Trump's Choice of Pence Reaches Out to Donor Class, Undermines Trade Criticism

By ROGER BYBEE

With Indiana Gov. Mike Pence’s impeccable credentials, among Republicans, on both “free-trade” and religious fundamentalism, coupled with powerful ties to the Republican donor class, Donald Trump potentially has the opportunity to restore bridges to the GOP establishment that he has torched during his successful fight for the Republican presidential nomination.

A New York Times editorial correctly noted, “Mr. Trump’s choice of Mr. Pence is a gesture to Republicans whose money he needs to win, and a move to pacify conservatives.” Pence has indeed been a money magnet for wealthy corporate donors, like the Club for Growth and the billionaire Koch brothers (David Koch has been Pence’s third largest donor over his political career). While Trump’s blend of populist anti-globalism and unvarnished hostility to immigrants — reminiscent of authoritarian right-wing movements now growing in Europe — has perhaps permanently driven away some big givers, other members of the donor class have been relieved by the addition of Pence to the ticket.

The Times’ Nicholas Confessore reports, “for Mr. Trump, who has only recently begun to build a modern presidential fund-raising apparatus, the choice of Mr. Pence could yet yield financial dividends. Mr. Pence has his own relationships to donors aligned with the Kochs, along with many other big givers who have until now been reluctant to get behind Mr. Trump or contribute to pro-Trump groups.”

Matt Schlapp, a former Koch Industries official who now heads the American Conservative Union, called Pence a “tonic” countering anxieties about the depth of Trump’s commitment to conservative economic policies. “He’s a well-known conservative political leader who has worked in Congress and Indiana,” according to Schlepp. “I think donors will see this as an indication of the type of decisions Donald Trump is going to make about who he is going to surround himself with.”

Pence’s hard-line social conservatism—like his support for an ill-fated “religious freedom” law permitting firms to discriminate against gays and one of the nation’s most stringent anti-abortion laws that outlaws abortion even in the case of severe fetal disabilities — will also mobilize evangelical Christians not drawn to the thrice-married, often coarse Donald Trump. Also unlike Trump, Pence has never offended the neo-conservatives in the Republican establishment who championed the war against Iraq led by Bush and Cheney. Where Trump has directly blamed George W. Bush for the disastrous, unprovoked invasion, Pence has remained a steadfast hawk, in line with his vote for the war.

Until now, the Trump campaign has deeply unsettled many Republican constituencies as well as much of the nation’s corporate and Republican elites. He capitalized on a sudden revolt this year by working-class and small-business Republicans who swept aside established party leaders and their traditional economic agenda of “free trade,” tax cuts for the rich, and cuts to Social security and Medicare. Responding to the anger of economically precarious Republicans, Trump has radically departed from hallowed Republican economic doctrines, particularly with his attacks on US corporations relocating jobs to Mexico and China and on the “free trade” agreements which encourage them. He has coupled his indictment of US trade deals with a xenophobic “America First” mentality.

But Pence’s presence on the ticket may help to reassure CEOs and some on the Right that Trump’s attacks on the offshoring of jobs and “free trade” deals should not to be viewed as dire threats to corporate interests. After all, Trump is a candidate who insists that he will compel Mexico to build and pay for a wall on the US’s southern border. In this light, Trump’s rhetorical blasts against firms like Carrier Air Conditioning, Nabisco’s Oreo division, and Ford which are transplanting jobs from the US to Mexico can be seen much less seriously, Pence can suggest behind closed doors to potential Republican contributors.

CEOs and other big donors can safely judge Pence on his staunch, unwavering support for every free-trade agreement that came up during his years in Congress, and has backed the pending Trans-Pacific Partnership. “Pence backed trade agreements with Colombia, South Korea, Panama, Peru, Oman, Chile and Singapore during his House tenure from 2001 through 2012. He voted for the Central American Free Trade Agreement, or CAFTA,” notes James Tankersley of the Washington Post.

“He voted to keep the United States in the World Trade Organization and to maintain permanent normal trade relations with China, the country Trump repeatedly criticizes for unfair trade practices and threatens with tariffs to boost US job creation.

“Pence also has publicly supported the proposed Trans-Pacific Partnership agreement of Pacific Rim nations, an agreement negotiated by the Obama administration which Trump opposes.”

Pence’s bedrock pro-corporate “free trade” loyalties are thus firmly established, and will likely inspire some heretofore reluctant members of the donor class to step forward and contribute to the Republican ticket of Trump and Pence.

Further, Pence could potentially develop a compelling, if entirely deceitful, narrative on offshoring that is largely consistent with Trump’s but diverts anger away from corporations and their government allies to the familiar if mythical enemies of government over-taxation and over-regulation.

Pence adopted these arguments in Indiana this year when the state was rocked by the announcement that the state was going to suffer the loss of 2,100 jobs to Mexico. United Electronic Corporation announced that it was going to transfer the jobs from its 1,700 worker Carrier Air Conditioning plant in Indianapolis and a 400-worker plant in Huntington to Monterrey, Mexico.

Trump responded to UTEC’ plans for closing the plants in harsh terms: “When Carrier goes to Mexico and they want to sell their product across the border, we’re going to say ‘Sorry, folks,’” Trump told an Indianapolis rally. “We’re going to charge you a 35% tax.”

Pence took a very notably different approach that could presage a new response to the job offshoring issue by Republicans. Pence responded to the uproar about the loss of family-sustaining jobs by expressing “disappointment” about UTEC’s decision, and instead concentrating his fire on federal tax and regulatory policies which, he claimed, were responsible for the massive flight of jobs out of Indiana and the US. Pence has maintained that Indiana’s economy has been prospering in the wake of the anti-union “right-to-work” law signed in 2012 by his predecessor Mitch Daniels, but argued that the burdens of high federal corporate taxes and over-regulation continue to drive jobs from the US.

“While our administration continues to foster an environment within the state that is attracting record investment, federal regulations continue to stymie our national economy,” Pence declared in a written statement. “The fact that these companies are leaving the United States speaks broadly about the need for reform in our nation’s capital.”

Over the last several years, Republicans like Pence and the CEOs with whom they are closely allied have been incessantly claiming that the official US corporate tax rate of 35% is “the world’s highest.” Strangely, this line has been reinforced by -President Barack Obama, who has often made statements falsely asserting that “companies that are doing the right thing and choosing to stay here, [and] they get hit with one of the highest tax rates in the world. That doesn’t make sense.”

In reality, very few corporations pay the official “sticker price” of 35%. Actual federal corporate taxes on 288 profitable corporations — as distinguished from the official 35% rate almost all firms easily avoid — were actually only 19.4% in the 2008-2012 period, a 2014 Citizens for Tax Justice (CTJ) report revealed.

This placed the US 8th lowest among the advanced nations in the Organization for Economic Cooperation and Development (OECD), the CTJ found.

Federal corporate taxes are hardly a problem explaining the UTCE moves to Mexico as maintained by Pence in the case of UTEC’s 2,100 jobs destined to be shipped off to low-wage plants in Mexico, neither taxes nor regulations can plausibly explain UTEC’s decision. In reality, UTEC has enjoyed an extremely low tax rate. “Over the past 15 years, the company has enjoyed $38 billion in US pretax income and has paid a federal tax rate averaging just 10.3% during that period — which means that the company is consistently finding ways to shelter more than two-thirds of its US profits from federal taxes,” pointed out Matt Gardner, executive director of the Institute on Taxation on Economic Policy.

While contributing little to the US Treasury, UTEC was the seventh-largest beneficiary of federal contracts in 2014, receiving nearly $6 billion of federal contracts in that year alone.

But UTEC has not only short-changed the federal government on taxes, but also Indiana, “Even more troubling to Governor Pence should be the fact that last year, the company didn’t pay even a dime of state income taxes on its $2.7 billion in US profits,” stated Gardner.

Nor are regulations an issue, contrary to statements by Pence and UTEC officials US Congressman Joe Donnelly (D-Ind.) confronted Carrier executive Chris Nelson to cite the specific regulatory issue, and none was cited. Pence’s office also failed to respond to the Indianapolis Business Journal’s request for information on the alleged issue.

Donnelly suggested that the real motivation for UTEC’s shift to Mexico is the differential between the $23 per hour average wage in Indianapolis compared with the minimum wage of slightly over $4 in Mexico. “The only discrepancy so far is on the fact that the minimum wage in Mexico is $4.19 a day. It’s certainly not that they’re not making money and they’re not succeeding. What they’re trying to do is to sell heating and ventilation products to [Americans] but aren’t willing to pay those same wages to the people who build the products. “

But realities like these have never before stopped a corporate- Republican propaganda campaign, and despite his pious image, Mike Pence has shown that he is perfectly capable of shielding corporate power while concocting bogus explanations for massive job loss. 

So don’t be surprised if Pence helps to escalate the barrage of propaganda about the meaningless official 35% corporate tax rate and “over-regulation” as the “real” explanations for US corporations leaving for Mexico and elsewhere.

Such a campaign would seek to keep mobilizing alienated non-union workers and small businesspeople by cynically blaming “big government” without alienating the giant, highly profitable corporations which are seeking to maximize profits without regard to the human costs.

Roger Bybee is a Milwaukee-based labor studies instructor and longtime progressive activist and writer who edited the Racine Labor weekly for 14 years. Email winterbybee@gmail.com.

From The Progressive Populist, August 15, 2016

Populist.com