With Carrier deal, Trump becomes 'negotiator in chief'
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Keeping some 1,000 jobs from moving from Indiana to Mexico, President-elect Trump addressed a key campaign issue. But he runs several risks.
They could hardly be more different: President Obama, liberal policy wonk; President-elect Donald Trump, conservative-leaning populist. Yet, when American jobs are at stake, both men have shown their willingness to intervene.
In 2009, Mr. Obama approved government loans to keep the US auto industry afloat, saving an estimated 1.5 million jobs. On Tuesday, Mr. Trump surprised just about everyone with a deal to save some 1,000 jobs at a Carrier manufacturing plant in Indianapolis. Carrier, a maker of air conditioners and heating furnaces, was already halfway out the door when it agreed to the deal.
By working out an agreement even before he takes office, Trump has quickly addressed a key campaign promise to keep US jobs from moving abroad. His move may also be an indication of how he will operate in office. Some observers call him a populist; others, “negotiator in chief.”
But Trump runs several risks by taking so personal a role in intervening in the economy. Like Obama and all presidents before him, Trump’s reputation will rest, at least in part, on the future direction of the economy. If it grows, his deals – while criticized and praised now along mostly party lines – will look prescient; if the economy falters, they will be viewed as failure.
Unlike Obama, Trump has much less margin for error because he inherits the presidency at a very different point in the economic cycle. Obama entered office in the teeth of a financial crisis and the worst recession in seven decades. No matter what he did, the economy was bound to improve.
Trump, by contrast, inherits an already growing economy with the stock market and the housing market at record levels. Any slowdown would hurt his popularity. Even the closing of the Carrier plant in the next few years would reflect negatively on Trump’s policies, just as the failure of solar-energy company Solyndra in 2011 hurt Obama’s green-energy initiative.
But in some ways, Trump’s timing may be auspicious. While the recovery has lasted a suspiciously long time and some forecasters are calling for a slowdown in 2018, Trump’s focus on the working class comes at a time when the benefits of the recovery may finally trickle down to blue collar workers.
Details of the Carrier agreement, worked on during the Thanksgiving holiday, have not yet been announced, but reaction to Trump’s move was swift.
“I would like to tell him: ‘Thank you for going out of your way and taking your holiday away from your family … and going to bat for all of us and keeping our jobs here,' ” longtime Carrier worker Robin Maynard told "Fox & Friends" Wednesday.
Critics pointed out that Trump’s deal would only save about half of the 2,000 jobs Carrier was planning to move to Mexico. Also, the deal reportedly includes state incentives to the company, which is a subsidiary of United Technologies, a big defense contractor to the federal government.
The highly personal nature of Trump’s involvement is also a classic move of populist leaders, says Grant Burrier, a political scientist at Curry College in Milton, Mass., who has studied populist leaders in Latin America.
“Trump is trying to demonstrate early that he will fight for American workers,” Professor Burrier writes in an email. “But I worry about a president negotiating personal deals with unreleased conditions. There are substantial financial interests at stake, both for the private sector and the taxpayers. Backroom deals could give rise to serious conflicts of interest.”
Obama’s use of federal funds to help General Motors and Chrysler through bankruptcy was also severely criticized in 2009, with only a little over a third of Americans supporting the deal, according to a CNN/Opinion Research Corp. poll. As the economy improved, however, so did support for the plan. By 2012, a Pew Research Center poll found 56 percent of Americans approved of the plan.
While the current economic recovery may look long in the tooth, two trends may help extend it. First is the comeback of middle-wage jobs.
“The tide may be turning as many middle-wage jobs – including teachers, construction workers, mechanics, administrative support personnel, and truck drivers – have finally started to return,” New York Federal Reserve Bank economists wrote in an August report. “In fact, between 2013 and 2015, the nation saw more middle-wage jobs created than either higher- or lower-wage jobs, a sharp reversal from earlier patterns of job growth.”
Second is a looming worker shortage that should begin to boost wages in many sectors of the economy. On Tuesday, Glassdoor Economic Research reported that US median base pay rose 3.1 percent compared with a year ago – the biggest rise since 2013.