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Trump is taking his long history of stiffing contractors to a whole new level

(Source: qz.com)

It was a moment of crackling intensity in the first 2016 presidential debate. About 40 minutes in, Hillary Clinton hit Donald Trump with an ugly accusation: “I’ve met dishwashers, painters, architects, glass installers, marble installers, drapery installers… who you refused to pay when they finished the work that you asked them to do.” Trump ducked the charge. Clinton redoubled. He ducked again.

And that was it. Trump won the presidency without ever addressing the well-documented pattern of accusations that he shortchanged hundreds of contractors who worked for his companies (paywall).

And now, as president, Trump seems to be at it again.

Thanks to the federal shutdown he championed, untold numbers of government contractors are going unpaid, reports the New York Times (paywall). Unlike federal employees, contractors working on an hourly basis have little hope for being reimbursed for lost wages once the government reopens. And many small businesses are left unable to receive payments for work completed as far back as October. Some have begun laying off workers.

The federal shutdown began on Dec. 22, when the government ran out of money after Trump reversed his plan to sign a spending bill, refusing to ink any spending bill that neglected to fund a wall on the US-Mexico border (a project that despite its dubious utility, somehow morphed from Trump’s signature campaign rally chant into a symbol of his loyalty to his voter base). Remarkably, the current one was the third shutdown in 2018, a sign of deepening antagonism between the Trump administration and Congressional Democrats. As of today, it is also the longest on record. And with the president so publicly committed to his wall ultimatum—and Democratic leaders refusing to renew an earlier offer of border security funding—it could get a good deal longer.

Exactly how many contractors’ livelihoods hang in the balance is unclear; the government publishes no official data on contractor and grantee numbers. However, Paul Light, a scholar of federal workers at New York University, tallies around 4.1 million federal contractors or grant recipients, according to the Times (though not all have been hurt by the shutdown). That compares with around 350,000 federal employees forced to stay home.

Contract workers range from storm-tracking radar operators to environmental researchers, though the majority are in the service sector—cafeteria workers, janitors, health aides. Many are employed through small businesses with government contracts. As the Times reports, some firms have yet to be paid for work finished in October.

With no clear end in sight, contractors find themselves torn between waiting out the standoff and finding new work. Other companies—like this e-learning firm that created apps for diplomats—have simply folded, unable to pay their workers.

Trump’s shoring up his 2020 reelection chances seems to be the only logical reason for subjecting millions of Americans to such economic trauma. (Recall that Trump had agreed to sign the spending bill, but flip-flopped after conservative media and supporters upbraided him for eschewing the wall.)

But unlike stiffing painters and dishwashers in his real estate mogul days, the president’s “hardball tactics” come with risks of much bigger, longer-term consequences. Each week of the shutdown costs the US $1.2 billion, according to Trump’s own chief economist, not counting lost productivity from workers stuck at home. That’s not helpful at a time when the American economy is already slowing. The shutdown also ups the risk of a downgrade on US government debt, which would raise its borrowing costs. And if this scarring episode deters small businesses from bidding for government work in the future, it could hurt government effectiveness (and cost taxpayers more to boot).

Or as Clinton put it in that debate years ago, “sometimes what happened in business would be really bad for government.”

More Info: qz.com

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