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Est. April 5, 2002
December 15, 2016 - Issue 679

Carrier And Trump:
Corporate Welfare
By Any Other Name
Is Still Fraud


"Whenever anyone complains about government,
they should realize that there are only two basic
sectors of national life that comprise government: 
politicians and corporate types and the latter have
had the greatest influence over the thrust
of government over the long haul."

Back in the 1970s, there were moves by various governments to stimulate growth and create jobs, called by a variety of names, one of which was Empire Zones, where companies could come in and receive property tax breaks, subsidies, and income tax breaks, among other perquisites.

It was corporate welfare then and Donald Trump’s little game at Carrier in Indiana is no less than corporate welfare now. The president-elect bragged about saving jobs, but he gave away plenty to Carrier and its parent corporations, United Technology. If ever there were entities that didn’t need welfare, it would be hundreds of corporations like UT, and they are never prosecuted for welfare fraud.

In the Carrier case, Trump, even before he has taken office, has shown his expertise in cutting deals, but there is a fly in that ointment. He said he “saved” between 1,100 and 1,200 jobs at Carrier, but the reality is that he saved no more than 800 jobs, a relief for those whose jobs will stay in Indiana, but there were hundreds that were never destined to move to Mexico and hundreds who still will lose their jobs. For a second act, he should let the American people know what he proposes to do about the tens of millions of jobs that have fled the country in the past four decades. How does he plan to bring them back?

Governments like the U.S. and Great Britain were indulging in corporate welfare 40 years ago (and beyond, but that’s another story) and they are still doing it. The so-called Empire Zones created few jobs, but it cost taxpayers a lot of money to do it. For example, in England, one such zone created jobs, but at a cost of $68,000 per job. At that time, the government could have given each worker $30,000 per year (a very good income for the working class at the time) and $38,000 could have been saved for the other taxpayers. Someone got that extra money and it has been routine that most of the money just happens to land in the coffers of the corporation that “created” the jobs in that zone. This continues to happen and Trump’s giveaway to Carrier is a good example. Worse still, most of these schemes don’t produce many jobs, at all.

Trump is too accustomed to greasing the palms of those he does business with, by way of “sealing the deal.” This deal, however, has run into opposition from all sides in politics, from the left, right, and center, as a giveaway to a corporation that doesn’t need an extra infusion of money. And, they don’t need tax breaks, since that was not given as a reason for moving the jobs to Mexico. “It’s the profit, stupid,” if we can paraphrase a former president. Carrier can save and bank millions more in profits by moving production to Mexico, just as thousands of other companies have done in the last half-century.

Over the past thirty years, U.S. auto industries have moved production to Mexico. The reason? Simple. Early in this period, Mexican autoworkers were making about $60 a week, while American autoworkers were earning about $600 a week. That’s about as clear a reason for moving as any. After all, the factory looked the same as any other auto plant in any developed nation, the workers were just as skilled, and the finished product could not be distinguished from one made in the U.S. To top it off, after the passage of the North American Free Trade Agreement (NAFTA), the goods moved back and forth across the frontier without much of a price to be paid by the company. It was a win-win for Corporate America.

There has been little to no blowback for corporations that have shipped millions of jobs and entire industries to low-wage countries, since there is a small price to pay to bring the goods back into the U.S. for sale on its retail shelves or showrooms. If there were a federal minimum wage of $15 an hour in the U.S. (maybe someday), that wage still would be a far cry from the $2-10 a day that workers are paid in many countries and it would price American workers out of the market. Trump said during the campaign that American wages are too high, which makes them noncompetitive.

Trump campaigned for president on a nebulous promise that he would support the working class and middle class. Remember, early this year, speaking of his supporters, he said, “I love the poorly educated.” It should have been taken as an insult, but it was not so taken by his supporters. His votes came from every demographic: working class, middle class, women, suburbanites, and, of course, the rich, who knew that he was just playing with the others and would come through for his own kind, feathering the nests of the 1 percent.

A quick look at the cast of characters he is choosing for his administration shows that he is doing just what any other Republican would do and that is lard the Executive Branch with corporate types who, like himself, have no experience in government, have a bent for “cutting deals,” as Trump himself would say, and, at the very least, have an overriding antipathy toward government regulation and for most, antipathy toward government, itself. So far, his picks portend disastrous effects on civil rights, women’s rights, worker rights, the global environment, small farms, and the agencies of government that have been created to protect the people and the planet from the worst instincts of corporations and their leaders.

They appear not to understand that governing is not just “cutting deals,” but overall, the purpose of governing is to see that this particular government is actually “of the people, by the people, and for the people.” That’s not what the Trump Administration is shaping up to be. The antipathy of his picks toward government and governing will, at best, reduce the effectiveness of its agencies and, at worst, destroy those agencies where they can.

Complaints regularly arise about the destruction of democracy stemming from the revolving door between government and Corporate America. Whenever anyone complains about government they should realize that there are only two basic sectors of national life that comprise government: politicians and corporate types and the latter have had the greatest influence over the thrust of government over the long haul. There is nothing that Trump is doing that indicates a deviation from that pattern. The revolving door is always open for CEOs or their minions to assume a place of power in government. Although he promised to “drain the swamp” (of Washington), he has unerringly picked denizens of the murky waters of the very swamp to run his government.

What is the problem with his picks? His administration is bound to continue to cut taxes for people like himself (billionaires and the lesser millionaires) and the corporations to which they are attached. He is bound to not only cut taxes for corporations and the rich, he will pay for those cuts like a long line of politicians before him. He will either cut or privatize social programs that scores of millions of Americans depend on for their health and well-being. It has been widely reported in the press that tax researchers have found that Fortune 500 companies have not paid (and are not likely to be required to pay) U.S. taxes on nearly $2.5 trillion on the profits that they have made in other countries. If they were required to pay U.S. taxes and, as U.S.-based corporations, they should, it would bring in some $700 billion in taxes to the federal government.

That amount of money could be very helpful to the nation for such things as improved schools in poor cities and rural areas, more health clinics, low-cost housing, the creation of jobs, more affordable pharmaceuticals, and clean water and air. Of course, that amount doesn’t seem to be much to a billionaire, but it would be a good start. Trump has told Corporate America that they need not worry about corporate taxes, because they would be, under his watch, at the “very, very low end.” And that includes United Technologies, parent of Carrier.

According to Frank Clemente, executive director of Americans for Tax Fairness, writing in a New York Times op-ed early this week, “President-elect Trump wants to oblige them (corporations) by cutting the tax rate on that offshore pile of cash from 35 percent to just 10 percent. That rate would cut their tax bill to just $150 billion, handing these corporations an unearned gift of more than $550 billion.”

With an administration that he has picked and is picking, it’s easy to see what direction he’s heading in: More money and profits for himself and his friends and all of those who travel in his circle, reduction of or eliminating regulation of the corporations, and reduction or sale of government programs that can improve the profits of companies that take them over. Pity the poor workers, all those who work for wages, large or small, who voted for him based on the promise that he would bring back millions of jobs, get the economy going, and “make America great again.” Unfortunately, the joke is not just on them. The Trump joke is on all of us. Columnist, John Funiciello, is a long-time former newspaper reporter and labor organizer, who lives in the Mohawk Valley of New York State. In addition to labor work, he is organizing family farmers as they struggle to stay on the land under enormous pressure from factory food producers and land developers. Contact Mr. Funiciello and BC.




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