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Trump's Carrier deal confuses corporate welfare with free markets
Washington Examiner ^ | 12/02/2016

Posted on 12/04/2016 11:05:28 AM PST by SeekAndFind

Because market freedoms create an environment for economic growth, thriving businesses and job creation, many people confuse "pro-market policies" with "pro-business" favors.

But they aren't the same thing, and President-elect Trump hurts his own agenda when he conflates the two. He did so at the Indiana Carrier plant Thursday, when he announced a deal to keep some Mexico-bound Carrier jobs in Indiana.

The deal is bad policy because it is loaded with at least $7 million in corporate welfare. It's bad politics because it rhetorically demolishes the crucial distinction between free-market policy on one hand, which benefits all businesses and thus the whole economy, and corporatism on the other, which benefits the big and well-connected.

Trump is fortunate that his vice president-elect, Mike Pence, also happens to be Indiana's governor. Carrier is lucky, too. Pence extended a $7 million tax break to the manufacturer this week. This is a subsidy. It is what Republicans spent the past eight years blasting as corporate welfare and crony capitalism.

House Speaker Paul Ryan in 2012 rightly criticized President Obama's industrial policy, which the president peddled as "investment."

Ryan objected, saying, "It's borrowing money and spending money through Washington, picking winners and losers. Spending money on favorite, you know, people like Solyndra or Fisker. Picking winners and losers in the economy through spending, through tax breaks, through regulations does not work."

Ryan was correct. A tax break for Carrier is not laissez-faire economics. Every other company and family in Indiana has to bear a greater share of the state's tax burden. Every company competing with Carrier for sales, capital and other resources, is at a disadvantage because they're paying for the favor Trump and Pence have given Carrier.

When you pick a winner, you automatically pick a thousand losers: smaller companies who lack Carrier's clout, less-connected companies not close to Pence and so on. The economy loses because corporate welfare means politicians rather than markets are deciding the allocation of money and resources. It's the opposite of free market economics.

There is also moral and political cost. Every corporation big enough to throw around some weight can threaten to leave the country and expect to get some government goodies to placate them. Trump explicitly welcomed other big companies to "negotiate good deals with the different states and all of that." This corrupts both business and government.

If we get four years of this sort of Trumponomics, we'll increasingly see companies with clout playing by one set of rules while the regular guy competes under a stricter rule book.

Pence on Thursday glossed over the $7 million subsidy. He said Carrier was persuaded to stay by Trump's "plans to make America more competitive. To reduce taxes. To roll back regulations."

"These companies aren't going to be leaving anymore," Trump said Thursday, because "we're going to do great things for businesses." He pledged to reduce the corporate income tax from 35 percent to 15 percent.

These promises are indeed great. This is the formula for economic growth: low taxes, low regulation, good schools and good infrastructure. They are "pro-business" by being "pro-market," not anti-market because by being a favor for a particular business.

Liberals will bash Trump and Pence's proposed tax cuts and regulation reform as "corporate welfare" and "crony capitalism." The Left doesn't distinguish between a reform that gets government out of the way of business and an intervention that puts government power in the service of business.

In this case, however, it seems that Trump doesn't either.

With this deal and his victory lap about it, Trump is buying into that pernicious left-liberal thinking that regards broad-based tax cuts and deregulation as special favors for business.

Trump pleasingly has promised tax and regulatory reform. He should stick to those broad, economy-wide changes that benefit everyone. Pleased though he is with his first deal to save a few hundred jobs, he needs to understand that it militates against his larger plans to help the entire economy. We urge him not to repeat this misguided process.


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: carrier; corporatewelfare; trump
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To: snarkytart
lowering corporate taxes and regulations is against free market?

Lowering corporate tax rates and eliminating regulations are free market policies. That isn't what happened with the Carrier deal. Tax rates remain unchanged and not a single regulation has been repealed.

61 posted on 12/04/2016 11:54:38 AM PST by SSS Two
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To: tennmountainman

Follow the money.

Most people want to be their own boss and I would prefer to buy locally with a company that does not require me to give up my Christian Beliefs

“They” took away Main Street and gave us heartless bigbox corporate stores . . . we can find a way to reverse the regulatons and tax system to restore freedom to the individuals on Main Street.


62 posted on 12/04/2016 11:54:48 AM PST by donna (I want to live in a Judeo/Christian country where we know that, before God, men & women are equal.)
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To: SeekAndFind

Trump made it clear throughout the campaign that he didn`t believe in granting individual tax breaks to companies in order to keep them here. Across the board reductions in taxes and regulations yes, but individual deals, no. How often did he make reference to companies taking the tax breaks and still relocating?

This particular deal was a little different in that Trump made a campaign promise specifically aimed at Carrier, so he probablly felt an additional responsibility to keep the jobs in Indiana rather than see them move to another state, so it wouldn`t surprise me if he encouraged Indiana to try to keep them there. But this was a unique situation because of the role the Carrier relocation played in the campaign.

Notice during his Carrier speech, Trump was quick to mention that relocating within the U.S. is not a problem as far as he`s concerned. Most of those wringing their hands over the deal understand this but are anxious to try and spin a victory into a failure.


63 posted on 12/04/2016 11:55:21 AM PST by mbrfl
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To: Texas Eagle
Besides, as far as I know, Chicago is still in The U.S.

Granted, but the problem is that Boeing was a Washington company and Locke didn't do due diligence.

Secondly, the President has every right to do his best to keep companies in the U.S. It has nothing to do with playing favorites or giving a company an unfair advantage. It has to do with keeping jobs in the U.S.

The Constitutional duty of the President as spelled out is to protect American interests around the world as well as at 'home'. For too long American interests have been for sale and sold for pennies on the dollar, or even just given away.

Finally, under the Constitution, the government in which the President is the most visual officer of that government, is to create an environment where citizens and legal entities acting as citizens can flourish.

This is so simple to understand.

64 posted on 12/04/2016 11:57:38 AM PST by Parmy (II don't know how to past the images.)
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To: MyDogAteMyBallot

Ok, sorry about the wrong attribution. I disagree with the author in either case.

The concept of thousands of losers is more aptly applied to the people in regions where the Governors and Mayors ignore marketplace realities and don’t work to maintain or improve their tax bases & local job markets.

It is a strawman argument. Carrier has already competed in the market place against all and sundry, it wasn’t created like Solyndra. Carrier is being offered an accommodation to benefit they taxpayers because of Carrier’s success and resultant leverage; they are not being elevated or declared a winner. Any other company with equivalent leverage might be offered a sweetener to remain by their local State/City.

Trump is offering the biggest sweetener of all to all American companies, lowering corporate taxes & deregulation. This is being cooked up as an issue by people who want to derail Trump’s plan, delegitimize him and it is being passed around by those that do not understand the actual forces at work. The story sells well because we are all sensitized by Obama and his cronyism.


65 posted on 12/04/2016 12:01:10 PM PST by JayGalt
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To: MyDogAteMyBallot

“Maybe this was a smart short-term political move, but I share the author’s opinion that it’s not good long-term policy.”

For the 100th time....the $7 million was ALREADY on the table. Pense made that offer a year ago. Trump made the deal based on the coming corporate tax rates, less regulations and the implied threat of losing defense contracts. The CEO of UT made the decision based on the sound federal policies coming down the pike...not the $7 million from Indiana. The CEO knows that Trump will get his policies through based on the makeup of the House and Senate.


66 posted on 12/04/2016 12:02:56 PM PST by MaxistheBest
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To: SSS Two

Kasich is a strong TPP advocate.


67 posted on 12/04/2016 12:03:44 PM PST by Cobra64 (Common sense isn't common any more.)
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To: SSS Two

When Reagan was President 80% of Americans were working AND
paying taxes.

Today that number is about 54%.

Different time. Different nation.
And different approach.


68 posted on 12/04/2016 12:05:27 PM PST by tennmountainman ("Prophet Mountainman" Predicter Of All Things RINO...for a small pittance)
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To: faithhopecharity

Those other things take time to implement and take effect. This was a nice opportunity to send a message about how things will be once the changes are in place, aided by his VPs ability to make things happen in Indiana.


69 posted on 12/04/2016 12:15:28 PM PST by bigbob (We have better coverage than Verizon - Can You Hear Us Now?)
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To: Parmy
Secondly, the President has every right to do his best to keep companies in the U.S. It has nothing to do with playing favorites or giving a company an unfair advantage. It has to do with keeping jobs in the U.S.

Okay, I'll bite. Where does it say that?

70 posted on 12/04/2016 12:16:04 PM PST by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: SeekAndFind

It is corporate welfare if you believe every dollar is owned by the Federal/State Govt. I remember when Conservatives were for lower taxes.

Pray America woke


71 posted on 12/04/2016 12:17:22 PM PST by bray (The Silent Majority ROARED)
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To: SeekAndFind

This is why I detested Palin for her “all about me” moment, addressing the Carrier deal.

We have so many back seat drivers, they’ve asked the front seat driver and riders to vacate the car.


72 posted on 12/04/2016 12:29:04 PM PST by DoughtyOne (jcon40, "Are we be coming into the age of Sanity?")
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To: mewzilla
When it’s targeted to a specific company and not a sector.

Across the board federal corporate tax cuts are coming under Trump. Indiana will have to address its own targeted cut and the problems that will arise from it.

73 posted on 12/04/2016 12:30:10 PM PST by FreeReign
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To: DoughtyOne

“This is why I detested Palin for her “all about me” moment, addressing the Carrier deal.”

Yup...really a cowardly way to try to stay relevant...the Boss is going to remember this one as will most on the TRump Train like me. She hasn’t done anything over the last 8 years to advance herself in any way. In my mind she is done after this.


74 posted on 12/04/2016 12:31:50 PM PST by MaxistheBest
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To: bigbob

Agreed. And his veep is particularly good at clear communications so far too


75 posted on 12/04/2016 12:34:44 PM PST by faithhopecharity ("Politicians are not born. They're excreted." Marcus Tullius Cicero)
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To: MaxistheBest

C. Kaepernick update:
passing 1/5 4 yards total 0 0
rushing 6/20 yards 1/14 yards 5/6 yards
24 total offensive yards

Replaced after 3 quarters by Blaine Gabbert


76 posted on 12/04/2016 12:39:28 PM PST by MaxistheBest
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To: SeekAndFind

Look the most important part of the Carrier saga, is that Trump cares. That is all that is important. Regardless of whether it was the right thing to do in the future. The reality is that someone is listening to the American people. Someone is fulfilling campaign promises. That’s huge. When the press gives politicians a free ride to promise anything on the campaign trail and then do the opposite once in office. That is akin to devaluing democracy and the press. We finely have someone in office who cares about Americans and does what he promises. You can argue the details and the economic value of the act. But that is not the point here.


77 posted on 12/04/2016 12:41:21 PM PST by poinq
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To: MaxistheBest

I never bought here shtick after the V.P. thing fell through. I supported her efforts there too. She was the only thing that saved McCain from a 10% showing > IMO.

Then he and his crew abused her. And then she endorsed him in 2010.

The end!


78 posted on 12/04/2016 12:44:09 PM PST by DoughtyOne (jcon40, "Are we be coming into the age of Sanity?")
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To: DoughtyOne

“I never bought here shtick after the V.P. thing fell through.”

I read somewhere that after her convention speech, the Obama campaign thought it was over for them, it was so good. I think if she had buried herself in policy papers for a few years, she could have been a player. Instead she took the easy way and now she is on nobody’s list for anything.


79 posted on 12/04/2016 12:53:53 PM PST by MaxistheBest
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To: mewzilla

When it’s targeted to a specific company and not a sector.


And I agree with you 100%

So this this case it all state tax breaks not fed

So my question is for the state only. it this exclusively for Carrier?

Or will you follow up for other business in the same sector in your state?...

one would assume that the same tax break for all in that business sector, in that state would have the same effect of keeping jobs in the state and bringing jobs to the state from from other states.

Again I agree if it only for Carrier..it the state giving then an unfair advantage and a lack of equality under the law

I would define crony capitalism as the government giving one business an unfair advantage over their competitors...

It not Curry capitalism all businesses in company competition operate under the same rules advantagesil


80 posted on 12/04/2016 1:25:49 PM PST by tophat9000 (Tophat9000)
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