Trump’s Deal with Carrier is a Shell Game. Keep your Eye on Federal Contractor Rules

by Alan Pyke –

Why does Trump want to cut a deal with Carrier but not regulate it?

A Carrier air conditioner in 2009. The company has drawn criticism for announcing plans to close its plant in Indiana and relocate jobs to Mexico.

Donald Trump and Mike Pence have managed to make a lot of hay out of last week’s announcement that Indiana-based manufacturer Carrier Corp. will now move fewer jobs to Mexico than it had previously planned, in exchange for tax breaks from Pence’s home state.

The president-elect says he didn’t explicitly threaten to punish Carrier or its parent firm United Technologies by shifting federal contracts to other vendors in the future. But the prospect of such punitive measures doubtless played some role in the talks, as Indiana Economic Development Commission board member John Mutz more or less confirmed to a local business paper.

The episode therefore spotlights a contradiction in Trump’s campaign promises (in addition to stoking fears that he will speed up a corporate race to the bottom where companies extort states for tax breaks by threatening to relocate). The Carrier talks underscore a tension between the anti-Obama animus that helped fuel Trump’s election win and his rhetoric about using public policy to foster job growth.

President Obama signed numerous executive orders specifically related to federal contract dollars. One set a higher minimum wage for workers at companies that win federal contracts. Another guaranteed those workers paid sick days. And a third, currently under injunction from a Texas judge, would make it harder for companies to win taxpayers’ business if they break workplace safety rules or steal from their employees.

The policies explicitly link companies’ treatment of their workers with their ability to make money by providing public services. It’s the same cudgel that Trump and Pence had in their holster when talking to Carrier’s corporate leadership.

We know the president elect is willing to use implicit threats to shut the multi-billion-dollar contracting faucet in individual cases when it will score him political wins and media accolades. But the Obama labor orders — which are much further-reaching, cracking down on systematic wage theft and labor abuses at taxpayer expense — will let Americans know if Trump is more interested in keeping his jobs promises or appeasing Republican tribalism.

Trump’s campaign promised to rescind “every single Obama executive order,” a line he’s already started walking back. He also told voters that “every policy decision we make must pass a simple test: does it create more jobs and better wages for Americans?”

The Fair Pay and Safe Workplaces executive order easily passes that test. Federal contractor wage theft stole $82 million in pay from workers doing the taxpayer’s business from 2007 to 2012, and more than 40 workers at those companies died in circumstances linked to safety violations. Americans send half a trillion dollars each year to companies that employ more than 20 percent of all U.S. workers. Stiffening payroll accountability and improving safety compliance at these firms would have massive effects across the economy while costing the government nothing.

Yet Republicans in Congress have already tried to sabotage the rules by exempting all defense contracts, and the party is ideologically inclined to portray this regulation as market interference — even though the rule merely requires companies to report any recent violations so they may be considered as part of a bidding process, and does not automatically ban federal agencies from doing business with even the most egregious serial violators.

Partisan politics would suggest Trump can make some Republicans on the Hill happy by nuking the wage theft executive order, while simultaneously letting some of his friends at giant corporations off the hook when it comes to paying workers what they earn and treating them lawfully on the job.

But Trump’s rhetoric about using policy to create more and better-paying jobs suggests he should fight for the rule; not just tolerate it, but actively support it in court.

U.S. District Court Judge Marcia Crone blocked the rule in October. It will die quietly unless the Trump administration appeals, or carries on with a potential appeal from the outgoing administration.

If Trump sits on his hands and lets Crone’s order stand, taxpayers will keep giving business to companies that actively cheat, squeeze, and endanger their frontline employees while paying their executives handsomely — the exact sort of rigged economic system Trump theoretically campaigned against.

Last week’s deal with Carrier would then look like just another iteration of that same scammy system: a large and well-connected conglomerate scoring tax breaks and retaining access to federal contracts by moving hundreds of jobs to Mexico instead of thousands.

Reprinted with permission from Think Progress, a branch of The Center for American Progress