For someone who’s pledging to cut corporate taxes, reduce federal regulations and improve the business climate, President Donald Trump isn’t making things easy for CEOs.
He wants Detroit’s automakers to create more American jobs by building more cars and trucks in the United States. He wants drug companies to manufacture more here. He wants defense contractors to cut prices. His immigration policies threaten to squeeze business between public perception, their customers and the need to recruit talent globally.
Put another way: America’s new negotiator-in-chief is promising to deliver the dramatically improved business environment this country’s CEOs say they want. In return, he’s effectively telling them how to run their business and to keep any criticism to themselves. Or else.
Trump’s not making things easy for state government, either. His temporary immigration ban is raising tensions in a state with one of the nation’s largest Arab populations. And he’s conjuring a new form of interstate competition for jobs and investment that could leave the likes of Michigan — with its official skepticism of economic development incentives — on the outside looking in.
“You have 50 wonderful governors to negotiate with,” Trump said recently, urging companies to invest inside the United States or pay a steep price. “So it’s not like we’re taking away competition.”
No, he may be increasing it, so long as his rhetoric about encouraging reinvestment in the American worker gains traction and becomes reality. That could pose some meaningful challenges for Michigan, where the Republican-controlled House remains cool to efforts to turbocharge the state’s moribund development incentives.
House Republicans should rethink their ideological rigor. Because the president whose road to the White House runs through the industrial Midwest is betting his tenure on a jobs bonanza sure to produce winners and losers. And the states that don’t have the tools to play will be losers.
Can you say opportunity, Michigan? The hangover of the Granholm-era tax credits for Detroit’s automakers scandalized the Legislature, particularly a Republican majority that collectively thought it detected a strong whiff of crony capitalism.
Not if you consider the prospect of total collapse as auto suppliers failed and two of Detroit’s three automakers sought protection in the federal bankruptcy code. But memories are short, making the sheer size of the credits in subsequent years reason enough to jettison many of the tools the state could use to play the game envisioned by the new president.
“He is going to unleash, no question, a flurry to bring jobs back to the U.S.,” says Doug Rothwell, CEO of Business Leaders for Michigan. Trump’s focus on re-energizing American manufacturing “should create a greater urgency to act. Our toolbox is not as competitive as the states around us. We let ideology stand in the way of bringing good jobs in.”
The question Michigan lawmakers need to ask is simple: just how well-equipped is the state to compete for the jobs and investment Trump is likely to wring from CEOs who either see the wisdom in doing so, wish to avoid the presidential backlash or both?
The answer: not as competitive as it could be. That should be a major concern for policymakers in Lansing because the cornerstones of corporate Michigan — Detroit’s automakers, Benton Harbor’s Whirlpool Corp. and Midland’s Dow Chemical Co. — already are inside the Trump White House’s business orbit.
This is a game Michigan needs to prepare to play. Following a failed effort to get a development incentive package approved during December’s lame-duck session, Business Leaders for Michigan once again is pushing its “Good Jobs for Michigan” legislation.
Ostensibly backed by Gov. Rick Snyder and state Senate leadership, the bills would reward businesses for creating jobs. A company that creates 500 or more jobs that pay the average wage in a region would be allowed, for up to five years, to capture half of the income taxes generated by those new jobs.
A company that agrees to pay 125 percent of the average wage and creates at least 250 jobs would be allowed to capture 100 percent of the income taxes generated by those jobs for up to 10 years — all of it revenue that otherwise would not be created.
“It’s about rewarding good job creation,” says Rothwell, also chair of the Michigan Economic Development Corp.’s executive committee. “There are no restrictions in terms of the industry. There are no restrictions on geography. Today we could not compete for those projects. We just don’t have the tools to do it.”
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.