The global reaction to two landmark new reports suggests the world could well lose that confrontation.
If the spinmeisters in the Donald Trump White House had any marketing nerve — and a mischievous sense of irony — they’d frame the new Trump tax package as a long-overdue move to protect the health and safety of America’s workers.
That’s not, of course, how Trump’s folks are billing the tax plan the White House released last week. Trump’s top economic aide, former Goldman Sachs president Gary Cohn, is calling the Trump package the most significant tax reform legislation “since 1986.” Treasury Secretary Steven Mnuchin, a former hedge fund manager, is hailing the Trump plan as “the biggest tax cut” in American history.
Critics of the Trump plan, meanwhile, are labeling the package a “plutocrat’s dream” chock full of enormous giveaways to America’s super rich and the corporations they run.
The first of these proposed giveaways: a whopping cut in the corporate tax rate, from 35 to 15 percent. The White House wants that same 15 percent rate applied to the income of “pass-through” companies, the partnerships and other businesses that “pass through” their profits to their principals. Taxes on these passed-through earnings currently face individual income tax rates that can go as high as 39.6 percent.
To top off this sundae of luscious giveaway goodies, the White House is asking Congress to let CEOs bring home the billions in untaxed profits they’ve parked overseas at just a 10 percent tax rate.
What could all these lavish tax breaks for corporate titans possibly have to do with protecting the health and safety of American workers?
In real life, nothing at all. But good spinmeisters don’t ever let reality get in their way. They just spin out of that reality whatever tale makes their patrons look good. And Donald Trump desperately wants to look good to the American workers he claims to champion.
So let the spinning begin. Trump’s people could start their mischief by pointing to alarming new research that appears in the Journal of Accounting and Economics. The two business management analysts behind this research, Judson Caskey of UCLA and N. Bugra Ozel of the University of Texas at Dallas, took a long hard look at how corporate CEOs react when they get anxious about meeting Wall Street’s expectations.
CEOs have good reason to worry about what Wall Street thinks. If high-finance movers and shakers feel a corporation isn’t “performing” as well as expected — not reporting enough earnings – they’ll start selling off that company’s shares. That sell-off will sink the company share price and, in the process, put a big hurt on the personal compensation the company’s CEO stands to collect.
How far will CEOs go to avoid disappointing Wall Street? Researchers Caskey and Ozel set out to see. They combed through years of data to determine whether corporate chiefs would put the health and safety of their workers in jeopardy to keep Wall Street happy.
Executives, turns out, most definitely would. To meet the profit targets Wall Street expects them to meet, one analysis of the Caskey-Ozel research notes, corporate execs “will try to lower costs by increasing employees’ workload and cutting back on safety-related expenditures.”
As a society, Caskey and Ozel point out, we’d like to assume that corporate managers would never “sacrifice people’s health” to meet their performance targets. But their data show that the stretching that execs undertake to meet those targets leads to “a 10 to 15 percent increase in employee injuries.”
What could on-the-ball Trump spin kings do with research like this? The Trump tax plan, they could proudly acknowledge, will add countless millions to corporate bottom lines, so many millions that corporate CEOs won’t have to worry anymore about meeting Wall Street’s expectations. If Congress adopts the Trump corporate tax cuts, the spinners could shamelessly pronounce, CEOs would no longer feel pressured to cut back on worker safety.
Caskey and Ozel, for their part, have their own remedy for countering the pressure to jeopardize worker safety — and that remedy has nothing whatsoever to do with cutting corporate taxes.
“Our evidence,” the researchers note, “suggests that unions mitigate the extent to which pressure to meet earnings expectations translates into reduced safety.”
A Trump administration that actually cared about worker safety, in other words, would do everything possible to increase the union presence in America’s workplaces.
In real life, the Trump White House is moving in the exact opposite direction. The President, Politico reports, will soon nominate for the National Labor Relations Board — the federal agency that oversees the nation’s labor relations — a fiercely anti-union attorney.
Institute for Policy Studies associate fellow Sam Pizzigati co-edits Inequality.org. His most recent book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900–1970. Follow him on Twitter @Too_Much_Online.