Bulletin of the League for the Revolutionary Party

January 3, 2018

Vicious Tax Bill Steps Up Class War on Workers and Poor

Just before Christmas, Donald Trump reportedly told the wealthy crowd dining at his luxurious Mar-a-Lago estate that “you all just got a lot richer” because of the huge tax bill that the Republicans had just railroaded through Congress. He didn’t say that everybody else, above all working people and the poor, would get screwed by the bill, although he might well have. For the “Tax Cuts and Jobs Act” will shift more tax burdens to the working class while giving the capitalists generous breaks. And since the budget deficit will expand as a result, vital programs like Medicaid, Medicare and Social Security will be threatened with cuts in 2018 in the name of “fiscal responsibility.” In sum, the tax bill is a defeat for the working class.

As revolutionary socialists, we understand that the political processes of American capitalism are designed to carry out the wishes of the capitalists, which inevitably collide with wider social needs and interests. Normally, however, imperialist democracies like the U.S., lubricated by super-profits gleaned from oppressed regions of the world, try to disguise pro-capitalist policies as serving the public interest. But this Christmas gift to the capitalists and their corporations is a gut-punch to everyone else. The desperation of the super-rich to grab what they can reflects the shakiness of the world capitalist economy and the decline of U.S. imperialism’s leading role.

Imperialism normally rests on bloody oppression around the world as well as racism and the super-exploitation of immigrants at home. The victory of Donald Trump, riding into office on a ramped-up venomous scapegoating campaign against oppressed people, raised the stakes for immigrants, Muslims, people of color, as well as women and the LGBT community. This widely unpopular tax bill, capping his first year in office, signals a lethal mix of further social and economic attacks on the entire working class.

What is to be done? Much attention has been given to recent electoral gains by the Democratic Party. We will show that the Congressional Democrats, although they voted unanimously against the tax bill, did not put up a serious resistance. Mass struggle by working-class and oppressed people is needed to defend against the deepening attacks. More broadly, capitalism is leading to the erosion of people’s livelihoods, the destruction of the planet and a deepening social crisis, all reflected in Trump’s grotesque presidency. We believe that while a defense can be partially successful against the current wave of attacks, a permanent solution cannot be found under capitalism. That’s why a working-class-led revolution leading to socialism is necessary.

What’s in the Tax Bill

The maze of tax proposals in the Republican bill is hard to evaluate. The tax rate for corporations is reduced from 35 percent to 21 percent, a 40 percent reduction; that much is certain, although the bill contains further business giveaways. But how it will affect personal taxes differs from one analysis to another, even though the overall pattern is clear. Middle-income households earning about the median income, $50,000 to $75,000, for example, will find their taxes cut by an average of about 1.5 percent, less than $1,000. In contrast, households making over $1 million would see an average percentage cut of over 3 percent, amounting to $70,000 gained. That is, a rich family that takes in 20 times what an average family gets is awarded a tax cut 70 times larger. Further, people in the middle range, including better paid workers, professionals and small capitalists, will see different balances of gains and losses: those in the top of this range will do better, those on the bottom, worse. Business owners and stock market investors will do better than wage earners, even when their incomes are the same. There is also a bias favoring Republican-leaning “Red states” that have lower state and local taxes over Democratic-voting “Blue states,” because of the new ceiling on deducting state and local income taxes and property taxes. Overall, some 60-plus percent of the cuts will go to the richest 1 percent of the population. And two-thirds of that will go to the top one-tenth of 1 percent. This comes on top of the already extreme inequality in this country, where the top 1 percent owns 38 percent of the wealth. And adding insult to injury, the plan pulls off a sneaky bait-and-switch maneuver: middle- and low-income folks will gain a little at first but will end up paying higher taxes when the cuts for them (but not for the rich) get phased out in a few years. As a whole, the measures confirm Karl Marx’s description of capitalism as a system that accumulates wealth at one pole and misery at the other.

Cuts to Health Care and Social Security

But the immediate effect on people’s taxes won’t match what they will face in the coming year. As the Federal budget deficit increases with the declining tax intake (by an estimated $1.5 trillion over a decade), laws already on the books mandate cuts in social programs. According to the Congressional Budget Office (CBO), a $25 billion cut to Medicare and over $100 billion more to other programs will result in 2018 from the “pay-as-you-go” law update signed by President Obama in 2010. And it is a sure bet that the Republican “deficit hawks,” who gleefully turned into doves and abandoned concern about the deficit in order to pass the tax giveaway, will conveniently become hawks again and plot the further erosion of benefits for the rest of us.

Leading Republicans like House Speaker Paul Ryan have already indicated they plan to seize this “once-in-a-lifetime opportunity” to “reform entitlement programs,” as if people are not really entitled to income from programs they have paid into all their working lives. Unable to get rid of Obama’s Affordable Care Act (ACA) by tackling it head on, the Republicans are using the tax bill to end the ACA’s mandate for individuals to buy health insurance. According to the Congressional Budget Office, the bill will effectively end medical coverage for an estimated 13 million people by 2027, by removing government subsidies for insurance and causing drastically raised premiums as younger and healthier people drop out.

ACA’s biggest plums went to the insurance and pharmaceutical corporations, while tens of millions had to decide not to buy the mandated individual insurance because of its prohibitive costs, and thereby faced steep fines. As bad as that has been, and as weak a substitute as ACA is for the kind of full government program like “Medicare for All” that most people wanted, the changes made in December will effectively worsen health care coverage and access for many more working class and needy people.

We note that Social Security and health care benefits have long been considered a burden by the ruling class and its politicians, and major cuts have been put forward by all recent presidents. In 2005 George Bush II sought to capitalize on his re-election by proposing to privatize the Social Security system and making it rely on the stock market. As the financial meltdown a few years late demonstrated, this would have risked the savings and livelihoods of all beneficiaries. But popular protests blocked the idea.

In 2010 Barack Obama also tried to impose austerity cuts on Social Security and Medicare. He convened the bipartisan Simpson-Bowles commission and charged it with devising a fiscal “grand bargain” to control the rising national debt. There were no mass protests because the labor and civil-rights leaderships refused to mobilize against a Democratic president. But Obama’s proposal was also blocked, by the intransigence of the right-wing Tea Party Republicans who refused the compromise’s proposed tax increases.

Trump and the Republican Congress

This year, with Republicans in charge of both Congress and the presidency, the profit-grabbing capitalists see their chance for a twofer: huge tax cuts for the rich plus benefit cuts for everyone else. And they are desperate to get it done before they lose their control of Washington, which seems likely the more voters see through them and their popularity plummets. Fat-cat donors have told the Representatives and Senators they pay for, “Get it done or don't ever call me again.” Hence the rush to get the bill passed without the normal public hearings and debate.

To be sure, the Republicans still seek some sort of camouflage for their holiday giveaway, to try to hold on to votes from mainly white middle-class people and workers. So they blather about how this is virtually a tax break for everyone, and how corporate tax breaks will lead to prosperity and more jobs. Trump chimed in, throwing out an absurdly fake figure of a $4000 raise for a typical American wage-earner if corporate taxes are cut.

But it’s a hard sell to convince people that they will benefit from being robbed, and that is not a specialty of these well-heeled politicians. A Gallup poll on December 5 indicated that only 29 percent of Americans support the proposed tax changes. In counties where Trump performed significantly better than did Mitt Romney in 2012, only 17 percent said they expect to pay less in taxes.

Many Trump voters believed his campaign promises of tax relief would help the “forgotten Americans” – white Americans anyway – and specifically that he would not cut Social Security and Medicare. Trump campaigned on closing tax loopholes, draining the swamp of lobbyists, while his aide Steve Bannon had even stood for raising taxes on the rich to 44 percent! Another reason for Trump’s rise was his stance of populist opposition to the Republican and Democratic elite. Of course, he has a shameless capacity for spinning out self-contradictions as well as outright lies, and he has proved to be loyal to his own class by collaborating with both “moderate” and ultra-reactionary Republicans to screw even the white working-class segment of his support.

Trump would have liked to maintain his populist posture longer. With the Russia-collusion probe hanging over his head, he tried to whip up his support among outright racists by offering kind words to the fascists and white supremacists after the Charlottesville clashes. But his sickening tweets cost him considerable “respectable” capitalist support.

Meanwhile, the Republicans in Congress were desperate for a legislative victory that would carry out their own strategies for aiding the ruling class. Since they might hold his fate in their hands, Trump agreed to their demands to cut taxes for the super-rich. Thus they reached a pact, largely on Congress’s terms. Of course, Trump had always intended to give immediate benefits to the wealthy and corporations. But the deal as it emerged has betrayed promises to white workers and middle-class people.

The Crisis of Capitalism

The background for this latest attack on the working class is the continuing long-term decline in the capitalist rate of profit since the end of the post-war economic boom decades ago. In response, the capitalist class was driven to increase its rate of exploitation of the working class worldwide. (See our Marxist Analysis of the Capitalist Crisis: Bankrupt System Drives Toward Depression PDF) A key method has been to shift industrial production to low-wage countries, especially those with repressive regimes like China and Bangladesh. This shift was accompanied by additional super-exploitation of immigrant labor – and a wage and benefit offensive against all workers in the imperialist centers, through layoffs or threats of them, longer and irregular hours, and automation.

The concessions that were possible in the middle decades of the 20th century under mass pressure stabilized the system for a period but ran counter to its underlying needs. As insufficient as the social benefits for the working class are, they take a bite out of profits and so stand in the way of shoring the system up in the face of newly-exploding economic crises. So capitalism turned firmly in the direction of increasing exploitation.

At the present time, nominal profits and stock values are up, but many investors sense that the economy is in another bubble and want to reap their rewards before another meltdown arrives. As one economic strategist put it in the December 14 New York Times , “The global economy is partying like it’s 2008.” And former Treasury Secretary Lawrence Summers wrote in the December 11 Financial Times that the “US economy faces a painful comedown from its ‘sugar-high’.”

This ramshackle tax bill is an effort by the richest capitalists to take advantage of the political situation and rake in an immediate windfall, whether that be used for stock buybacks, increased dividends or further speculation. As billionaire and former New York mayor Michael Bloomberg noted, “We don’t need the money. Corporations are sitting on a record amount of cash reserves: nearly $2.3 trillion.” The bill is obviously not a contribution to the long-term health of the capitalist system, which would demand, among other things, a massive governmental investment to restore the infrastructure and to hold back the environmental collapse. That would require much higher taxes on the rich, not lower.

Corporate leaders have already indicated that they are not even planning to do much in the way of new investments in existing industry. When Trump’s chief economic adviser Gary Cohn asked a Wall Street audience of corporate chief executives which of them would invest more if the tax cuts were passed, only a few raised their hands. Cohn plaintively asked, “Why aren’t the other hands up?”

Clearly a new wave of investment-driven productivity gains is not in the cards. And even less likely is a serious increase in jobs, despite the vague promises. The ballooning deficit will be a source of financial instability, even with gutting social programs. The tax bill is a cobbling together of contradictory measures, including giveaways to the rich that undermine their own capitalist system, so half-baked that even the bulk of the establishment’s own paid economists have condemned it.

But while extraordinary in its vulgarity and typically Trumpian in the fake claims it rests on, this tax bill basically intensifies the capitalists’ long-term economic offensive. The shifting of tax burdens from the wealthy to the middle class, workers and poor has been going on for decades, reinforcing the transfer of income towards the capitalists. Corporate taxes have also been lowered several times in the same period. And social programs have been eroded before. The new tax scam ties together the various new attacks in one blatantly hideous package.

The accurate answer to Gary Cohn’s question on Wall Street would have been “Après nous, le déluge” (“After us, the flood”). That is the expression attributed to the King of France on the eve of the 18th-century revolution that did away with the feudal order. Today the ruling class’s contempt for the well-being of everybody else shows that socialist revolution is necessary for the advancement and survival of the human race.

Democrats No Defense Against Republican Attacks

The tax bill happens to be a rare case when every Democrat in the U.S. Congress voted against the Republican plans. The Democrats and their liberal supporters in the media and elsewhere have been sharply critical of the legislation, along some of the lines outlined here. Thus they portray themselves as being on the side of the “middle class.” But their true loyalty is to capitalism and the ruling class, as Obama proved when he bailed out the banks with tens of trillions of dollars and spent nothing to relieve people whose homes were foreclosed in the meltdown a decade ago.

A New York Times editorial on December 17, as the tax bill was being finalized, confirmed the Democrats’ capitalist essence:

“Of course, the growing importance of wealthy donors is not exclusively a Republican phenomenon. Democratic candidates have also benefited from the largess of wealthy donors ... Donations from Wall Street and corporate America have, in fact, pushed many Democrats to the center or even to the right on issues like financial regulation, international trade, antitrust policy and welfare reform.”

That factor goes a long way to show why the Democratic Party leadership – the Obama/Clinton wing of the party represented in Congress by party leaders Nancy Pelosi and Chuck Schumer – has gone along with the long-term shift in tax burdens away from the wealthy and their corporations. The Clinton and Obama administrations somewhat moderated the corporate and high-income tax breaks of the Reagan and Bush years. But even under Democratic leadership, the shifts in income and tax privileges since the mid-20th century were never seriously reversed.

Consider the statement issued by Senate minority leader Chuck Schumer on December 1:

“What a grave shame it is that we weren’t able to work together on this bill. Tax reform is an issue that is ripe for bipartisan compromise. Democrats have spent many long hours with our Republican colleagues talking about tax reform ideas. There is a sincere desire on this side of the aisle to work with our colleagues, particularly on tax reform, but we have been rebuffed, time and time again.”

The Democratic establishment begged to collaborate with the openly anti-working-class Republicans on “tax reform” because they too favored cutting corporate taxes. Had they worked together they would have tried to make the bill’s gross inequality less blatant. But at the same time they welcomed the Republicans’ intransigence, figuring that the bill is so unpopular that they could hang it around the Republicans’ necks come November 2018's mid-term election and maybe even take back Congress. So they paid lip service to widespread concerns about the wealth gap that the tax bill widens, condemned the attacks on Obamacare and claimed to support raising the minimum wage. But they refused to fight the Republican bill with anything approaching the full means available. Their protests have been limited to rhetoric and low-level pubic relations efforts like petition campaigns and small demonstrations at Congress. (See the section on “‘Reforming’ Health Care” in our article Barack Obama: Wall Street’s Warrior .)

Compare that to what the Tea Party Republicans did under Obama, mobilizing large nationwide protests in 2009 against the Democrats’ health care bill. In contrast, the Democrats are reluctant to see their base of workers and oppressed minorities protesting in the streets, since their base’s demands inevitably come at the expense of capital.

In 2017 there were ample opportunities to take on Trumpism with mass actions. There were, for example, protests at Congressional “town meetings” against the efforts to destroy Obamacare, and rallies at airports to defend Muslim immigrants against Trump’s bans. But none of these efforts were organized by the Democrats’ national leadership. And after the “alt-right” march with Confederate and Nazi banners in Charlottesville in August, with Trump on the ropes after his soft-on-fascist tweets, Schumer and Pelosi came to his rescue. They agreed to a budget deal to keep the Federal government running, in return for empty promises to provide for the immigrant youth covered by Obama’s Deferred Action for Childhood Arrivals (DACA) decree. And Trump has now stabbed his Democratic partners in the back by tying funding for his racist border wall to any DACA deal.

A partially alternative approach was presented by Bernie Sanders, a leader of the party’s “progressive” wing. Sanders’ rhetoric was stronger: he called the Republican tax bill “class warfare” and called for raising, not lowering, taxes on the rich and corporations if the Democrats take back Congress. But he has proved himself to be a Democratic Party loyalist, even though he masquerades as an Independent and a socialist. As in his 2016 campaign for the presidential nomination, he serves to tie liberals and even many radicals to the pro-capitalist Democratic Party and to its corporate-friendly leadership whose hold on the party’s reins of power is cemented by Wall Street money. That is still the role he plays.

The Democratic Party operates as a kinder, gentler, lesser-evil version of the Republicans. Sanders and a few others run to the left and claim to be a genuine alternative. But they do not differ with the leadership strategy of blunting mass struggle in order to focus on getting Democrats elected and maintaining social peace. The Democratic Party is a lesser evil, but as such has historically been a graveyard of mass struggles, politically co-opting upsurges like the union drives of the 1930s and 1940s and the Black struggles of the 1960s.

Democrats Push Bipartisan Collaboration

Even as the Republicans steamrollered their tax bill through Congress without even letting the Democrats see it, leading Democrats continued to press for “bipartisanship” – meaning collaboration with the Republicans to hold back programs favored by the majority of the population. This is the strategy not just of Schumer and Pelosi but also of the Democrats’ recent electoral heroes. Virginia’s Democratic governor-elect Ralph Northam, fresh from his victory in November over a Trumpian Republican, walked back his promise to expand Medicaid in his state because doing so wouldn’t be bipartisan – one more example of how Democrats use Republican intransigence as their excuse for not carrying out what voters elected them to do.

Doug Jones, the Democrat who defeated the white Christian supremacist Roy Moore in the Alabama senatorial election in early December, was able to win in this deep-red state because of the very believable charges that Moore was a sexual predator and child molester. But afterwards, in the interest of bipartisanship, he rejected calling for Trump to resign – in the face of multiple accusations and Trump’s own admission that he preys on women. Jones also pledged to vote with the Republicans when that means doing “what I think is in the best interest of my state and in the country” – in effect promising to compromise the interests of the working class, especially Black people who elected him.

In today’s political climate the Democratic Party establishment can be said to better represent the capitalist class as a whole than do the Republicans. For one thing, the ruling class fears that Trump is failing to shore up the U.S.’s declining position in an increasingly multipolar world. In particular, they see mounting evidence of Trump’s ties to Russian oligarchs, not just his collusion with Russian interference in the U.S. election. They worry, with considerable justification, that he is interested in defending his private capitalist interests rather than the overall interests of American imperialism. With the grossly unequal tax bill, on top of Trump’s use of aggressive racial polarization, the ruling class has reason to fear that Trump and his Republican allies will destabilize U.S. power domestically as well as internationally.

Labor Leadership Fights Fiercely – NOT

Tragically and treacherously, the Democrats have been supported in their efforts by the labor bureaucracy. An AFL-CIO Labor Wire of December 9 sums up the union officialdom’s appeal to their members: “Make a call to urge our leaders to reject any bill that makes drastic cuts that hurt working people [in order] to pay for wasteful tax giveaways for corporations.” Get on your phones, say the labor chiefs, not into the streets!

And if this doesn’t work? The message is to save your energy until next fall, and then vote. This is nothing new. The leadership of the unions and organizations of the oppressed like the NAACP have for decades hitched their wagons to the support of the Democrats and their electoral strategies. When the heads of the mass organizations of workers and oppressed tell their ranks to rely on the Democrats who have done little to help them, it is small wonder that many workers don’t bother to vote Democratic – and that some white workers turn to a racist charlatan like the plutocratic populist who pledged to look after their interests.

Opposition to the Republican tax plan is widespread but low-level – just the kind that suits the Democrats and is reinforced by them. But the struggle to defend working-class interests, in this and all areas of life, is hardly over. In fact, this whole sorry episode is adding discontent and anger to a populace already simmering with bitterness against social and class injustices. The potential for a struggle against the tax privileges of the wealthy will increase in the near future and could well be a pivotal portion of a growing class struggle in this country that is so desperately needed.

This is a struggle that can unite in action masses of people who are often bitterly divided in a racist and sexist society. Slogans like “tax the rich” and “tax the banks and corporations” will be increasingly heard. Such demands do not challenge the control of the government and the economy by the capitalist class, and so they can therefore only be temporarily effective. But they can be a spur to a broader and deeper fight that takes aim at the capitalist system itself.

It is a struggle that needs working-class leadership and must be based on an alliance between the working class and the poor, especially people of color and immigrants and refugees. The working class, centrally based in the productive process, has the potential to spearhead mass action, and that can raise consciousness of the decisiveness of class forces in society – as opposed to populist notions of “the people” or “the 99%.” But social struggles have been dominated by bourgeois or middle-class leaderships at best. Working people and youth injected militancy into the fightbacks, but there was no working-class leadership on the scene, whether from unions or alternative organizations and groupings.

Union actions have been at historically low levels for many years. The prime reason is the pro-capitalist conservatism of the labor leadership with its “don’t fight, just vote” strategy. The labor leadership is a central obstacle to struggle and must be replaced. Politically advanced workers can’t ignore the labor bureaucrats as long as they retain power: rather revolutionaries should seek to lead working people in making demands on union officials, and leaders of Black and Latino and other organizations for oppressed people, to organize mass demonstrations and prepare where possible for industrial actions, for example. Revolutionaries should welcome any steps the officials take in the right direction as a springboard for a bigger and better resistance – while we will seek to expose them when they refuse to use their power and resources.

Such a mass resistance will have to proceed against the wishes and interests of the Democratic Party. But some Democratic politicians do favor certain reforms beneficial for the workers and poor. They should be challenged to actively back demands coming from the working class and to fight to enact particular legislation. Such challenges will tend to expose the Democratic politicians and prove the need for the working class to erect its own independent class leadership. Even if a major struggle does not oppose the two-party capitalist system at the start, the aim of revolutionaries is not only to advocate the best fighting strategy for the immediate struggle but also to convince workers in struggle that a fundamental break with the capitalist parties is necessary.

The Need for Revolution and Revolutionary Leadership

In the U.S. it makes sense that any big fightback that erupts will initially be focused on stopping the racist and anti-worker attacks like the cuts in programs that are being prepared. That way some gains can be won and some of the worst attacks can be blunted. The League for the Revolutionary Party (LRP) believes in building all the possible struggles that can be waged against the current attacks.

But we also believe that the only way the interests of working and oppressed people be defended and permanently secured lies with a successful revolutionary struggle that overthrows the rule of the capitalist class and establishes the rule of the working class, in alliance with the oppressed. Instead of an exploitative and oppressive capitalist state, that revolution will establish a workers’ state on the road to socialism. We further believe that a revolutionary party of the working class is the necessary alternative for fighting against the capitalist attacks today and for developing a revolutionary strategy for the future.

The current attacks are taking place when the American economy is enjoying a profits bubble. When the bubble bursts, the capitalist class will get far nastier than it even is now. The prospects of economic collapse argues for making efforts to fight for mass action as soon as possible – while continuing to convince more working class people and youth of the need for socialist revolution.

The vast majority of working and oppressed people will come to see that we don’t have a real stake in maintaining capitalism; we don’t own any of the means of production or companies; we aren’t the bosses who collect all the profits at our expense. The problem with capitalism is not only the vast wealth accrued by the few and the increasing poverty of masses. Until the workers and oppressed expropriate the capitalist class, we don’t have the power to make the key decisions that govern our society.

After a socialist revolution that overthrows capitalism, a revolutionary society would establish full employment, decent guaranteed health care, a program of public works and a healthy economy. With the establishment of a government of the working class and oppressed based on a worker's state. the fight against racism, sexism and other social ills would make serious strides forward; over time, all these reactionary poisons could be wiped out. The socialist society that the workers’ state brings about would do away with class differences – all would share in the labor needed and in what society produces. Socialism can achieve abundance for all by pooling the industrial power and resources of many countries, which is why international socialist revolution is the key to reaching a truly classless society.

We are a long way from the socialist goal, but the potential for such a world is already present. The alternative is an increasingly bleak existence under capitalism, so the choice is clear.