Donald Trump lied about passing pro-worker industrial policy
November 2, 2020 Jacobin
Highlighting Trump’s dismal record on jobs is important for convincing workers who may still be taken in by his pro-labor rhetoric. But this goes beyond just dunking on Trump. The mainstream of the Democratic Party shares Trump’s enthusiasm for offering massive tax breaks to the wealthiest companies in the desperate hope they will create jobs. Numerous case studies from the last four years alone disprove this myth, and subbing in Democrats to pursue the same failed strategy will lead to more disaster for working people.
The Left needs to get serious about an industrial strategy that can actually create massive amounts of high quality jobs. The mistakes from the first Trump term need to be learned — or else a potential Biden administration could just be a warm-up act for an even more dangerous and emboldened far-right.
Thirty Years of Decline
The report focuses on four states in the Great Lakes region: Pennsylvania, Ohio, Wisconsin, and Michigan. These states are iconic for their role in powering the country’s manufacturing economy. Voters in these states have felt the decline in US manufacturing most sharply and helped tipped the balance toward Trump in 2016.
The economic pain affecting the region is not new. From 1990–2007, these states lost a total of 800,000 manufacturing jobs. Another 500,000 jobs were lost during the Great Recession of 2007–8 alone.
Despite boasts about the Trump economy before COVID-19, a modest recovery was already taking place in the Great Lakes region during the Obama years. Between 2010 and 2016, 294,000 jobs returned at a higher rate than the first two years of the Trump administration. Some of this recovery was stimulated by federal policies like the bailout of the auto industry.
Though the first three years of the Trump presidency saw economic growth, manufacturing wages dropped during this time. By summer 2019, well before COVID-19, US manufacturing had already entered into a recession. In some states like Ohio and Michigan, the recession had begun even before that. The COVID-19 recession led to 381,000 more manufacturing workers in the Great Lakes region being fired or furloughed.
While there were some modest economic gains during Trump’s first term, they proved to be too limited and short-lived to spark a broader economic transformation. The roots of this failure lie in an economic philosophy and policy agenda that puts workers last.
Tax and Trade Policy
Aserious plan to revive US manufacturing would involve directing massive amounts of public revenue toward investments in critical areas like infrastructure and education. Trump’s tax cuts, which mainly benefit the rich while leaving crumbs for everyone else, is a step in the wrong direction. The tax cuts are estimated to cut public revenue by $1.5 trillion over ten years.
The Trump tax plan also literally gives corporations more incentives to move production to other countries. According to the Institute on Taxation and Economic Policy, Trump’s plan “taxes the offshore profits of American corporations at a rate of zero percent or, sometimes, at half the rate imposed on domestic profits. […] This can also encourage corporations to transfer real investments and jobs offshore.”
The results of the often-touted trade war with China are also dismal for US workers. Trump has had no coherent plan besides lashing out with tariffs every so often. The most substantive element of the trade war were a series of tariffs on Chinese goods that rose from a 10 percent to a 25 percent duty between September 2018 and May 2019. China has retaliated with tariffs of their own, and a study by Moody’s found that the trade war had cost 300,000 US jobs by 2019 across a range of sectors.
One has to look hard to find substantial differences between trade deals like NAFTA and Trump’s United States–Mexico–Canada Agreement (USMCA). The administration has made a big deal out of new rules that require 45 percent of automobiles within USMCA to be produced by workers earning $16/hour. However, US and Canadian auto workers usually already make more than $16/hour.
In effect, the Trump trade war will not lead to any measurable growth in wages or jobs for the workers that were supposed to benefit.
Case Studies in Corporate Welfare
The phrase “socialism for the rich, rugged individualism for the poor,” first uttered by Dr Martin Luther King Jr in 1968, is becoming popular again. The case studies of corporate welfare included in the Policy Matters Ohio study will make you see why. It is yet more proof that the long-standing bipartisan effort to attract private investment through tax incentives is a sure loser.
On July 26, 2017 a White House ceremony was held with Wisconsin governor Scott Walker. They celebrated the announcement that Foxconn would build a display panel factory in Wisconsin, after the state promised the company a record $4 billion in taxpayer subsidies; 2,080 jobs were promised to in-state workers by the end of 2019.
As it turned out, Foxconn only created 520 jobs. Most of these jobs are in the research and development sector, and won’t actually go to working-class people. Foxconn leased office space in multiple cities, supposedly to serve as manufacturing innovation centers. These offices are still empty. Billions of dollars that could’ve been used for direct federal employment were wasted on another fruitless corporate subsidy.
In 2008, General Motors made a thirty-year commitment to keep its Lordstown Chevy Cruze plant in Ohio. They were given $82 million in state subsidies. General Motors reneged on this agreement and closed down in March 2019. Trump didn’t try to take any executive action or even whip up public shame against the company in order to save this once iconic plant.
Unfortunately, examples like these are not unique. Each year countless states, towns, and municipalities across the country are reduced to beggars, giving up critical revenue in the hope that corporations move to their backyard. Decades of experience have shown us that the costs of this approach far outweigh the benefits.
Can We Build Back Better?
Trump’s inability to revive manufacturing, along with his war on labor unions and attack on the National Labor Relations Board, make clear he is an enemy of working people. But the Left can’t stop at the easy part of denouncing Trump.
Joe Biden’s previous support of anti-worker trade deals like NAFTA and the Trans-Pacific Partnership (TPP) should leave no doubt as to what his policies on trade and manufacturing will look like if he wins the presidency. Democratic socialists need to craft an approach to job creation at the federal and state level that puts workers front and center.
Clearly the private sector cannot be relied upon to create enough high-quality jobs, no matter how many tax incentives are given. The federal government needs to forcefully intervene to create good-paying, long-term, union jobs. As we face the biggest economic crisis since the Great Depression and an accelerating climate crisis, we need millions of jobs that can contribute toward environmental sustainability.
By working directly with unions, the revival of US industry can go hand in hand with the revival of the labor movement. Proposals like those drawn up by unions in New York state as part of the New York Climate Jobs program are an inspirational model, and will form the backbone of a true revival in US industrial policy.
While Trump’s actual policies have been a disaster, the success of his rhetoric clearly demonstrates that developing a coherent industrial strategy will be crucial for political success. Though we should be cautious with historical analogies, we can use them to confirm at least one thing: If we don’t address the jobs crisis, right-wing populists will.
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