With President Trump overseas, White House budget director Mick Mulvaney previewed Trump's first full budget proposal on Monday. The $4.1 trillion plan won't be released until Tuesday, but Mulvaney outlined the steep cuts to Medicaid, the Children's Health Insurance Program, social services for the low-income and disabled, most federal agencies, farm subsidies, federal pension benefits, college loans, highway funds, medical research, and foreign aid, paired with billions more for the Pentagon, Veterans Affairs Department, and Homeland Security. The proposal also includes $19 billion in new spending to help states provide six weeks of paid leave for new mother and fathers, a priority for Ivanka Trump.
The proposal foresees a balanced budget in 10 years, but that relies on growth of at least 3 percent a year, widely seen as exceedingly optimistic, plus Congress passing the American Health Care Act along lines laid out in the House Republican version. Using more conventional projections, it leaves a gaping hole in the budget. The blueprint does not cut Medicare or the main part of Social Security — though the Social Security Disability Insurance (SSDI) program goes under the knife — because Trump promised not to, Mulvaney said, adding that SSDI doesn't count under the promise because for voters, "it's old age retirement that they think of when they think of Social Security," not disability benefits.
For Trump's budget plan to become reality, Congress would have to sign on. That is seen as unlikely, though Congress will probably have to take Trump's priorities into consideration. Senate Minority Leader Chuck Schumer (D-N.Y.) has already panned the proposal, calling it "a budget that takes a meat cleaver to the middle class by gutting the programs that help them the most." Sen. John Cornyn (R-Texas) said the $866 billion in Medicaid cuts are probably DOA in the Senate. "I just think it's the prerogative of Congress to make those decisions in consultation with the president," he said. "But almost every president's budget proposal that I know of is basically dead on arrival."
Mulvaney will start trying to sell the plan to the House and Senate budget committees on Wednesday and Thursday, and he told reporters he doesn't expect Congress to enact his wish list unchanged. "If Congress has a different way to get to that endpoint, God bless them," he said. Still, "it would be nice to minimize the daylight between us and them on these things." Peter Weber
President-elect Donald Trump got into a high-profile Twitter spat on Wednesday with Chuck Jones, the president of the United Steelworkers local that represents the union workers at the Carrier furnace plant where Trump intervened to save jobs. Jones had criticized Trump for claiming 1,100 jobs would be kept in Indiana instead of the roughly 800 jobs that actually won't be sent to Mexico. It turns out, even those 800 jobs won't all stay in Indianapolis for long, according to the CEO of Carrier's parent company, United Technologies, and the reason is the other part of the Trump-brokered deal.
"We're going to make a $16 million investment in that factory in Indianapolis to automate, to drive the cost down so that we can continue to be competitive," United Technologies CEO Greg Hayes told CNBC's Jim Cramer this week. "Now, is it as cheap as moving to Mexico with lower-cost labor? No. But we will make that plant competitive just because we'll make the capital investments there. But what that ultimately means is there will be fewer jobs." You can watch the relevant part of the interview starting at about the 12:50 mark:
United Technologies isn't alone in building robots to replace manual labor. U.S. factories are actually producing more goods today than in the post-World War II boom — domestic factory output has risen 150 percent in the past 40 years, according to Federal Reserve data — but U.S. manufacturing jobs have contracted by more than 30 percent in the same period, thanks largely to automation, CNNMoney notes, arguing that "automation is the only way that a plant in Indiana that pays about $20 an hour can compete with Mexican plants where workers earn $3 an hour."
"You can't just blame cheap labor" in Mexico and other countries, LNS research analyst Dan Miklovic tells CNNMoney. "Certainly many of the jobs that we've lost, especially in more sophisticated industries, it's not so much that they've been offshored, but it has been automation that replaced them. We use a lot more robots to build cars." Peter Weber
On Thursday, President-elect Donald Trump visited Carrier Corp. in Indiana and claimed victory for a deal that, according to The Wall Street Journal, will result in 800 factory jobs staying in Indianapolis that had been slated to go to Mexico. Carrier still plans to move 600 jobs from that plant to Mexico, plus 700 more from a factory in nearby Huntington owned by Carrier's parent company, United Technologies. In return, Indiana will give United Technologies $7 million in tax breaks and other financial incentives over 10 years, and Carrier will invest some $16 million in Indiana. Carrier said Wednesday the "incentives" were "an important consideration" in its decision.
The deal was hammered out by Indiana Gov. Mike Pence, the vice president-elect, who seemed as surprised as Trump that Carrier agreed to reverse itself on outsourcing the jobs. Not everyone thinks $7 million in tax breaks is a good trade for 800 jobs, especially since 1,300 United Technologies jobs are still leaving for Mexico (Carrier also gets credit in the deal for keeping 300 white collar jobs in Indiana that were not leaving). And the criticism comes from both the right and left.
Trump's "Carrier shakedown is a short-term political victory that will hurt workers and the economy if it becomes the norm for the next four years," says The Wall Street Journal in an editorial. Along with his Ford bullying, "Trump has now muscled his way into at least two corporate decisions about where and how to do business. But who would you rather have making a decision about where to make furnaces or cars? A company whose profitability depends on making good decisions, or a branding executive turned politician who wants to claim political credit?"
Sen. Bernie Sanders (I-Vt.) would pick the president, and in a Washington Post op-ed, he took issue with Trump's tactics, not his meddling. Trump has promised to threaten businesses who outsource jobs with a 35 percent tariff — The Wall Street Journal finds this horrifying — but "instead of a damn tax, the company will be rewarded with a damn tax cut," Sanders wrote. "Wow! How's that for standing up to corporate greed? How's that for punishing corporations that shut down in the United States and move abroad? In essence, United Technologies took Trump hostage and won. And that should send a shock wave of fear through all workers across the country." You can hear more of Sanders' critique in the MSNBC interview below. Peter Weber