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Institute for Policy Studies

Blogging Our Grand Divide

A ‘String Theory’ for the Trump Era

Corporate CEOs are cheering a new White House executive order that lets them keep cheating on the taxpayer dime. But taxpayers may well be wising up.

No strings attached.

Con men love this simple phrasing. They use it all the time. They make an offer too good to be true, then assure their targeted victims that if they accept the offer and turn out not to like it, they can always walk away. No strings.

President Trump announces his signing of legislation that lets corporations that violate federal labor laws continue to obtain federal contracts.

Corporate executives who vie for lucrative federal government contracts love “no strings,” too. In fact, they’ve taken the “no strings” mantra to an entire new level. They’ve weaponized the concept: First they cheat, then they invoke “no strings” as an excuse to keep cheating.

Earlier this week, President Donald Trump signed legislation that turns this corporate two-step into the law of the land. Under the bill Trump inked Monday, corporate execs can violate federal worker-protection laws on wages, hours, and safety and still qualify for federal contracts.

Back in 2014, President Obama had moved to help make sure that cheating corporations could not qualify for federal contracts. He signed into law an executive order that requires companies bidding for contracts to disclose their previous labor and safety law violations and lets federal agencies bar violators from receiving future government work.

This “Fair Pay and Safe Workplaces” executive order would have gone into final effect this past October. But corporate lobby groups found a judge to put the order temporarily on ice. The bill Trump has just signed makes that ice concrete. No future President can resurrect Obama’s executive order unless Congress first gives a green light.

America’s CEOs now have what they wanted. Obama’s executive order on contracting no longer endangers their basic business model. They can continue “cutting corners.” They can double-down on squeezing workers and sidestepping the statutes meant to protect them.

Today’s CEOs have elevated this corner cutting into somewhat of a corporate art form. But their business model can only work if government plays along. That’s because private corporations depend heavily on public tax dollars. Private-sector firms with federal contracts, a recent report from Senator Elizabeth Warren details, employ over one in five U.S. workers and annually collect about $500 billion in taxpayer dollars.

Today’s CEOs have elevated corner cutting into a corporate art form.

Local and state governments shell out hundreds of billions more in contracts with private business concerns. All these billions give, at least in theory, the public sector enormous potential power over how enterprises in the private sector behave.

And that’s what worries corporate executives. Their enormous pay packages — and their incredibly comfortable lives — rest on their “freedom” to fatten their corporate bottom lines by whatever means necessary. They don’t want any government “strings” on that freedom.

Other folks, unfortunately, end up paying quite a heavy price to keep Corporate America “free.”

In 2015 and 2016, for instance, four Goodyear Tire employees died in accidents at the company’s factory in Danville, Virginia. In October 2016, Virginia’s Occupational Safety and Health agency fined Goodyear over $1 million in penalties for both “willful” and “serious” safety violations.

Goodyear last year sported, despite these violations, $8.3 million in taxpayer-funded federal contracts.

Goodyear CEO Richard Kramer, meanwhile, personally pocketed paychecks worth $19.8 million in 2016, on top of the $73.5 million in compensation he collected the previous four years.

Now the prospect of losing $8.3 million a year in federal contracts might not be enough to make a big-time chief exec like Goodyear’s Kramer think twice about jeopardizing worker safety. But what if we tightened the strings? What if we went after the executive pay windfalls that give today’s CEOs an almost irresistible incentive to cut corners and cheat?

That string tightening has, in fact, already begun. Cities and states across the United States are moving to leverage the power of the public purse against excessive executive pay. From Rhode Island to California, elected officials are considering statutes that make getting government contracts and tax breaks harder for firms that pay their top execs far more than what they pay their workers.

These new strings make sense. They would also, if we gave them the chance, make our nation a whole lot more equal.

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