It’s been quite a week. It began with Mitt Romney declaring, “I’m not concerned about the very poor. We have a safety net there.” It ended with Caterpillar shutting down its locomotive plant in London, Ontario and moving operations to Indiana — two days after Governor Mitch Daniels signed legislation making Indiana a right to work state.

It’s not that Caterpillar is in trouble. Last year the corporation made $4.9 billion — an increase of 83% over last year. Caterpillar bought the plant from General Motors in 2010. In 2008, Prime Minister Stephen Harper gave the plant $5 million in federal tax breaks on the theory that such largesse created jobs. On January 1st, Cat locked out its workers and issued an ultimatum — accept a 50% pay cut or we’ll shut down operations. All that was needed was Governor Daniels cooperation.

Mr. Romney claims that America needs the same medicine. The problem is that, while taxes would be cut for the wealthy, they would rise on those who make much less money. As Paul Krugman pointed out yesterday:

According to the nonpartisan Tax Policy Center, Mr. Romney’s tax plan would actually raise taxes on many lower-income Americans, while sharply cutting taxes at the top end. More than 80 percent of the tax cuts would go to people making more than $200,000 a year, almost half to those making more than $1 million a year, with the average member of the million-plus club getting a $145,000 tax break.

So where is that safety net? And what about Romney’s claim that — because of a huge, unwieldy bureaucracy — “very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them?”

Krugman takes on that argument, too. Once again, what Romney says is simply not true:

This claim, like much of what Mr. Romney says, was completely false: U.S. poverty programs have nothing like as much bureaucracy and overhead as, say, private health insurance companies. As the Center on Budget and Policy Priorities has documented, between 90 percent and 99 percent of the dollars allocated to safety-net programs do, in fact, reach the beneficiaries.

Romney says that the safety net doesn’t work. Harper says that corporate tax cuts create jobs. Have we clued in yet? We’ve been played for chumps.

OWEN GRAY
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The_Ohioan
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The_Ohioan
4 years 7 months ago

Not yet. When they control the internet so viable protests are no longer possible, then we will be chump change.

dduck
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dduck
4 years 7 months ago

“This claim, like much of what Mr. Romney says, was completely false:’

Gee, “like much”, what percent would that be?

My liemeter says Krugman does it sometimes (see, I can be fair) after all got to get that column cooking.

RP
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RP
4 years 7 months ago
One has to wonder what the benefit was to bring the business back to the US. There is a comment from a former employee that he paid over 25,000 in federal taxes last year. Not sure what the tax rate is in Canada, but I would imagine that it is about the same as the US, so that means this person probably made close to 100K. If that is so and this is indicative of the wages paid at the plant, one can understand why they closed down and moved to the US. With benefits, this is closer to $130,000.… Read more »
dduck
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dduck
4 years 7 months ago

I’m not sure, but I think taxes are higher. I once paid a tax when I bought a postage stamp there, totaling about 57cents.

zephyr
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zephyr
4 years 7 months ago

My crap detector went to hell during the GWB years (failure due to overload), so I’ve been functioning on instinct alone – which has been incredibly easy. Yes, we’ve been played for chumps. Get down on your knees and hail the gods of greed and exploitation! (oh wait, you’re already on your knees… you just may not know it yet)

Quelcrist Falconer
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Quelcrist Falconer
4 years 7 months ago

One has to wonder what the benefit was to bring the business back to the US.

July 24, 2011
Indiana State officials and Muncie city officials, agree to provide Caterpillar with incentives that could reach about $28 million, as it refurbishes and re-opens a former Westinghouse plant that had been mothballed for more than a decade. The incentives include tax credits, infrastructure improvements and worker-training funds.

bushwah
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bushwah
4 years 7 months ago
Excuse me, RP, but what in the hell are you talking about?? “Bring the jobs back to America” — “bring the business back to the US” — do you imagine that all our jobs are belong to you?? This was a CANADIAN business; these were CANADIAN jobs. What do you mean, “back to” the United States? A filthy slobbering USAmerican corporation bought a Canadian company, got Canadian tax breaks to do it (note that this did NOT involve stealing anyone else’s jobs) — and then closed the company, stripping all the physical plant and intellectual property that Canadian workers and… Read more »
zephyr
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zephyr
4 years 7 months ago

Bushwah, thanks for the Canadian perspective – and for the link:

http://www.thestar.com/news/article/1126357

“they will treat the ancillary human resources as an expendable asset to be stripped away, bargained down or locked out”

Bingo. Like I said, greed and exploitation. That sort of sociopathy crosses borders allright. People need to start waking up.

rudi
Guest
rudi
4 years 7 months ago

This link shows that Cat bought the plant in 2010. Cat management are thugs.
http://www.marketwatch.com/story/canadian-taxpayers-left-holding-the-bag-in-london-plant-shutdown-2012-02-03
http://www.montrealgazette.com/business/Caterpillar+engaged+faith+bargaining+Ontario+premier/6080797/story.html
Maybe Walmart will convert the facility to a store and double the jobs at a quarter of the wages.

EEllis
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EEllis
4 years 7 months ago
Just a couple of comments. One the reference to Cats earnings. Who cares? Progress Rail is the company who balance counts. Because Cat makes money elsewhere doesn’t mean they should take a hit for Canada, or for the US or anyone else. They are a for profit company not a charity or arm of the Govt. Really when you look at it Progress Rail’s profits don’t really matter it should be if that factory, owned by Electro-Motive Diesel, makes money but since that isn’t touched I have to wonder. By the way none of these companies are Canadian. Electro-Motive Diesel… Read more »
EEllis
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EEllis
4 years 7 months ago

A filthy slobbering USAmerican corporation bought a Canadian company, got Canadian tax breaks to do it

As a point of fact it was not Canadian owned even before it was bought and the tax breaks came before the recent purchase

zephyr
Guest
zephyr
4 years 7 months ago
With regard to skilled workers, when adjusted for inflation new hires are making considerably less than I did working in a factory in the 70’s and machine shops in the early 80’s. Of course they’re just glad if they have a job. Meanwhile salaries at the top keep going up up up. This is an old story in the new century. And all those workers making minimum wage flipping burgers, stocking shelves at your favorite hypermarket, keeping the buildings clean – and generally making your life more convenient? They’re making the equivalent of 3 dollars an hour in 1980 money.… Read more »
bushwah
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bushwah
4 years 7 months ago
EEllis, do forgive my lack of clarity. The company was located in Canada, operated in Canada, employed Canadians and produced goods in Canada. The nationality of the owner corporation is not the issue there — any more than it is the issue in what has just happened. That is, the nationality of the owner corporation does not call for, or justify, the closing of the plant in Canada. That is what I was responding to: the bizarre suggestion that because a particular USAmerican corporation bought a going concern in another country, closing that operation and moving all of its assets… Read more »
rudi
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rudi
4 years 7 months ago

The plant was only in Canada for two years. The Canadians gave Cat tax breaks to open the plant. They closed up and moved on to a better deal.
http://www.thestar.com/business/article/1126643–olive-capitalism-s-ugly-face-in-london-ont

Yes, that is the plan revealed Friday by U.S.-based Caterpillar Inc., owner of London’s 90-year-old Electro-Motive Diesel Inc. (EMD). Caterpillar has abruptly shut down the firm just 18 months after buying it. Cat is poised to ship EMD’s specialized equipment and technology — intellectual property developed in London over several generations — to low-wage jurisdictions outside Canada.

EEllis
Guest
EEllis
4 years 7 months ago
The nationality of the owner corporation is not the issue there — any more than it is the issue in what has just happened Maybe not by you but with comments like “A filthy slobbering USAmerican corporation bought a Canadian company” it sounds like you are making it an issue. The tax breaks it had received prior to the purchase had an effect on the value of the company at the time of the purchase; the vendor sold the breaks paid for by other Canadian taxpayers and pocketed that value, thus ripping off Canadians Oh yes that was what 5… Read more »
EEllis
Guest
EEllis
4 years 7 months ago
I also have to say that the world changes and people need to open their eyes and try and see clearly what is going on. Lower skill manufacturing jobs peaked long ago and are never going to pay like they used to. I used to be a projectionist. While not the best pay at one time you would make pretty good money doing a complex job. Now they barely pay min wage and they are right to do so. Why? Because the job has gotten so easy with newer equipment and automation that any high school kid can do the… Read more »
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