Justin Miller

 Justin Miller is a senior writing fellow for The American Prospect.

Recent Articles

Scott Walker Doubles Down on Foxconn-omics

(Gage Skidmore)
 

It was just a few months ago that Wisconsin Governor Scott Walker unveiled a massive deal that would give the Taiwanese manufacturing giant Foxconn $3 billion in tax subsidies to open a $10 billion LCD TV factory, promising to bring 13,000 jobs to southeastern Wisconsin.

That’s a public cost of $230,000 per job. Initial estimates found that the state wouldn’t break even on its investment until 2043. On top of the massive tax subsidies, Foxconn will benefit from a host of other goodies—lower electricity rates, state funding for road construction and worker training, exemptions from certain environmental regulations, and unprecedented special treatment in the state court systems.

In short, Walker handed a foreign corporation the keys to the government.

Now, with another major manufacturer threatening to cut hundreds of jobs in Wisconsin, Walker is doubling down on his corporate welfare program. Following the passage of the GOP tax cut, Kimberly-Clark (the company that makes Kleenex, Huggies diapers, and Cottonelle toilet paper) announced in January that it would deliver a dividend increase for its shareholders and a $2.3 billion share buyback. The company said it would then use the remainder of its tax cut savings to restructure its operations.

That apparently means cutting 5,000 jobs in the United States, including 600 positions from its operations in northeastern Wisconsin. The company turned a $3.3 billion profit in 2017.

In a last-ditch effort to save those jobs, Walker is falling back on his Foxconn playbook. On Monday, he proposed legislation that would give Kimberly-Clark the same deal as Foxconn: 17 percent tax credits on qualifying wages at the company’s two plants.

 

 

As the Milwaukee Journal-Sentinel points out, Wisconsin taxpayers would be on the hook for $8,500 in Kimberly-Clark tax credits for one $50,000 salaried job.

Walker is running for re-election in 2018 and he’s faced scrutiny over his failure to make good on a 2010 campaign promise to create 250,000 jobs in the state. He’s not only failed to meet that mark by nearly 65,000 jobs, but Wisconsin’s manufacturing industry has continued to wither away.

The conservative governor has failed to entice businesses to set up shop with his policies of union busting and deep budget cuts to everything from the public university system to infrastructure. 

As Walker has attacked public welfare programs (he’s pushed for drug-testing requirements for state welfare recipients and work requirements for Medicaid beneficiaries), he’s unabashedly set up a generous corporate welfare program that flies in the face of the GOP’s purported vision of free-market capitalism. 

After privatizing the state economic development agency in 2011, Walker has lavished companies with lucrative tax subsidies. In return, companies like Ashley Furniture have announced layoffs, offshored operations, or simply failed to meet job-creation promises.

The Foxconn deal may be the biggest, but, as Walker has shown, it will be far from the last. The governor has now invited any Wisconsin company to threaten to uproot unless it gets a sweet new tax subsidy.

Call it Foxconn-omics.

The Proof Is in the Jobs Report: Minimum-Wage Hikes Work

The first jobs report of 2018 is out, and overall the news is pretty good. President Donald Trump and congressional Republicans will certainly try to take credit for the job growth and higher wages. But it would be more accurate to attribute this uptick to state labor policy—not the superiority of MAGAnomics and massive tax cuts.

The United States added 200,000 jobs in January, making this the 88th straight month of job growth, and the unemployment rate held steady at 4.1 percent (though the black unemployment rate jumped back up to 7.7 percent, just days after Trump boasted about historically low rates in his State of the Union). Meanwhile, average hourly earnings for private-sector workers increased by 0.34 percent this month, and 2.9 percent over the past year.

Wage levels have struggled to gain traction in recent years, even as the labor market has tightened. But for labor economists and workers alike, these most recent increases could be a sign that wages might finally be on the upswing, thanks to progressive state policies. In the new year, 18 states across the country—from Florida to Maine, and from Washington state to Michigan—hiked their minimum wages, bringing $5 billion in additional pay to 4.5 million workers, according to the Economic Policy Institute.

Despite staunch resistance from Republicans and the business lobby, worker-led movements like the Fight for 15 have had a great deal of success in increasing pressure on state and municipal lawmakers to increase minimum pay. The results are now evident in jobs reports, and it’s pretty clear that one of the best ways for the Trump administration to boost pay is to push for a higher minimum wage.

But will Trump and congressional Republicans finally come to accept minimum-wage increases as sound economic policy? Don’t count on it. The federal minimum wage, which is still $7.25 an hour, hasn’t gone up since 2009, and its value has only withered since. The issue has become highly polarized in Congress, with Republicans doubling down on the argument that any increase to the federal minimum wage will kill jobs and hurt business, and that the only way for wages to go up is to ease taxes on corporations and let it all trickle down.

We know how that story goes

Labor Department Covered Up Evidence That New Tipping Rule Could Lead to Wage Theft

In December, President Trump’s Department of Labor announced that it would roll back an Obama-era rule that limited when tipped restaurant workers would have to share their tips with other employees.

Worker advocates warned that undoing the rule would allow employers to use tips from waiters and bar staff to subsidize the low wages of employees in the kitchen—and that ultimately management could simply keep the tips for themselves. When Trump’s Labor Department proposed its new “tip pooling” rule, which was a top priority for the restaurant industry, it claimed that it couldn’t measure how it would affect workers’ wages.

However, Bloomberg Law now reports that an internal DOL analysis found that workers “could lose out on billions of dollars in gratuities.” But Trump officials tried to alter that analysis and ultimately buried the information entirely.

As the report finds:

Senior department political officials—faced with a government analysis showing that workers could lose billions of dollars in tips as a result of the proposal—ordered staff to revise the data methodology to lessen the expected impact, several of the sources said.

And even when that new methodology seemed to show that tipped workers would lose less money, administration officials remained uneasy. Labor Secretary Alexander Acosta and his team took issue with the DOL’s assumption that managers could simply keep the pooled tips instead of dividing it among the staff as a whole. Ultimately, the DOL and the White House agreed to remove the data entirely.

So just how much did the DOL find the rule would cost workers? It’s unclear. But the Economic Policy Institute came up with an estimate that found that the new tip pooling rule could prompt employers to pocket as much as $5.8 billion in tips earned by restaurant workers each year.

“This shows the lengths to which the Trump administration and Secretary of Labor Alexander Acosta will go to hide the fact that they are taking steps to actively make workers’ lives worse,” Heidi Shierholz, EPI’s senior economist and a former chief economist for Obama’s DOL, said in a statement.

This is just the latest example of how Trump’s Labor Department has become a vehicle for advancing business-friendly deregulation at the expense of workers’ own welfare.

ExxonMobil Plays Trump Like a Fiddle

President Donald Trump—the great dealmaker—has an ego fueled by flattery, which is allowing corporate America to play him like a fiddle. Since the passage of his massive tax cuts, Trump has trumpeted the news of one-time bonuses, wage hikes, capital investment projects, and job creation promises as affirmations of his genius.

His State of the Union Address Wednesday night was no different. As Trump proclaimed:

Since we passed tax cuts, roughly 3 million workers have already gotten tax-cut bonuses—many of them thousands and thousands of dollars per worker, and it’s getting more, every month, every week. Apple has just announced it plans to invest a total of $350 billion in America, and hire another 20,000 workers. And just a little while ago, Exxon Mobil announced a $50 billion investment in the United States. Just a little while ago.

This, in fact, is our new American moment. There has never been a better time to start living the American Dream.

So what about that ExxonMobil investment? ExxonMobil CEO Darren Woods, who took over for Rex Tillerson when he went to work for Trump, announced Monday that the company would be investing $50 billion in capital and exploration investments over the next five years—a move, he said, that is thanks in part to the corporate tax cuts. Trump repeated the news in his address to much applause, as Tillerson looked on from the front row.

It turns out the fossil fuel giant was, in all likelihood, going to make that investment anyway. As Americans for Tax Fairness point out, SEC filings show that ExxonMobil made about $53 billion in domestic investment in the five-year period between 2012-2016. This suggests that the company will continue to invest in capital spending at a similar (or even lower) pace.

The company was already paying an absurdly low rate in corporate taxes—just 13.6 percent on $60 billion in U.S. profits between 2008-2015. Lowering the statutory rate to 21 percent, then, doesn’t do much for its after-tax profits.

Of course, ExxonMobil is an incredibly powerful corporate actor—the third largest company in the world. It has a tremendous interest in currying favor with its regulator, the Trump administration.  Trump’s presidency could prove highly lucrative for the company, enhancing prospects for drilling along the U.S. coasts, in the Arctic National Wildlife Refuge, and potential for new fracking operations on public land.

It’s also absurd to assert that news of these bonuses is anything more than savvy public relations. And that money that Apple is “bringing back” from overseas is merely an accounting move on paper—and an affirmation that it was evading U.S. taxation by shifting its income into foreign accounts. Apple’s move is not any sort of tribute to the brilliance of Trump’s deal making on taxes.

Corporations like ExxonMobil and Apple will continue to misrepresent their typical business operations as all due to the brilliance of Trump. The flattery will work. But that does not mean the Trump tax cuts are working.  

Good Riddance, Sam Brownback

The governor may be (finally) leaving Kansas, but his trickle-down legacy has saddled us all. 

(Gage Skidmore) Governor Sam Brownback of Kansas speaking at the 2017 Conservative Political Action Conference (CPAC) in National Harbor, Maryland. trickle-downers_35.jpg U ltimately, it was Mike Pence who bailed Kansas out from its economic disaster. The vice president had to cast two tie-breaking votes in the Senate Wednesday to get Sam Brownback, his fellow conservative evangelical and GOP right-winger, confirmed as President Trump’s ambassador at-large for religious freedom—a position Brownback was nominated for nearly a year ago. Brownback has now officially announced that he’s resigning his position as Kansas governor next Thursday. The former U.S. senator was first elected governor in 2010, spearheading the Tea Party backlash against Barack Obama. He promptly turned his own state into a Petri dish for radical trickle-down economics , promising it would prompt a “shot of adrenaline” into the Kansas economy. The reckless cuts to income and business taxes didn’t work, as I...

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