Thursday, June 21, 2018
Politics

Donald Trump's deal to create 50,000 jobs in America looks a lot different on day two

When President-elect Donald Trump on Tuesday announced that Japanese corporate giant SoftBank had agreed to invest $50 billion in the United States and create 50,000 new jobs, he presented it as a triumph for American workers. But economists and analysts who have been scrutinizing the announcement suggest it might be a bigger win for the Japanese telecom and Internet conglomerate, SoftBank, and its billionaire founder, Masayoshi Son.

Analysts said the Japanese telecom and Internet conglomerate could be angling for lucrative benefits, including the regulatory approval to carry out one of the largest telecom mergers in recent history, between Sprint, which SoftBank owns, and rival carrier T-Mobile. It could also be cultivating a friendly environment for further technology investments Son is seeking to make in the United States.

"I think Son must have thought how to use Trump and this opportunity" for his business, said Mana Nakazora, chief credit analyst at BNP Paribas Securities.

Shares of SoftBank Group Corp. rose 6.2 percent on the Tokyo Stock Exchange on Wednesday to close at their highest level in more than a year. Shares of Sprint Corp rose nearly 9 percent on Wednesday, while T-Mobile's stock climbed more than 4 percent. Collectively, the companies added billions of dollars in market value after the announcement.

Trump said on Twitter on Tuesday that Son said he would not have made the investment if Trump had not won the election.

But analysts said that the $50 billion investment would likely come from a $100 billion fund created by SoftBank and the Saudi government — Son said as much to the Wall Street Journal and that much of the fund might have been destined for the United States anyway.

SoftBank announced in October that it would dedicate at least $25 billion toward the $100 billion so-called SoftBank Vision Fund to invest in global technology companies in the next five years. Saudi Arabia's public investment fund pledged to invest up to $45 billion in the same time period, with the additional $30 billion coming from outside investors.

"Son must have intended as much as half of the Vision Fund to go to the U.S., as he's aware that there are great companies in Silicon Valley. But he chose this time to announce it as Trump is now going to be the next president," said Jun Tanabe, a SoftBank analyst at JP Morgan Securities in Tokyo.

"Mr. Son already created the $100 billion fund and chose to invest $50 billion into the U.S. I suspect he would have done this whether the winner was Trump or Hillary," Suzuki Kazuto, professor of international political economy at Hokkaido University, tweeted Wednesday.

A SoftBank spokesperson declined to comment whether the funds would be coming from the SoftBank Vision fund or give further information regarding the investment. Trump's spokesperson did not respond to requests for comment.

Analysts suggested it would be difficult to deploy $100 billion in investment in global technology without looking largely to the U.S. and Silicon Valley. In 2015, for example, venture capitalists invested $148 billion worldwide in 8,381 deals, according to consulting firm EY. The U.S. accounted for roughly half of that investment.

"In 2016 so far, about 60 percent of all venture capital in the world has gone to the U.S.," said Jeff Grabow, U.S. venture capital leader for EY. "The U.S. would be the first place anybody would look."

Analysts said Sun may be seeking to improve the chances of a merger between SoftBank's Sprint and T-Mobile, a deal that would create a mobile carrier larger than Verizon and almost as big as AT&T. Sprint and SoftBank abandoned an effort to purchase rival telecom carrier T-Mobile in 2014 — a deal valued at roughly $32 billion — after the Federal Communications Commission signaled the deal might violate antitrust laws.

Trump will be responsible for appointing the next chairman to the FCC. Speaking from the lobby of the Trump Tower on Tuesday, Son said that he wanted to celebrate Trump's election "because he would do a lot of deregulation."

"SoftBank's original plan may come true with the new FCC chairman," Naoshi Nema, analyst at Cantor Fitzgerald, said in a note.

Analysts also speculated the deal could be an effort to smooth the way for other investments in the U.S. in the future, and specifically ward off the suspicion that sometimes surrounds foreign investment.

"It's possible that the SoftBank Vision Fund, the money coming from overseas, will start investing in American companies one after another, so there's a risk that Trump might criticize the move," said Hideaki Tanaka, senior analyst at Mitsubishi UFJ Morgan Stanley Securities Co.

Instead, Son first paid his respects to Trump by showing that SoftBank would be investing in American start-ups and hiring locals, said Tanaka. "This could help SoftBank do its business in the U.S. more smoothly. It could give an impression that his company is friendly to the U.S."

In the last two months, Trump has taken an unusual new approach toward companies, negotiating with the air conditioner and furnace manufacturer Carrier to keep hundreds of jobs at an Indiana furnace factory from moving to Mexico, and singling out gear-maker Rexnord on Twitter for plans to offshore facilities. He has threatened American firms that outsource jobs with "retribution," and proposed a 35 percent tariff against U.S. firms that do so.

Some lawmakers and Trump allies have celebrated the deal with Carrier. Peter Wallison, former White House counsel under Ronald Reagan and a fellow at the American Enterprise Institute, said there isn't enough evidence yet to say that Trump will continue to single out companies. "We haven't yet seen a real policy that would suggest to me that is the way he is going to conduct his presidency."

But others have argued that Trump's actions represent the beginning of a policy of negotiating with companies on an individual basis, which in turn will create an incentive for companies to threaten to send jobs overseas in exchange for deals at home. Indiana agreed to $7 million tax subsidies to save the Carrier jobs.

In a Washington Post op-ed last week, former Democratic presidential candidate Bernie Sanders criticized Trump for delivering Carrier tax and regulatory favors in return for keeping jobs in the state, arguing that the practice could allow companies to hold Trump "hostage."

"He has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives. Even corporations that weren't thinking of offshoring jobs will most probably be re-evaluating their stance this morning," Sanders wrote.

Matthew Mitchell, a senior research fellow at the libertarian Mercatus Center, says it's unclear what direct benefits SoftBank may receive from the Trump administration, if anything. But he added that the president shouldn't be involved in the investment decisions of individual companies, because it risks making the U.S. government reliant on the support of companies to carry out its policies.

"I think we're getting into this world now where there's no longer a taboo about picking winners and losers. And to me, that's a big concern, because institutionally that's in some way what has set the U.S. apart from banana republics," he said.

Comments
Hotel renovator approved by council to restore New Port Richey’s Hacienda Hotel

Hotel renovator approved by council to restore New Port Richey’s Hacienda Hotel

NEW PORT RICHEY — A seasoned historic hotel renovator and operator is going to take a crack at getting New Port Richey’s city-owned Hacienda Hotel back into action. New Port Richey City Council members, acting as the Community Redevelopment Agency, u...
Published: 06/20/18
Pope Francis criticizes Trump’s family-separation policy on migrants, says ‘populism is not the solution’

Pope Francis criticizes Trump’s family-separation policy on migrants, says ‘populism is not the solution’

VATICAN CITY - Pope Francis stepped into a growing controversy over President Donald Trump’s immigration policies, criticizing the separation of migrant families at the U.S.-Mexican border and saying that "populism" and "creating psychosis" are not t...
Published: 06/20/18
Raburn out in State House 57 race. Now who’s in?

Raburn out in State House 57 race. Now who’s in?

Well, that didn’t last long.U.S. Army veteran Michael Sean McCoy filed to run as the Republican candidate in the State House, District 57 race just hours after incumbent State Rep. Jake Raburn, R-Lithia, announced he was stepping down.McCoy, who live...
Updated: 7 hours ago
Romano: A Tampa Bay ‘superstar’ caught in the crosshairs of Trump’s border policy

Romano: A Tampa Bay ‘superstar’ caught in the crosshairs of Trump’s border policy

At this moment, she is Tampa Bay’s most influential export. A smart, accomplished and powerful attorney making life-altering decisions on an international stage.But what of tomorrow? And the day after?When the story of President Donald Trump’s border...
Published: 06/19/18
‘Don’t leave me, Mom’: Detainee tells of separation from son

‘Don’t leave me, Mom’: Detainee tells of separation from son

SEATTLE — The call came at mealtime — an anonymous threat demanding $5,000 or her son’s life. So Blanca Orantes-Lopez, her 8-year-old boy and his father packed up and left the Pacific surfing town of Puerto La Libertad in El Salvador and headed for t...
Published: 06/19/18
Trump defiant as border crisis escalates, prepares to lobby House GOP on immigration bills

Trump defiant as border crisis escalates, prepares to lobby House GOP on immigration bills

WASHINGTON - As he prepared to visit Capitol Hill, President Donald Trump on Tuesday continued to insist that Congress produce comprehensive immigration legislation, while anxious Republicans explored a narrower fix to the administration policy of se...
Published: 06/19/18
Trump, GOP to huddle as outrage builds over border policy

Trump, GOP to huddle as outrage builds over border policy

WASHINGTON (AP) — Calls are mounting on Capitol Hill for the Trump administration to end the separation of families at the southern border ahead of a visit from President Donald Trump to discuss legislation.Trump’s meeting late Tuesday afternoon with...
Published: 06/19/18
Another detention center for immigrant children planned for Houston

Another detention center for immigrant children planned for Houston

Another facility intended for detaining undocumented children is reportedly in the works for Houston as the number of children separated from their parents at the border continues to swell.Southwest Key Programs, the same contractor that operates the...
Published: 06/19/18
Muralist working with huge St. Pete ‘canvas’ to create neighborhood eye-grabber

Muralist working with huge St. Pete ‘canvas’ to create neighborhood eye-grabber

ST. PETERSBURG — They appear to rise out of nowhere — two enormous, reclaimed-water tanks with an artist’s white clouds scudding across a blue background.A closer view reveals silhouettes of a lone coyote howling at the sky, mangrove islands, oak, cy...
Published: 06/19/18
FBI agent removed from Russia probe for anti-Trump texts says he’s willing to testify before Congress

FBI agent removed from Russia probe for anti-Trump texts says he’s willing to testify before Congress

The FBI agent who was removed from the investigation into Russian interference in the 2016 election for sending anti-Trump texts intends to testify before the House Judiciary Committee and any other congressional committee that asks, his attorney sai...
Published: 06/17/18