Trump's Carrier deal saves 800 jobs in exchange for $7M in incentives

The $7-million incentive package Carrier Corp. will receive in a deal with U.S. president-elect Donald Trump and vice president-elect Mike Pence is a departure from how tax credits are commonly used in Indiana.

Economic development experts question wisdom of rewarding 'a company that threatens to leave'

Donald Trump speaks at event at Carrier HVAC plant in Indianapolis, Ind., on Dec. 1. The U.S. president-elect struck a deal with the manufacturer that saves 800 jobs from being shipped off to Mexico in exchange for tax credits and training grants. (Chris Bergin/Reuters)

The $7-million incentive package Carrier Corp. will receive in a deal with U.S. president-elect Donald Trump and vice president-elect Mike Pence is a departure from how tax credits are commonly used in Indiana.

The furnace and air conditioner manufacturer will receive $5 million in tax credits over the next decade in exchange for keeping hundreds of jobs at its Indianapolis plant, the Indianapolis Star reported.

It will also get $1 million in training grants and up to $1 million in additional tax credits based on its planned $16-million investment in the factory.

The deal differs from most other economic development agreements in Indiana, where incentives are usually aimed at bringing in jobs, not retaining them. Trump has criticized the use of such incentives in the past.

The deal was an early victory for the incoming administration and was mostly welcomed by the plant's 1,400 employees, who were told in February that their jobs would be dropped as the work moved to Mexico.

Hundreds of jobs still in jeopardy 

But the deal will only save about 800 jobs that were initially slated to be outsourced, fewer than the roughly 1,000 initially reported. That means an estimated 400 to 500 workers at the plant, as well as 700 employees at another plant owned by related company in Huntington, Ind., will still lose their jobs.

Some economic development experts said the agreement is troubling.

"It's a potentially dangerous policy where you reward a company that threatens to leave. ... In this case, you're rewarding a company that is actually cutting a lot of jobs in the state," said Steve Weitzner of site selection firm Silverlode Consulting.

Trump stands with Carrier worker Sadieka Alexander while touring the factory. Some economic development experts worry the deal will set a negative precedent by rewarding a company that threatened ship jobs across the border. (Mike Segar/Reuters)

Mitch Roob, who led the state's economic development agency under former governor Mitch Daniels, said economic development needs to be handled on a case-by-case basis. He said awarding incentives for retention wasn't common.

"But there were certain circumstances when that became the best option for us, and we went ahead and did it," Roob said.

The board of Indiana's economic development agency must still approve the deal. As governor of Indiana, Pence is chairman of the board and appoints its members.

Trump balks at call for nominees' tax returns

Meanwhile, Trump's transition team is pushing back on Senate Democrats' calls for all cabinet nominees to release their tax returns, calling it a "PR stunt" and defending the Republican's picks as selfless, patriotic Americans.

Trump refused to release his own tax returns, breaking with recent major party presidential candidates, and his team is arguing that it's unnecessary for his nominees, some of whom are the wealthiest Americans in the country.

In a memo for campaign supporters and Congress obtained by The Associated Press, transition officials say the Democratic calls are "a PR stunt with zero precedent designed to arm opposition researchers."

Senate Democrats on Thursday said they will push for all committees to require cabinet and other high-level nominees to provide their tax returns ahead of their confirmation hearings.

This week, Trump announced that he planned to nominate former Goldman Sachs executive Steven Mnuchin as his Treasury secretary and billionaire investor Wilbur Ross to lead the Commerce Department.

Education secretary nominee Betsy DeVos, the wealthiest of Trump's cabinet picks thus far, married into the family that started the sales company Amway.

Elaine Chao, his choice for transportation secretary and wife of Senate Majority Leader Mitch McConnell, is the daughter of a Chinese shipping magnate and has served on the boards of Wells Fargo bank, Dole Food and News Corp., the parent of Fox News.

"President-elect Trump's nominees are patriotic Americans, many of whom are selflessly leaving behind their private business careers to serve their country," the memo said.