Carrier/United: A Fool & His Money...

    For all who whinged about the supposed Clinton Foundation supposed possible appearances of "pay-to-play" for their charity, Donald's not even in office and the pay-to-play and corporate welfare has begun.

    In order to look tough on losing jobs to Mexico, he's orchestrated a sweetheart deal of high-level access to United Technologies to keep 1000 jobs in Indiana, half of its planned offshoring. Contrary to the suggestions that this was done with Indiana tax breaks, most of which had already been rescinded due to Carrier going back on its promises).

    Imagine, a $56 billion a year company, with $7.6 billion profits, requires handholding from the President-elect to not offshore an operation that's 0.1% of its revenues - a blip. In return, it gets government access for its US government military business likely worth billions, since it sells $5.6 billion to the government yearly.

    "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.

    Establishing a good relationship with the Trump administration could benefit Carrier in ways that extend beyond its parent company's federal contracts.

    For example, United Technologies could have a voice in policy debates about regulatory costs, Ball State University economist Michael Hicks said.

    "The chance for Carrier (and their lawyers) to help craft a huge regulatory relief bill is worth every penny they might save over delaying the closure of this plant for a few years," he said in an email.

    Hicks downplayed federal contract concerns, saying most Defense Department "contracts of consequence are negotiated and let years in advance, and it is hard to craft presidential involvement in them." [insert laugh track here....]

    Mohan Tatikonda, an operations management professor for the Indiana University Kelley School of Business, agreed that influencing policy decisions had to be a top priority for United Technologies and Carrier.

    "Being able to have a seat at the table regarding tax policy and potential regulatory reform or changes is quite valuable," he said. "UTC not only has federal government contracts, they also have exports — current and potential exports — that the federal government has a role in allowing or approving. The value of those exports being increased or decreased is quite significant, and that might have been at play as well."

    In short, we don't even know how bad it'll be, but it'll be *extremely* bad. We won't have any more FOIAs to tell us how badly we got screwed - that's so pre-election. Disclosure is now optional, meaning it won't happen, or at most only when it's convenient.  And to get a tiny number of jobs saves as a political showcase, we've let the hyenas write the rules. And this deal will be the most public one of its type - more opaque than Cheney's Energy panel, we'll never have any idea who got a seat at Trump's favoritism-and-handouts table.

    (Don't expect the press to dig in on this one - what we know now is likely as much as we well know, and no one will follow up. But Fox Business explains it's all wonderful, since they only look at it from the corporate & money-making side, not taxpayer or citizen's perspective)

    We've discussed trade deals out the wazoo - and this deal shows more than ever why trade deals are needed - so everyone's on the same playing field, so we're not continually orchestrating some backroom deal for 1 particular company with good connections, to make things *FAIR*. Including taxes on trillions in exports rather than harbored in tax havens or forgiven through tax holidays.

    Instead, Donald is pushing for the bigger scam - lowering corporate tax rates from 35% to 15%. Let me get this straight - we argued over a few dollars of minimum wage for a year, and instead we're going to give away trillions of dollars in tax revenues.

    As WSJ reports, It gets even better - 39.6% top personal rate down to 34%, business income tax dropping from 39.6% to 15%. All to make America more "competitive". And we laugh at those Asian producers for being corrupt and not as productive - hey, give me a million, I'll eat for a day - give me a billion and I'll start a cut-throat global empire. That's free enterprise, right?

    And in the "cry me a river" category, banks will lose billions in tax writedowns because they can't still charge off those 2008 losses from playing chicken and screw-the-customer at the current rate of 35%, but instead at the lower 15% rate - which gives an idea that they've been doing what Trump did years ago - turned a huge dumbass business move into a lifelong hedge against paying taxes.

    But let's keep up the "both sides do it", "corrupt Hillary", "establishment" and "weak candidate" memes - they help us easily explain our horrid loss to a documented business con-man without actually having to understand what happened.

    As Yogi Berra famously said, "it's deja vu all over again". Or as Bush might have said, "Fool me twice, will get fooled again".


    Spot-on, nice work. 

    Nice piece, PP. Bernie agrees with you too:

    He brings up a good point I'd missed - just threaten to take jobs overseas and they'll come running. (presumably, until the ad hoc charm wears off). But it's not just a tax break they'll likely get - it's more business deals, possibly sole source, and maybe a seat at some board to rewrite the rules. Likely worth a helluva lot more than $65 million to a megabillion conglomerate.

    Jesus, and we're just into our 4th week of the age of Trump, 2 months until he assumes office. Heckuva job, Brownie...

    Marcie Wheeler adds some insight into our current default industrial policy - piecemeal deals and general lethargy and states outbidding each other - vs having an actual industrial policy, and the screwed up way our military production underpins it - no wars? no jobs. Makes sense, eh?

    Wall Street Journal comes out against the deal, noting even that 300 jobs were counted towards the 1000 number even though Carrier hadn't planned on exporting them. So $7 million for keeping 700 jobs and exporting 1400. Hard bargainer, these Republicans.

    The Indiana governor was offering $7 million over 10 years to encourage the company to keep in the state roughly one-third of the 2,100 jobs it planned to ship to Mexico. United Technologies would also get credit from the state for keeping 300 research and headquarters jobs that it didn’t plan to shift abroad.

    "One tactic, which we’ve already seen with this week’s ostentatious announcement of a deal to keep some Carrier jobs in America, will be to distract the nation with bright, shiny, trivial objects. True, this tactic will work only if news coverage is both gullible and innumerate.

    No, Mr. Trump didn’t “stand up” to Carrier — he seems to have offered it a bribe. And we’re talking about a thousand jobs in a huge economy; at the rate of one Carrier-size deal a week, it would take Mr. Trump 30 years to save as many jobs as President Obama did with the auto bailout; it would take him a century to make up for the overall loss of manufacturing jobs just since 2000."

    Ah, but it was only 700 jobs, so roughly 1 1/2 times x 30 = 45 years, 1 1/2 centuries. Lipstick on a pig - meet the Trump Dynasty.

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