Trump and US Capitalism - Beyond the clowning

trump clowning

Clowns distract us and amuse us, whether in the circus, or in the White House. The liberal media are preoccupied with Trump’s tweets: whether stupid, ignorant, fascistic, they’re always unpredictable and good for gossip. But they cloud what is really going on. Behind the apparent chaos, discord, investigations and lies, a coherent plan is unfolding. Beyond the clowning and beyond the tweets, the US ruling class is undertaking a comprehensive remodelling of US capitalism, making it even more exploitative, aggressive and anti-people. Steve Palmer reports.

Trump has demanded that regulatory agencies delete two rules for every new one introduced. Incinerating protections for workers and consumers, the Trump administration is transferring even more power to finance capital, the chemical and pharmaceutical industry and fossil fuel companies by weakening regulation, changing legislation and modifying tax policy. A Regulatory Accountability Act is in process which will make it immeasurably easier for capitalists to gut, challenge and delay consumer and worker protections. Class action law suits against banks will be forced into arbitration – a much more favourable arena for the banks, since many of the arbitrators come from the industry. Agencies are increasingly populated by ex-lobbyists as ‘advisors’, who ensure that it is corporations, not working people who gain under Trump.

Healthcare

Trump’s failure to repeal Obamacare (the Affordable Care Act) should not obscure the rollbacks that are going on. Health insurance plans will not have to protect people with pre-existing conditions, premiums will be increased, it will be easier to stop providing no-cost birth control on religious or moral grounds. Grants to teenage pregnancy prevention programmes will end two years early. A rule which forbade states from denying family planning funding to Planned Parenthood is up for repeal, hitting the poorest and most vulnerable women hardest, thanks to anti-abortion ideologues.

Environment

Environmental protection is being gutted. The new head of the Environmental Protection Authority, Scott Pruitt, is a climate change denier who claims that: ‘God wants people to be stewards of the Earth’. His appointment has been described as ‘like putting an arsonist in charge of fighting fires’. He has replaced agency scientists with lobbyists for the fossil fuel and chemical industries. He has cut $330m from the programme to clean up ‘Superfund’ (heavily contaminated) sites. He is overturning the Clean Power Plan which reduces climate changing emissions from power plants. A rule restricting the dumping of toxic coal mine debris has been overturned. He is so paranoid that he has installed a $25,000 ‘secrecy booth’ in his office for communications, and doubled his security detail.

Worker protection

Trump has repealed rules that required companies seeking federal contracts greater than $500,000 to disclose and fix labour and safety violations. Health and safety record-keeping enforcement has been weakened. Rules limiting workplace exposure to the toxic metal beryllium have been gutted. A steady erosion of workers’ protection and labour rights is under way.

Education

Under right-wing zealot Education Secretary Betsy DeVos, the Trump administration is introducing a wide-ranging and dramatic ‘reform’ of public education. Essentially, it involves switching Federal funds from paying for public schools at all levels into subsidies for private education, via scholarships, education savings accounts, vouchers and so-called ‘portability’ of funding. This is despite research findings that show that these programmes actually reduce pupil achievement, with lower maths and reading scores.

Judiciary

The supposedly neutral judiciary is being tipped far to the right. Beyond the appointment of the conservative Neil Gorsuch to the Supreme Court, the Trump administration is intent on reshaping the entire judicial system by appointing extreme right-wingers as judges. Trump has promised that ‘We will set records in terms of the number of judges … There has never been anything like what we’ve been able to do together with judges.’ The strategy has been to focus on the Appeals Courts, rather than local courts, packing them with conservatives. Nearly half of Appeals Court active judges are eligible for retirement, leaving the possibility of replacing them with extreme conservative nominees. Examples of the kind of person we are talking about are John K Bush, who has compared abortion to slavery and Stephanos Bibas who has proposed using electric shocks as punishment for certain offences.

Corporate welfare

In one sense, the entire policy of the Trump administration is to increase corporate welfare. The myth of ‘free enterprise’ is a pathetic fairy story for the gullible: companies rely on the government for subsidies, cheap loans, grants, tax breaks and special loopholes in the tax code.

Trump’s tax plan

Perhaps the most blatant example of the Trump administration’s crude measures to benefit the rich is the Trump tax plan. Sold as a fix for the unbelievably Byzantine tax system, as a tax break for the US middle-class and a boost for business by cutting corporate taxes, it is still in the process of being hammered out in the versions approved by the House of Representatives and under consideration by the Senate.

The Estate Tax will be reduced, then abolished, handing the rich $151bn over the next decade. This cut will, incidentally, save the Trump family $1.15bn when he dies. Other changes benefit businesses, cutting their rate of taxation. The corporate tax rate is being cut from 35% to 20%, theoretically increasing investment, creating more jobs and increasing pay. In fact, the effective tax rate for corporations is far lower than the nominal rate because of numerous tax breaks and careful tax planning. US corporations are sitting on a huge cash pile of $1.9 trillion and nothing is stopping them from using this to increase workers’ pay, hiring more workers or investing more – except that none of this would increase corporate profits. This ‘trickle-down’ economics has been thoroughly discredited, yet is still peddled by right-wing ideologues. In fact any resulting savings are likely to be used to increase the corporate buy-back of shares, predicted to reach $590bn in 2018, boosting paper profitability.

US residents pay Local, State and Federal taxes. Local and State taxes can currently be deducted from Federal tax owed. This will change under the Trump plan, and they will no longer be deductible. Since State and Local taxes are typically much lower in conservative States than in liberal ones, this amounts to a subsidy from Democratic States to rich Republicans. This may have dire unintended consequences for the entire economy. One of the largest State taxes is on homes (property tax – a bit like council tax). Eliminating its deductibility will increase the cost of owning a home, pushing down the value of houses. Quite apart from wiping out what little equity owners may have, it will reduce consumer spending. It will also create problems for government sponsored entities Fannie Mae and Freddy Mac, which guarantee a large proportion of US mortgages, recycling them into cash, ensuring liquidity for the whole US financial system. When the value of the asset (home) falls then the quality of Fannie and Freddy’s securities will immediately be downgraded, hitting liquidity throughout the international financial system, bringing a return of the 2008 financial crisis (see ‘Freddy and Fannie in the land of make-believe’, FRFI 204, August/September 2008).

In an interview last year, as a Presidential candidate, Trump promised to eliminate the national debt within eight years – an impressive ambition, especially considering that the US has been in debt since 1835. To achieve this target would require over $2 trillion in repayments annually – when the Federal budget is about $4 trillion. The ‘executive overview’: it isn’t happening. His tax plan won’t help, in fact it will do the opposite: according to the Congressional Budget Office, the House version of the plan will add a huge $1.5 trillion to the $20 trillion federal debt over 10 years. Others have estimated as much as $5.5 trillion. This will lead to increased interest expenses, higher budget deficits and a hunt for budget cuts, in particular on Social Security (federal pension programme), Medicare (free healthcare for seniors) and Medicaid (healthcare programme for people on low incomes).

Resist!

All along the line, Trump’s administration is thoroughly reactionary. It is vital to support the resistance to these attacks, from the widespread protests against police murders and brutality, through to the struggle in Puerto Rico, to the People’s Congress of Resistance. The Democratic Party is no alternative – it too is beholden to the same corporations as the Trump administration. The only solution to this wholesale assault is a struggle for socialism.

Fight Racism! Fight Imperialism! 261 December 2017/January 2018

 

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