Everything You Need To Know About Trump's Carrier Deal
On Tuesday, Carrier (an air-conditioning manufacturer in Indiana) announced that it would be keeping 1,000 jobs, that it planned to move to Mexico, in the US.
The Carrier jobs were a longtime Trump campaign point, and the president-elect was quick to claim them as his victory — saying they decision was an outcome of a deal made between his administration and the company. Here's what you need to know about what went down.
Trump Used The Company As An Example In His Campaign
Trump made keeping jobs in the United States one of the main issues of his election campaign and frequently pilloried Carrier for planning to ship jobs overseas as he appealed to blue-collar workers in the Midwest.
[Reuters]
The Deal Was Brokered By Vice-President Elect And Indiana Governor Mike Pence
[I]t was not Trump — but Vice President-elect Mike Pence — who was key to Carrier's decision. His status as Indiana's governor positioned him to offer Carrier tax breaks to stay in the state. It's not a new strategy: State and local governments offer companies tax incentives to locate, expand or remain there all the time.
[CNN]
It Gave Carrier $7 Million In Economic Incentives Over 10 Years
In exchange for not outsourcing some jobs, United Technology, which made a profit of $7.6 billion last year and owns Carrier, will reportedly receive $7 million over 10 years in state economic incentives. The company was also assured the Trump administration will lower corporations' federal tax burden and ease regulations.
The Deal Was Also Incentivized Through (Implicitly) Threatening Carrier's Parent Company
Mr. Trump, while offering a carrot through the state incentives, also held an implicit stick: the threat of pulling $5 billion to $6 billion in federal contracts from Carrier's parent, United Technologies.
In An Op-Ed, Bernie Sanders Criticized Trump For Using Tax Breaks Rather Than The Tariffs He Originally Promised
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. 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.
Critics Argue That Corporations Are Manipulating The Government With The Threat Of Relocation
[W]hat happened in Indiana represents exactly the problem, not the solution, in America's approach to corporate negotiation…It's not good that the geography of large offices and factories is a function of public money doled out by cities, states and in Washington. It's been a great boon to companies with the size and flexibility to uproot or locate their operations at will, or at least make a convincing threat they'll do so. And a big loss for the rest of us.
[Slate]
Despite The Realities Of The Deal, Trump Framed The Outcome As A Result Of Threat Rather Than Of Incentives
In a speech given at the Carrier plant on Thursday, Trump said:
Companies are not going to leave the United States anymore without consequences.
[Mediaite]
Regardless Of Policy, The Deal Is A Major Political Win For Trump
It was [a] key test for his claim that the negotiation skills he said he'd honed in years of business could produce results. That makes the deal that Trump has apparently struck to keep the jobs in Indiana a major political win — the president-elect fulfilling a major promise well before he takes the oath of office. He is a successful bully even before he takes his pulpit. It's a sign that the theatrical, blustery persona that Trump struck on the stump can be translatable, in at least some cases to the presidency.
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