll tax for the "right kind" of companies it wants to keep in town, leaving older companies to bear the city's payroll tax burden. California provided tax incentives for the Toyota-GM NUMMI plant to be built in Hayward. Louisiana provides tax incentives for movies and television shows to be shot in the state. North Carolina provided tax incentives for the Apple server farm to be built near Morganton. Cities build stadia for local sports teams on an all-too-frequent basis. How is Indiana providing a tax incentive for Carrier to remain in Indianapolis any different?
Are those tax incentives cheaper than the unemployment and welfare that would have been paid to the laid off workers? If so, it sounds like Indiana made a good deal.
What burns the Dems up is that Trump got to put on a little political theater show, a better one than the Beer Summit that Obama put on.
Also, as someone mentioned, Carrier agreed to invest $16 million in upgrading the plant, giving them incentive to stay in Indiana for a few years at least.
If other companies want a deal that costs less than the alternative, provides jobs and continued employment to US taxpayers, and requires them to invest a substantial sum in upgrading their existing US plants giving them an incentive to stay in the US, let's make a deal.
A president stomping his feet and pitching a temper tantrum over corporate offshoring was not going to get Carrier to stay.
Conan the Grammarian at December 2, 2016 8:22 AM
Trump did not offer Carrier a special deal. He just detailed the tax policy changes he intends to make for everyone. If you think he made a 'special' deal you are mistaken.
Steve in Tulsa at December 2, 2016 9:28 AM
"What burns the Dems up is that Trump got to put on a little political theater show,"
Scott Adams has a blog post today about this. He called it the "New CEO Strategy", something that smart CEO's do when they take over a new business: do something quick that gets immediately visible results, in order to create a good first impression.
More to the point, I think a whole bunch of people are fed up with political theory. They want what works, regardless of whose ideology it does or doesn't fit. Rumor has it that one of the first things Trump is going to do is propose a big infrastructure spending bill. A lot of the Cruz/Paul faction of the GOP is going to have to hold their noses and vote for it, because their constituents will demand it, and because they can't afford to give the political high ground on working-class economic issues back to the Democrats. I feel their pain, but I recall the lesson of the sewer socialists: people don't care about your ideology as long as you make things work.
Cousin Dave at December 2, 2016 11:03 AM
@Cousin Dave: "Everyone does it" does not make it right, or wise.
@Conan: We're back to Bastiat. You see one company kept in the state or city by tax breaks. You don't see all the other companies, which in the long run must pay higher taxes. Some of them will move away - or if taxes are high everywhere, the non-favored companies will have to cut back on growth.
The only reason crony capitalist deals are so common is that the favored companies are not the only beneficiaries: the politicians are paid off in campaign contributions, favorable publicity by math-challenged journalists, and stock tips. They are good for the politicians and crony capitalists, but nearly always they are bad for most of us.
markm at December 4, 2016 7:11 AM
Unlike Solyndra, we're not seeing a favored company or industry being given special breaks. We're seeing a general attempt to keep a company from leaving and adding to the welfare and unemployment rolls. In this case, the cost of Carrier leaving is greater than the cost of keeping Carrier. And the attempt to keep Carrier is part of a larger acknowledgement that the cost of doing business in the US has been made too high, artificially high, and needs to be lowered ... for all companies.
Conan the Grammarian at December 4, 2016 8:41 AM
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