The false dawn of Trump’s Carrier announcement

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(AP)

When Barack Obama pushed aggressively to bail out the U.S. auto industry in 2009, saving well over a million American jobs in one of the most successful interventions in U.S. economic history, Republicans raved against the move as an illegitimate use of government power and tried to block it in Congress. They also fought an earlier, less ambitious rescue effort by President Bush, a member of their own party, which forced Bush to rely on Democratic votes to pass the measure.

As one Indiana Republican described his party’s opposition at the time, “The American people know we can’t borrow and spend and bail our way back to a growing economy or a healthy domestic automotive industry.” Yet that’s exactly what we’ve since done. The economy is growing, the auto industry is healthy, and every penny of the auto bailout money has been returned to the American taxpayer.

Given that history, it’s interesting to watch many of those same Republicans now demanding that we hail Donald Trump as some kind of economic miracle worker. As he’ll announce today in Indiana, Trump has helped put together a package of economic incentives that will keep 850 factory jobs at a Carrier air conditioner plant from moving to Mexico. Another 350 headquarters and engineering jobs slated to move to North Carolina will also stay in Indiana. That’s all good news, particularly for those workers and their families.

Unfortunately, another 1,300 jobs at the factory will still be moving to Mexico, where Carrier can pay its new workers less than $20 a day.  And it’s worth noting that Vice President-elect Mike Pence, the Indiana governor who helped negotiate the state tax incentives needed to keep the Carrier plant open and who will bask in today’s success alongside Trump, also happens to be the Indiana congressman quoted above as opposing government intervention in such matters.

Funny how these things work.

In addition to state tax incentives, Trump and Pence apparently found leverage in the fact that Carrier’s parent company, United Technologies, holds some $5.6 billion in defense contracts with the federal government that might be endangered if the company refused to play ball.  As an Indiana economic-development official told the Indianapolis Star, “This is an enormous company with all kinds of subsidiaries that do government work, and I am sure they want to keep it.”

As the Star reports:

“Carrier wants to stay in good graces with the federal government,” another source with knowledge of the negotiations said. “Finalizing this deal was a show of good faith.”

The source said Vice President-elect Mike Pence, who is still governor of Indiana, and his state commerce secretary, Victor Smith, had been in discussions with Carrier for weeks. In what the source described as a “carrot and stick” approach, Trump entered the negotiations later to discuss the company’s relationship with the federal government.”

Personally, I don’t have a big problem with using that kind of leverage in these particular circumstances, for this particular goal, even though it’s of dubious legality. But as I suspect we’ll learn, once you start using lucrative federal contracts as a political reward or punishment, you open the door to a whole peck of trouble. (It also reflects the kind of bullying approach that we’re likely to see often from the incoming administration, in pursuit of goals that will be a lot less defensible than saving jobs. )

But here’s the larger problem, as reflected in this chart put together by the conservative American Enterprise Institute. As it documents, U.S. production of auto parts and automobiles hit an all-time peak in September 2016, up 21.2 percent from production in 2000. Yet that record level of production has been achieved with 34 percent fewer workers.

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Look closely at what has happened just since the recession. Output has soared by 165 percent, while growth in employment has been much more gradual. Overall, an estimated 80 to 90 percent of the manufacturing jobs lost in this country since peak manufacturing employment in 1977 have been lost due to productivity improvement here at home, not because the factories moved overseas.

As the Wall Street Journal points out, “Even if Indiana could negotiate one such deal every single week for the next three years, adding 1,000 jobs each time, manufacturing would still employ fewer people in the state than it did in the year 2000.”

There is nothing that Trump or anyone else can do to reverse or slow that process. Tax cuts certainly can’t fix it; if anything, they may accelerate investment in robots and other labor-saving technologies. And cutbacks in the social safety net will only compound the damage done to those cast adrift by that process. The policy challenges created by this new economy require that we think through fundamental changes in how we reward and allocate work, and our leaders are a long, long way from coming to grips with that fact.

Reader Comments 0

2230 comments
Rose Leone
Rose Leone

850 jobs saved is better than 2150 lost.

James McCallion
James McCallion

Bookman at it again! The less jobs we send overseas the less we have in unemployment insurance, food stamps,housing allowances! Once again, it is cheaper to keep jobs here then to send overseas! Get some common sense!

Barbara Maynard
Barbara Maynard

Lie 1,069 staying here only four hundred going to Mexico they are low seniority and Mexican workers who don't speak English and would probably be deported anyway so stop spreading your lies lies lies.

Noellaup Sniknah
Noellaup Sniknah

If you had not put in a commie potus things might be different. Dumbasses

Jerry Allison
Jerry Allison

If so those air-conditioned units want be sold in America or they will be 35% higher. Than there competitor and sales will drop dramatically.

Duane Fuller
Duane Fuller

Really and what really has Obama done what is there but division total lies to us about Obamacare forces people to pay no matter what it's not worth the cost. Payed ransom to Iran and lied yeah a real great president total unfit and it showed all his way or no way that's why congress and Senate never did a thing the guy never tried to protect the police he allowed the killings because he never came out to even try to stop all the crap he wants Muslims to have rule and no one else

Duane Fuller
Duane Fuller

So what he keep some here what did obamer do nothing but cause division and lie to us

Barbara Fitzgerald
Barbara Fitzgerald

Then why is all the Mexicans coming over here to United States illegally if all these companies are moving to Mexico know why because we're getting the lazy ones the one that don't want to work I want to come over here and live off the government and the American people we are getting the Misfits that Mexico don't want

Sue Stewart Taylor
Sue Stewart Taylor

I don't believe this even so, 10 jobs saved is better than all going.

Dan Selway
Dan Selway

Shame that carrier stuff are junk

Ingrid Domingo
Ingrid Domingo

That's what I said TRUMP IS saving 900 but another 1300 will LOSE their jobs and CARRIER IS GETTING A 7 MILLION DOLLAR BREAK Now that's not good in my books

Carrol LaFleur
Carrol LaFleur

It's better than none\U0001f1fa\U0001f1f8\U0001f1fa\U0001f1f8\U0001f1fa\U0001f1f8

Bill Mullen
Bill Mullen

They said 1100 jobs were saved that is how many families are not brokenhearted and will not lose their homes Trump is off to a great start before he's even sworn in I believe he's going to be one of the best presidents in 25 years

Franklin Ben
Franklin Ben

I thought you idiots didn't like socialism or government interference. More jobs still moving out then were saved and he gave a huge tax cut to a company in which taxpayers in the state have to make up for. Also wasn't trump saying he was going to punish companies threatning to move jobs elsewhere. Yet he is rewarding them. Trump could kill halfbthr population in the US and y'all would make any excuse to support him.

Bill Mullen
Bill Mullen

Obama has overregulated companies so much they were forced to leave the country Trump will fix all this

Larry Huie
Larry Huie

i would'nt bet on the others leaving.

Brandon Cantrell
Brandon Cantrell

Hmmm, so 850 families who actually have jobs mean nothing I guess to these raving liberals. Sounds like a good start if you ask me.

David Mons
David Mons

It would be nice if all these so called Liberal Socialist Nazi Democrats could live in cuba or china as an average person for 1 year and then see who serves who and just how Great a socialist state is.

Cheryl Cheryl
Cheryl Cheryl

Some of you do know jim jones is dead,stop drinking the kool-aid

David Alford
David Alford

Wears the 1000 if they gave a million plus dollars they did not save a thing

Revonda Sartain
Revonda Sartain

He did this and has not even started his term of office. Just think of what he will be able to do after inauguration.

Sarah Petty
Sarah Petty

1,100 jobs were saved 628 million dollars of income will stay in America every employee got over $4.65 cent raise the plant will put $16 million up grades.and the company gets $700 thousand a year tax credits for 10 years. Keep it up trump

Chris Knable
Chris Knable

He saved 850 that nobody would have given a second thought . That's great . He's not in office yet . We'll see . I love he saved what he did . Mrs. K.

Vernon Howard
Vernon Howard

Trump playing on the idiots that voted for him..lol...unbelievable

Derrick Smith
Derrick Smith

Wall Street Journal Carrier Got A Taxpayer Handout Because Trump Holds Investment In Their Parent Company By Jason Easley on Fri, Dec 2nd, 2016 at 1:53 pm The Carrier deal has turned into a prime example of the sorts of conflicts of interest that will be coming to the White House with Donald Trump. It turns out the president-elect gave Carrier $7 million in taxpayer money and he owns stock in Carrier's parent company, United Technologies.

Patrick Oneal Lilley
Patrick Oneal Lilley

Hillary still lost.and 98%of GM car are made overseas and they go 40billion

Len Miller
Len Miller

Typical of the birdcage liner ajc. Focus on the negative not the positive. Focus on the millions now getting healthcare while ignoring the many more millions who have lost theirs. Focus on this one deal Trump made while not even in office but ignore obamas silence on police killing, riots and terrorist attacks. Time to change the liner in the birdcage......

Brandon Matthew Jackson Sr.
Brandon Matthew Jackson Sr.

Y'all won't be able to bring up Obama in 4 years\U0001f602\U0001f602\U0001f602\U0001f602 have fun degrading him, but the future president will have some fault in this

Stephen Wargo
Stephen Wargo

What fault.. He literally SAVED 11,000 jobs.....

Jay Barton
Jay Barton

Obama did not stop them from moving, he just loaned out money. Then they smashed him in the face this past year and announced plants moving to Mexico, could Obama stop that, he did not even try

Kat Brag
Kat Brag

Did Obama loan money to Carrier?

T.O. Lawrence
T.O. Lawrence

Jay Barton it might help the confusion if you replied to the comment you're referencing instead of creating a new subthread - otherwise comments can be reordered as per user and algorithmic preference. For example, on my feed the comment immediately prior reads "I just wish that Trump would bring his manufacturing companies back to US soil." which doesn't appear to be the auto bailout you refer to.

Bruce Howard
Bruce Howard

Wow \U0001f633 The media always have the tendency to give part of the truth.

Paul Mcleish
Paul Mcleish

Get ur numbers right dumbass! 350 would go to mx. Sucks but its business. He was able to keep the 1500 here

Summer Smith
Summer Smith

Mid century, manufacturing jobs were the backbone of America. American products were the best made products in the world. Workers made a decent wage that would sustain a family and most came with some type of retirement. Most all of those major manufacturing jobs are gone overseas now. We can argue all day as to why this happened, but the point is that the United States must get back to manufacturing. The United States has Become the Largest Flea Market in the World. All we do today is sell products to each other that are made in other countries. Citizens should support anyone, no matter the party affiliation, that recognizes this major issue and is making efforts to bring manufacturing back to the U.S.

Terrell Cannady
Terrell Cannady

So stop taking credit for NOTHING, IT MAKES NO SENSE, IF YOUR STOP ING THEM FROM MOVING THEN STOP THEM,DON'T TURN AROUND AND SAY OH BUT 1200 JOB OR STILL MOVING, RElly

Christopher Corbett
Christopher Corbett

No to mention his Branded Name is still in China, Indonesia and India

Robert Jenkins
Robert Jenkins

This was a photo op deal. It's no deal ,if jobs r still being removed from this country.

Cathy Henry
Cathy Henry

The man not god. He is trying and hes doi g alot better than the president we go

Danny Hoosline
Danny Hoosline

Oh Faithless America>>> Give TRUMP A Chance ... And AJC FAKE NEWS..........

Kat Brag
Kat Brag

HRC's plan was to close Corporate tax loopholes not provide Corporate Welfare as Trump is doing. That is not sustainable. #TrumpedUpTrickleDown

Kat Brag
Kat Brag

Fake news helped ekect Trump. InfoWars Conspiracy Theories almost got innocent people killed.

Brian Sutton
Brian Sutton

Well she murders people by her words and her actions so there's that!! Oh and she has been to pedophile Island 6 times so she's a pedifile, so there's that!! I could go on and on!

Constance Rutledge
Constance Rutledge

Brian Sutton let's see your credible proof of your claims, meaning nothing from Russian sponsored fake news websites or fox fake news. You people are so gullible. No wonder Don the con was able to play you so easily. How's that swamp draining going ?