During the last few days of November, President-elect Donald Trump repeatedly celebrated an announcement made by Carrier, in which the furnace and air conditioning manufacturer said it would keep 800 jobs in Indiana, rather than moving them to Mexico. Those less familiar with Trump and his manufacturing policies may be wondering why the president-elect is even being mentioned alongside an independent company's manufacturing plans, so here is everything you need to know about Trump's Carrier deal, why it matters, and what it means for the United States.
Trump first zeroed in on Carrier's manufacturing during his presidential campaign, when the company announced in February that it planned to move its factory out to Mexico. At a rally in March, Trump said he'd put an end to the exodus of American jobs, telling supporters, "Somehow it is not presidential for the president of the United States to call up some guy at Carrier, and say, ‘This is the president of the United States.’ Who cares?"
Now, Carrier has reached a deal with Trump and Vice President-elect Mike Pence in order to keep approximately 800 jobs in the country. In order to make the deal appealing, the state of Indiana will give the company $7 million in tax breaks over the next 10 years, according to The Wall Street Journal. Another 1,300 jobs will still be moved out to Mexico.
So here's what Americans should know about the Carrier deal:
Some Are Saying It's A Sign That Trump Will Keep Campaign Promises
In one New York Post op-ed, contributor Jonathon Trugman said Trump was "standing up for the blue-collar workers who helped get him elected" and wrote that "Trump isn’t waiting until January to work to turn the economy around." Many supporters expressed similar sentiments, and the Carrier deal is likely to be touted by the Trump campaign as a sign that Trump is serious about keeping jobs in the United States.
Some Have Argued That It's A Misuse Of Presidential Power
As economist Lawrence Summers pointed out in an op-ed for The Washington Post, presidents have a massive amount of power — and, according to Summers, using that power to interfere with individual companies is dangerous. The tax breaks Carrier will receive by keeping 800 jobs in Indiana pale in comparison to the savings Carrier would benefit from if it moved all of the jobs it had intended to Mexico. However, as Summers wrote:
It's surely worth $60 million to not be on the wrong side of a possibly vindictive president of the United States. ... Presidents have enormous latent power, and it is the custom of restraint in its use that is one of the important differences between us and banana republics. If its ad hoc use is licensed, the possibilities are endless. Most companies will prefer the good to the bad will of the U.S. president and his leadership team.
Trump Has Investments In Carrier's Parent Company
Not only is governmental involvement in the free market potentially problematic, but Trump also has a bit of a conflict of interest when it comes to Carrier. According to Politicus, Trump reportedly owned stock in United Technologies, Carrier's parent company, in the past. The connection doesn't automatically mean anything insidious, but it's the kind of conflict of interest that we could see repeatedly throughout a Trump presidency.
It Might Make For Good Headlines — But An Entire Economy Can't Run On Deals Alone
Striking deals on a company-by-company basis might create a multitude of headlines for Trump, but it's not actually an effective way to manage an economy that has more than 150 million people in its workforce. According to Vox, the United States needs to create 200,000 jobs a month in order to support population growth alone — not just recover 800 jobs here and there. On top of that, giving every company that threatens to leave the country tax breaks in order to have them stay could cost taxpayers in the long run.
In order to sustainably create jobs, the country will need actual policies, not just one-time deals struck with individual companies. Policies would also affect all companies equally, helping keep government influence out of the free market and ensuring just treatment across the board. Whether Trump will start focusing on policies rather than one-off deals, however, remains to be seen.