Carried Away With Carrier Incentives

President-elect Donald Trump yesterday warned that the government would punish companies seeking to move operations overseas with “consequences,” setting the stage for an unprecedented level of intervention by the White House into private enterprise all over the country.

Trump’s remarks came as he triumphantly celebrated a decision by the heating and air-conditioning company Carrier to reverse its plans to close a furnace plant here and move to Mexico, helping keep 1,100 jobs in Indianapolis, Indiana. “About 800 of those were manufacturing positions that had been scheduled to move south of the border beginning in 2017, said a person familiar with the negotiations.” An additional 300 to 600 Carrier positions at that plant, as well as roughly 700 jobs at another facility in Northern Indiana, will still be moved to Mexico in the next year.

Under the terms of the agreement, which have not been finalized, Carrier would receive a $7 million tax incentive package from the state of Indiana in exchange for making a $16 million investment in the facility. Trump later admitted that the amount would probably be higher.

In remarks delivered inside the Carrier facility, the president-elect said more companies will decide to stay in the United States because his administration will lower corporate taxes and reduce regulations. He also warned that businesses that decide to go abroad will pay a price through a border tax on imported goods. “Companies are not going to leave the United States anymore without consequences,” Trump declared Thursday. “Not gonna happen. It’s not gonna happen.”

Trump said he decided to intervene after watching a television news report that reminded him that he had vowed during the campaign, “We’re not going to let Carrier leave.” Trump’s determination to use a mixture of incentives and tariffs to keep jobs from going overseas represents a sharp break with the free-market wing of the Republican Party.

“I think it’s pretty darn good that people are keeping their jobs in Indiana instead of going to Mexico,” said House Speaker Republican Paul Ryan, emphasizing that the party is hoping to pass comprehensive tax changes that would be a boon to all businesses. Ryan has repeatedly criticized President Barack Obama for allegedly trying to pick “winners and losers” in his stimulus package.

The Carrier deal was sharply criticized by some conservatives, and liberals, who derided it as corporate welfare. The reaction in Indiana was mixed despite Governor turned Vice President-Elect Mike Pence’s obvious excitement.