Janine Jackson interviewed Greg LeRoy about Trump’s Carrier deal for the December 9, 2016, episode of CounterSpin. This is a lightly edited transcript.
Janine Jackson: There are many questions to be asked about Trump’s deal with Carrier Corporation’s Indiana plant: how many jobs did it actually save, what exactly did he offer Carrier’s parent, United Technologies, much less why he sought the deal in the first place, and whether he himself remembers. But while an argument in which Sarah Palin comes out against Trump’s “crony capitalism” is somewhat…dazzling, our guest suggests we keep our eyes on the substantive issue being unearthed here, namely a corporation’s ability to use jobs, AKA worker’s livelihood, to extort favorable deals from the state, deals that can wind up hurting the communities that those workers live in.
Greg LeRoy is executive director of Good Jobs First. He joins us by phone from Washington, DC. Welcome to CounterSpin, Greg LeRoy.
Greg LeRoy: Thanks, Janine. Great to be with you.
JJ: I remember Kate Bronfenbrenner from Cornell showing how employers used threats of plant closings in 50 percent of union organizing drives. One company posted maps of North America throughout the factory with a big arrow from the current plant site to Mexico. That was the mid-1990s. So the idea that Trump’s deal with Carrier will “give other companies ideas” doesn’t really make too much sense, does it? There’s a history here.
GL: Yeah, that’s right. Lots of companies have been threatening to move to Mexico for a long time, even before NAFTA. I worked on my first runaway shop to Mexico in 1986, a windshield wiper plant in Buffalo called Trico. Not new, and not unique to this time or this recession. It’s important to remember: All state and local taxes combined of the cost of doing business for the average company in this country come to just 2 percent of their cost structure. The Carrier subsidies, the $7 million that Indiana gave Carrier, isn’t the cause for them staying. In fact, it’s ludicrous; the company was on record saying they’d save $65 million a year, and they’re going to get $700,000 a year for ten years from the state for not moving. It can’t be the reason they decided to stay, it must be about the defense contracts.
JJ: Right, the defense contracts that their parent company, United, is involved in. And that’s part of the “turn over the stone” and look at the specifics of this Carrier deal, but what I want to talk to you about is the fact of the ability to corporations to do this. It’s not only about moving to Mexico. A lot of the history is about what, you pointed out, Business Week called the “second war between the states,” back in 1976. It’s really about back and forth between states.
GL: That’s right. It’s all too easy for a [New York City] company to go have lunch with the mayor of Greenwich, Connecticut, or the mayor of Jersey City, New Jersey, and create the appearance of looking like you’re interested in running across the Hudson, and then shake down New York City to stay. We listed, in a book I wrote 11 years ago, dozens of financial services companies, banks, media companies, stock exchanges who did this and then got eight- and nine-figure retention packages, so to speak, from the city.
JJ: Part of the problem is that we don’t see it happening. Reporters are purporting to talk about what the quid pro quos are, but the fact is they’re not actually aware of all of them, necessarily. You described that corporate decision-making as a black box. Nobody gets to really see that deal-making, even though we’re all implicated.
GL: That’s exactly right; we are all implicated, because it’s all money coming out of our collective public treasuries, that is needed for schools and infrastructure and police and fire and sanitation and everything else that we do with those taxes. But you’re right, it is a black box. At the end of the day, we’re forced to accept whatever the companies say, and the script is that you get the tax break, and then you praise the politician that gave it to you so that they can get reelected, so they—especially during this long, painful recovery—can look like they’re being aggressive on jobs.
JJ: I think it’s confusing for a lot of folks watching the media, certainly, because I think folks are going to come away thinking that to criticize this Carrier deal is to be anti-worker. Because, after all, some jobs were saved, and we’re supposed to be thankful for any handful of jobs that were saved in the US. And I worry that the conversation is so unsubtle that we can’t actually see a broader thing in play. And I wonder if you could just talk to us a little bit about the difference between “jobs were saved” and “something was done that actually would improve the world for US workers.”
GL: Yeah, great point. So the journalism on this issue has been all over the map, this episode at Carrier. Obviously Trump got a ton of favorable coverage, and it’s reflected in a poll that suggested a very high approval rating for what he did. To their credit, a few journalists that I can think of have said, wait a minute, let’s look up this thing called trade adjustment assistance, which is the certification of other plants that are closing because of runaway shops or import competition, even just for the state of Indiana. And the truth is there’s dozens of other cases, in any given moment, of companies running off to Mexico or China or other places, that aren’t going to get Trump’s attention. And nothing he did at Carrier is any kind of systemic silver bullet for all of those people.
So he can’t sit there and do one-offs all the time, and not every company running away to Mexico is going to have another division that depends on Pentagon contracts that he can make noise about. There’s no systemic solution here. The Indianapolis Star, a guy named Tony Cook, did a fabulous job, both before and since, pointing out that as governor, Pence had given subsidies to several companies that had offshored, for example. That had come out last summer in the Indianapolis Star, great series.
JJ: Right. I hate to see journalists giving their time just to picking off instances of hypocrisy here, because I think folks are really, actually looking for a deeper understanding of processes and how things work, no matter who’s in charge.
And with that, I want to go to what sounds very uninteresting and yet is potentially very interesting indeed, which is Government Accounting Standards Board Statement No. 77.
GL: Now we’re entering serious wonkyland. So there’s a secure body up in Connecticut called the Governmental Accounting Standards Board. It’s, despite its name, not a public body, it’s a nonprofit standard-setting group. It sets forth what are called “generally accepted accounting principles,” or GAAP, for state and local government bodies. And the rationale here is that everybody should keep their books in a uniform way, so that the credit rating agencies can give you the best possible credit rating, and you can get the lowest possible interest rate if you have to float bonds, to build a new school or sewer system or whatever.
So GASB has been around for a long time, it’s been around since the ’80s, and it periodically updates the wording of GAAP in statements. And one of the most recent statements it issued is No. 77, where they actually finally, finally, finally got around to corporate welfare. They said, starting for calendar 2017 and beyond, when you issue this thing called your “comprehensive annual financial report,” your CAFR for the previous year, the year of the spending that you’re reporting on that you just finished, you’re going to have to account for how much revenue you lost to these economic development tax break programs, so-called tax abatements.
This is a big, big, big tectonic shift in policy—first time they’d ever touched any kind of tax breaks of any kind. And we know that more than 50,000 bodies of state and local government will do this, because they comply with GAAP, and we think tens of billions of dollars are going to be dragged out of the shadows. School districts and counties and cities and townships, as well as multiple layers of state government, will all have this data coming out next year.
So we think this whole debate about corporate tax breaks next year is going to get really, really amped up, because at the same time Trump is going to be cutting federal aid to cities and federal aid to schools and so on, all this new data is going to come out pointing out how much money is getting lost to corporate tax breaks. The two things are going to be colliding next year.
JJ: And I think they’re going to be colliding, also, with more eyes on them—because folks are, for varying reasons, looking down to state and local levels for political conversation, for political action, so the fact that that’s coming out at that level…. But I do just want to underscore that this is connected with the jobs conversation, in the sense that states often do a kind of chicanery with jobs going across borders, and that’s related to this Statement 77 that we’re talking about.
GL: Well, it is, because, although it’s still legal for companies to jump state lines and have their jobs defined as “new,” quote unquote, as they arrive in a state, maybe even though they just moved, you know, down the block in the case of Kansas City, or across the city line, in the case of Memphis into Mississippi or wherever. This new data, we think, is going to really make it much easier for citizen activists to hold their elected official accountable and say, wait a minute, what’s going on with all this money? We didn’t know it was that much; our schools are in trouble, or whatever, we’ve got better things to do with this money.
And, frankly, there’s even a right conversation on this, right? You’ve got groups like Americans for Prosperity going after film production tax credits in some states. It’s a left/right kumbaya, frankly, on this transparency stuff.
JJ: Let me just ask you, finally, on the Carrier deal itself: What would you hope that folks would have as a take-away from it? We know that media tend to get kind of confused in the frippery sometimes, but what do you think is the core here?
GL: Oh, I think the core story is, this was a one-off. But it raises the broader issue of, what are states really doing, if they’re serious about retaining jobs and not wasting any more money as they try to do it? There are tangible solutions. We can fix this, we can stop committing interstate job fraud, we can stop pulling wool over people’s eyes, and be honest about how jobs are created.
JJ: We’ve been speaking with Greg LeRoy of Good Jobs First. Find their work online at GoodJobsFirst.org. Greg LeRoy, thank you so much for joining us this week on CounterSpin.