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USA: Another Trickle Down Tax Scam

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The Republicans needed a win. After almost a year in power, in both the legislative and the executive branches of government, all they had to show was a president with the lowest approval ratings ever, a massive and very public failure of their initial attempt at governing - the failure to repeal Obamacare, and public perception being driven by the “Outrage of the Week” from Donald Trump's twitter account. Not to mention an ongoing investigation by Robert Mueller into Russian interference in the American election of 2016 and the Republican collusion in that interference and a Senate candidate in the very Republican state of Alabama with a history of child abuse. So yes, the Republicans badly needed a win. And of course when the Republicans win, the rest of us lose.

Trickle Down Rises Again

So, in order to get this badly needed win, the Republican Party resurrected an old strategy dating from the 1980s, the dawn of neo-liberalism in power. They put together a “tax cut” proposal and attempted to sell it to the American people as a way to get the economy moving again. Surely, they reasoned, it worked during the boom times of the 1980s under the “patron saint” of trickle down economics, Ronald Reagan.

Of course, talking about tax cuts as a way to stimulate the economy in 2017 ignores the changes in the economy in the almost 40 years since Reagan was elected. It also ignores the fact that Reagan also raised taxes again after his first tax cuts, albeit by only half as much as the cuts. But, most importantly, what it ignores is the fact that the Reagan tax policy was instrumental in shifting the burden of taxation from the wealthy and the corporations onto the backs of the rest of us, the working class.

The next iteration of trickle-down came with the tax cuts proposed by George W. Bush which were made permanent for the most part by Democrat Barack Obama in 2010. These were again “sold” to the American people by means of the popular refrain of “getting the economy moving again”. Once again, the Bush tax cuts gave a minimum benefit for the rest of us while the wealthy made out like bandits.

The proof of the pudding, as they say, is in the eating. Every time tax cuts for the wealthy and corporations are sold as a panacea for increasing the pace of economic recovery, the best they do is provide a temporary upturn. The long term effect is shown in the massive wealth inequality we see today. Since Reagan, the tax burden has shifted to the rest of us and our reward for this is stagnant incomes for the working class and a wealth distribution rising to the top to levels not seen since the French Revolution and the Bourbon aristocracy. In short, trickle-down economics is no less of a scam now than it was when George Bush the Elder called it “voodoo economics” when he was running against Ronald Reagan in the 1980 primaries.

But objective economic facts do not change the meme. For Republicans and, quite frankly, most Democrats, tax cuts are good and a way to get the capitalist Masters of the Universe to spend some of those massive piles of money they've amassed on the rest of us. It sounds good in theory and plays well with many of the public, but the problem is that it just doesn't work out that way. At its most basic it doesn't work because it ignores the profit motive when it comes to reinvestment in the productive economy.

Trickle-down has never, and will never, work the way they say it will because it ignores the basic motivation of capitalism, the need not just for profit, but for more profit. More profit to counteract the falling profit rates. That is what underlies the destructive force of capitalism that led us to the historic crisis in 2008 and which the capitalists are still struggling to overcome. Their perspective for overcoming this crisis is to load the cost onto our shoulders. The tax plan is an important strategic step for the US bourgeoisie in doing exactly that; making the working class pay for their crisis.

The Republican Tax Plan(s)

Both the House of Representatives and the Senate have now passed tax cutting proposals. Since the laws passed by each body are different, the next step is a conference committee to resolve those differences. Although the differences are in some cases significant, it should be expected that a combined proposal will be written that keeps the common thread of both bills, the lowering of corporate tax rates by as much as 15%. The rest of the bill is just the gravy on top of the meat of this proposal. Even the significant differences will be ironed out because the Republicans badly need a win.

In a few years, this upwards redistribution will cause a financial crisis in the few popular programs that are left for us, namely and mostly Medicare and Social Security for the aged. It will also affect programs that allow the poor, working, and middle classes to be educated, buy homes, and ease the effects of negative life events that we all experience. The US will wind up either having to cut these popular programs or pay for them with deficit spending that will eventually devalue everything and lead to rampant inflation. Hence, it’s not surprising that Republicans, like Paul Ryan, are already articulating the need for cutting down social security and Medicare to help fight the rising financial deficit. A financial deficit that will increase $1.5 trillion due to the intended tax plan.

How Can We Stop It?

To stop this massive give away to the super-rich will require decisive action by the intended victims of this grand larceny. Organizing telephone trees to lobby congressmen and convincing them that the proposals will make them unpopular will get us nowhere. Firstly, most Democrats don't care and secondly, they are powerless to stop it. The Republicans have been rooting for these cuts for years and are desperate for a win. Nothing will influence such people except massive resistance in the streets. After all, even if they lose the mid-term elections because of it, there's a cushy job in the private sector or in lobbying as a reward.

Nonetheless, we have to try to stop it because the legislative inertia of an enacted and signed bill will not be overcome with an electoral victory by Democrats. They have shown that they are as divided on this as the Republicans, if not more so. No, we must stop it now before it's signed into law.

To begin, we must be in the streets against the proposal. We must be there in the thousands and, if possible, the millions. We must show that the negative impact for them will not just be felt at the ballot box, but throughout industry, commerce, and services by means of strikes and union organizing. The trade unions, as well as organizations like the DSA, migrant organizations and organizations of people of color, as well as the LGBTQ community, should call for an active participation of their local branches to organize and coordinate nationwide strikes, boycotts, and occupations against this strategic attack against the US working class.

This defensive struggle needs to be fought and structured by strike committees in every work place, school, university and neighborhood to draw in and connect as many people as possible in the fight. This could lead to a revival of the fight against Trump and provide an urgently needed perspective for everyone who wants to fight against the attacks but presently does not see a chance to do so.

If this defensive struggle really takes off, it can also be developed into an offensive struggle by extending the demands to throwing the government and Trump‘s whole regime out of office.

The task for revolutionaries in such a struggle should be to argue for an independent way forward for the working class. We need to argue for a necessary break of the trade unions from their long-term affiliations with the Democratic Party and propose they initiate the formation of a workers' party! A workers' party that could organize and unify the defensive struggles of all branches of the working class and provide an active and militant perspective for the offensive struggle:

For a massive mobilization against the tax bill! We need a wave of strikes and other forms of direct action until the tax bill is off the table!
For the formation of local strike committees that lead and can coordinate and plan the strike nation wide!
Let’s not stop halfway! Force the complete abandonment of the tax plan and take it off the table and then drive Trump and the Republicans out of power!
Break with the Democrats! They represent no alternative for the working class and the oppressed ! For the formation of a independent workers' party!