Last week, President-elect Donald J. Trump and his administration reached a deal with United Technologies, holding company of the air conditioner and appliance manufacturer Carrier, to keep around 1,000 jobs in the United States. Trump has promised on the campaign trail that he would keep those jobs on US soil since Carrier first announced that they would move their manufacturing from Indiana to Mexico in February. Outlets from Breitbart to The Young Turks have praised the deal. What a great power move! Trump isn’t even in office yet, and he’s already closing deals. But what if Trump’s latest deal is filling the swamp rather than draining it?
Carrier’s decision was purportedly based on tax breaks promised by Indiana Governor and Vice President-elect Mike Pence in conjunction with Trump’s planned pro-business policies. There’s an issue with that narrative, however. The total in tax breaks is $7 million. The cost to keep those jobs in the States: $65 million. The incentives were offered months ago and subsequently declined by Carrier, so it’s unlikely that these incentives effected United’s decision in any real way. So why did United Technologies change its mind? Could it be Trump’s proposed corporate tax cut? Maybe. Could it be the deregulation proposed by the new administration? It’s a possibility.
But perhaps United Technologies’ decision has nothing to do with Carrier and everything to do with Pratt & Whitney. The United subsidiary produces jet engines and has approximately $5.6 billion in contracts with the Department of Defense. Accounting for around 10% of United’s revenue, these contracts could be renewed by Trump’s DoD. Or not.
Whether or not Trump explicitly threatened to take away the government contracts, this certainly played a major role in United’s decision. After all, United brings in upwards of $56 billion a year. What’s $65 million to stay in the government’s good graces?
Of course, the government’s job isn’t to strike up agreements with individual companies in order to keep jobs in America. Rather, the best way to protect American jobs is to make America the best place in the world to start and run a business. Start by deregulating and cutting taxes and spending, then just stay out of the way. Just like the economic recovery in the mid 1980s, tax revenue will go up, inflation will go down, and business will be booming in no time.
Only a fool would contend that this is the first time a President has used policy to influence specific firms for better or worse. President George W. Bush implemented steel tariffs and special privileges for big oil. President Obama used Cash for Clunkers to pay back the UAW buddies who helped him get elected and the stimulus to help specific industries. It was wrong when Bush did it. It was wrong when Obama did it, and it’s wrong when Trump does it.
Let’s not pretend it’s disloyal or subversive to criticize Trump; after all, conservative principles supersede Republican politicians. Let’s hope this isn’t a foreshadowing of the Trump administration. America will find out soon enough, but in the meantime, don’t be afraid to celebrate when Trump does the right thing and call him out when he doesn’t; and in the words of President Reagan, “Watch closely and don’t be afraid to see what you see.”