Trump & Carrier: Incentives Are Preferable To A “Mailed Fist”

REUTERS/Chris Bergin

Lewis K. Uhler and Peter J. Ferrara National Tax Limitation Foundation
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It was a natural “thank you” to Indiana supporters when, as part of his recent “victory tour”, President-Elect Donald Trump “convinced” Carrier Corporation (and United Technology) corporate leaders that they ought to keep 1,000 or so air conditioner manufacturing jobs in Indiana rather than ship them off to Mexico.

Liberal pundit Mark Shields called it a “political masterstroke.”  Most importantly, it was an early foretaste of Trump’s entire policy reform program, based on incentives to produce the desired results, adopted in accordance with the rule of law.

It was not the raw Obama-style exercise of presidential power, using his phone and his pen to make new policy contrary to the will of the people, as in shutting down the Keystone Pipeline, closing coal fired power plants, and negotiating the Iran nuclear “deal” without ever submitting it for Senate confirmation.

In sharp contrast, all of Trump’s executive and legislative proposals are based on universal voluntary incentives to produce the right result, and individual consumer choice in competitive markets, NOT the “mailed fist” of raw political power to force the outcome.

These include major tax reform sharply reducing tax rates for all, which provides incentives for U.S. capital investment from across the globe, business creation and expansion, and entrepreneurial innovation. That is the foundation for creating millions of new jobs and rising wages across the board.

It includes regulatory reform to reduce the burdens and barriers on business and employers, particularly liberating American energy producers to lead the world in energy production. That includes fossil fuels, where thanks to modern technological innovation, America now has the resources to be the number 1 oil producer in the world, number 1 natural gas producer, and number 1 coal producer, all at once.

That would mean a long overdue U.S. economic boom, with an energy independent America leading the world in the fuels that powered the industrial revolution. Windmills and dancing on sunbeams are not prepared today to support such booming growth, and probably never will be, because the energy content of such sources is inherently so diffuse.

Recent books such as Climate Change Reconsidered II and Why Scientists Disagree About Global Warming, published by the Heartland Institute, demonstrate as a matter of world leading science that Americans have no reason to fear catastrophic global warming from using our own energy resources.

Trump’s policies also include repealing and replacing Obamacare with consumer freedom of choice in competitive markets, replacing Obamacare federal mandates where the federal government forces workers and employers to buy the health insurance the government wants rather than what they want. Repealing and replacing Obamacare would actually make good on the original promises of Obamacare, sharply reducing now skyrocketing, unworkable, health insurance premiums due to unreasoned and oppressive Obamacare regulatory mandates.

Repealing Obamacare would involve another trillion dollar tax cut through the repeal of Obamacare taxes, with the sharp reduction in health costs resulting from consumer choice and competition providing another, huge, effective, pro-growth tax cut. His plan would also deliver on original Obamacare promises that consumers could keep the health insurance and doctors they like.

These Trump policies would assure that domestic and multinational corporations remain in and return to the U.S, build their job base here, bring their “off shore earnings” home and make America great again. This is the difference between Reagan, Kennedy – and now Trump – policies, and those of progressives like Obama who arbitrarily undercut their enemies while engaging in “crony capitalism” with their friends.

Incentives – not mandates – have never been understood by progressives but are the foundation of free market conservative policies.

The same holds for the states.  Part of the “deal” with Carrier was Indiana state tax cuts enacted by Governor (now Vice-President Elect) Mike Pence and the Indiana legislature. It is time for states to use tax rate and regulatory reform incentives to attract and hold businesses instead of out-right cash grants or special tax breaks that amount to multiple tens of billions of state taxpayer dollars each year being used to benefit some state businesses at the expense of others.

Tax competition among the states, as among nations, has been the route to more vibrant economies in those states that have engaged in tax rate reduction, fiscal discipline and regulatory and licensing reform.  Pence should shout this from the roof tops. He and Trump must move quickly on major U.S. tax and regulatory reform.

Lew Uhler is Founder and President of the National Tax Limitation Committee and the National Tax Limitation Foundation (NTLF). Peter Ferrara is Principle and General Counsel  of the Raddington Group, an international economic consulting firm,  Senior Policy Advisor for Budget and Entitlement Policy at NTLF, and Senior Fellow for Budget Policy and Entitlement Reform at the Heartland Institute.