Heed union leader’s truth-telling on Trump/Carrier deal and judge on policy, not theatrics

Last week I argued that the Trump-brokered deal with Carrier industries to keep 700 jobs in Indiana shouldn’t be treated as a triumph, but instead as a sellout of those unlucky workers who hadn’t managed to make themselves useful as PR props for Trump. And yesterday somebody with actual credibility on this—Chuck Jones, a union leader who represents the Carrier employees—buttressed this argument.

One key point here is pretty simple: “doing deals” company-by-company, rather than instituting good policy rules across-the-board, will do nothing for American workers except pit them against each other. The Trump administration’s effectiveness in helping American workers should be judged on policy, not theatrics.

The biggest reason why this is true is that deals don’t scale-up against a recovering economy. A quick example: in the first quarter of 2009 (the first three months of President Obama’s presidency) 2.5 million workers were laid-off. In the most recent three months, 1.5 million workers were laid-off. What does this tell us?

First, that even in normal economic times, there is a ton of churn in the economy. Why do these 700 workers go to the front of the line in getting help from Trump while the other 1.4993 million are left on their own? An ironic note here is pointed out by Harold Meyerson: Trump never would have even heard of the planned Carrier move without the union (and Chuck Jones).

Second, policy is a lot more powerful than even well-intentioned (rather than self-serving) deals. The 1 million worker decline in layoffs between the beginning of 2009 and the most recent quarter is easy to explain. In early 2009, the economy was melting down because policymakers failed to rein in Wall Street’s enabling of the housing bubble. By 2016, policy had helped stop the fire and get the economy closer to recovery. Yes, some policymakers (Republicans in Congress and statehouses) had hampered this recovery through austerity, but the point remains: you can save 1 million people each quarter from layoffs through good policy, or 700 through potentially-corrupt deals. Why not do the former?

But maybe the Carrier deal should be seen as a signal of Trump’s genuine commitment to also pursue policy changes that will help American workers? Seems awfully unlikely. Take just one example: Trump’s promised changes to corporate taxes.

His overriding promise is to cut them, a lot. Giving corporations large tax breaks seems…unpromising as a start in the campaign to stand up to the powerful on behalf of America’s working class.

Worse, a provision of today’s corporate tax code gives companies an incentive to move production and profits offshore because they can defer tax payments on income earned abroad until it is repatriated (returned to shareholders). Does Trump end this deferral? No, he doesn’t. The first iteration of his tax plan did end deferral on future profits (although it treated the trillions of dollars already moved abroad very, very favorably—imposing only a 10 percent tax on them). But in the latest iteration, even the earlier plan  to end deferral is gone. So, Trump is willing to do a self-serving deal to help 700 workers, but he abandoned a plank in his original tax plan that would have reduced the incentive to offshore the production of many thousands more jobs.

An uncharitable reading would be that he campaigned as a populist who was going to “drain the swamp”, but, the betrayal of these promises has already begun— and the dropping of plans to end deferral are a prime example of how. The real question to end with is simply how long will he be able to disguise the gap between his campaign rhetoric and policy outcomes with head-faking PR stunts like the Carrier deal?