Carrier Deal: Corporate Welfare, Extortion – or Both

It doesn’t matter how you parse it, the case for Carrier is corporate welfare, corporate extortion, or both.

The deal struck between Carrier, the State of Indiana – on behalf of Mike Pence – and Donald Trump exemplifies the long standing, and growing, welfare payments to American corporations disguised as incentives and tax breaks.  Never mind the stigma of the dreaded “W” word (welfare), and it’s use to stigmatize, castigate and otherwise demean those recipients who are truly deserving of governmental assistance, it’s hailed as a good and honorable thing  as long as it’s the corporate conglomerates who are the sucklings on the nipples of the welfare pig.

Listening to the employees of Carrier harp about the greatness of their savior Donald Trump, for having saved their jobs so easily, and subsequently living up to his campaign promise to slap tariffs on companies like Carrier from moving their operations to places like Mexico, highlights just how gullible America’s uniformed and uneducated voters are. Never mind the fact that there is no magic performed here -none at all – when you consider the enormous tax breaks, and other incentives doled out by the State of Indiana for Carriers “stay in America free card”, or the fact that the number of jobs to remain in Indiana are less than what Trump hyped, or the fact that the number still going to Mexico maybe higher (still) than the number remaining in Indiana.

As reported by several news sources, Politicus USA for one reported The deal that Donald Trump negotiated with United Technologies to keep Carrier jobs in Indiana is getting even worse. Trump and Pence gave United Technologies $7 million of taxpayer money in exchange for only keeping 800 jobs in the US.”  In return for keeping less in the US than they are moving to Mexico, United Technologies is getting a tax cut and incentive package worth $7 million over the next ten years.  The Wall Street Journal reported reported “that the deal only covers 800 Carrier jobs in the Indianapolis furnace plant and an additional 300 research and development jobs that were not going to Mexico. Carrier parent company United Technologies still intends to move 1,300 jobs to Mexico.”

While an early report suggest that the deal cost the State of Indiana $7,000,000, it’s highly likely the incentives by the state of Indiana will be substantially higher.  One of the most detailed discussions about how this corporate welfare program (disguised as incentives) works, was done in December 5, 2012, titled: A Thin Line: Economic Development or Corporate Welfare?” on NPR’s program – FRESH AIR, hosted by Terry Gross, and written by her guest Louise Story, a reporter with the Times Investigations Unit.  This story is a must read/listen. It can be heard on podcast at:
http://www.npr.org/2012/12/05/166489199/a-thin-line-economic-growth-or-corporate-welfare.

A transcript of the interview between FRESH AIR’s, Terry Gross and the NY Times Investigations Unit reporter, Louise Story can be read here:
http://www.npr.org/templates/transcript/transcript.php?storyId=166489199.

In her new series for The New York Times called “The United States of Subsidies,” investigative reporter Louise Story examines how states, counties and cities are giving up more than $80 billion each year in tax breaks and other financial incentives to lure companies or persuade them to stay put.  One of the fundamental questions raised by Ms. Story – a reporter with the New York Times Investigations Unit – and discussed in detail in the three-part New York Times series program “United States of Subsidies, “was, where does economic development end and corporate welfare begin?

The states and localities want jobs and economic growth; the companies want free land, free buildings, property tax abatement, “anything you can think of that would be financially beneficial,” Story tells Fresh Air‘s Terry Gross.

Another example from Texas – as reported by the New York Times story, Amazon has promised to open new distribution facilities there and hire 2,500 workers in exchange for about $250 million in tax revenues, revenues that they wouldn’t have to pay. So you do the math and say this amounts to about $100,000 per job in lost tax revenues, and most of the workers who would be paid, you know, with this new facility would get about 20 to $30,000 a year.

So if you’re losing $100,000 in tax revenues per job, and each worker’s only getting 20 to $30,000, you’re paying a fortune for every job.

The bottom line is that states and local municipalities are, and have been for some time, paying through the nose for this false appearance of job creation; when in actuality, they are giving away the store at taxpayers’ expense.  The tax payers are in essence paying for many of the “pseudo” jobs they’re getting through a sort of black market, back door scheme.  What’s even more troubling is that few people really know the details of these lucrative deals struck between their state and local governments.  In fairness, there are situations where, say in the case of some of the large automobile plants popping up throughout the South, these plants are locating to what amounts to desolate, unforgiving and remotely rural places where, even giving the land away would be no great loss to anyone.   However, when you drive by some of these places, you will see massive and enormous infrastructure improvements being made to the interstate highways and local roadways.  It’s only my guess, especially in the case of the interstate highway improvements, these improvements cost tens of millions of dollars and have to be paid for by the states, and the federal government, since the interstate highways are constructed, operated and maintained by the states and the federal government.

If a hungry child gets a free or reduced lunch at school through the USDA’s Child Nutrition program, he or she is viewed as leech on an entitled program.

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