Okay, Democrats. You can sit around complaining about pollsters and the electoral college and blue-collar voters who’ve been duped into voting against their own economic interests. You can sit back for two years and let Trump and the Tea Party play out their fantasies and let the world see how badly that turns out. Or you can turn lemons into lemonade by moving quickly to give Trump the chance to do the one thing he loves most: make a deal.
The deal I have in mind takes a page from both Jack Kemp and President Obama as well as Trump’s own agenda — corporate tax breaks in exchange for job creation and infrastructure investment. It might unfold this way:
The president appoints as Secretary of Commerce a seasoned financial and corporate dealmaker and orders him to begin negotiations with American corporations to bring back manufacturing jobs, or create new ones, in designated “empowerment zones” — regions suffering from high unemployment, declining population and property values, low levels of educational achievement and high levels of drug use and other social dysfunction. For every net new job created, there would be a $15,000 annual tax credit in each of the next five years. But that credit could only be applied against taxes owed for foreign profits repatriated to the United States at the lower 15 percent tax level originally proposed by Trump and pushed through the new Congress with strong Democratic support. Only companies that sign such deals would be eligible for the reduced 15 percent tax rate on past profits. Companies that do not sign deals would still qualify for the 15 percent rate, but only for future profits.
It’s unclear how much of the $2.4 trillion in unrepatriated corporate profits would be brought home and taxed under such a regime. But let’s assume, conservatively, that it’s $1 trillion, which before the credits would yield $150 billion in revenue. Let’s also assume that, with the government paying for roughly one third the wages of the newly hired workers, companies commit to creating one million new jobs, earning them tax credits worth $75 billion against their collective $150 billion tax bill.
Even after the job credits, the government would be left with a $75 billion windfall in corporate tax revenue. Under the Democratic proposal, that money would be earmarked as the initial equity in a new infrastructure bank that could borrow an additional $225 billion and finance a total of $300 billion to build or modernize airports, rail lines, train stations, bridges and toll roads — any project capable of generating fees to pay interest on the borrowed money.
Why would Trump agree to such a proposal? For starters, it could allow him to show immediately and concretely that he had created jobs, lowered corporate tax rates and broke through the Washington gridlock in a genuinely bipartisan fashion. And just imagine the Trumpian theater he could create:
The new president appoints as Commerce Secretary a longtime Democrat who can be trusted not to give away the store to those job-exporting corporate executives who Trump had so frequently criticized during the campaign. With great fanfare, the new secretary sets up a new high-tech war room in the Commerce Department and one by one calls in the chief executives of every major corporation with significant profits “stranded” overseas. The names of the companies that strike deals would added to a list on big electronic scoreboard on the wall of the war room — and on the department’s web site — right next to a giant map indicating where all the new jobs are to be created. The names of companies that refuse would be put on another equally prominent list, along with the amount of their stranded profits.
Why would Democrats want to propose something that would give Trump an early success? Because it would allow them to co-opt the proposal to cut corporate taxes that would almost certainly emerge from the Republican Congress, one which would give the corporations even more tax benefits without any guarantees of job creation. That’s exactly what happened, by the way, the last time the government offered a tax holiday for repatriation of overseas profits.
In fact, there’s little downside for Democrats presenting Trump with such a proposal on the table now, even before he takes office. If he takes up their offer, Democrats can take some credit for helping blue-collar voters while making themselves immediately relevant in a Washington where they are about to control no branch of government. And if he declines — or if Republicans in Congress try to block him for striking such a deal — then this becomes Exhibit A in a Democratic campaign to expose Trump and his party as corporate shills rather than populist champions for displaced manufacturing workers and their communities.
It would be a mistake for Democrats to read into Trump’s surprising victory this week a validation of the strategy of obstructionism the Republicans pursued during the Obama years that they might now adopt themselves. In reality, Trump was the “pox on all your houses” candidate, one who not only handily dispatched the Tea Party and establishment candidates in the Republican primary but also beat the establishment Democratic candidate in the general election. The best strategy for Democrats over the next year is to try to tease out the inner Democrat and deal-maker in Trump while getting him to see the selfish political advantage in creating some distance between himself and the hard-liners of the Republican right who will never agree to bipartisan compromise and will never be satisfied.
Pearlstein is a Post business and economics writer and Robinson Professor of Public Affairs at the Schar School of George Mason University.