In revolutionary moments laws, ideas and politics are challenged by new circumstances. These circumstances force the convergence of revolution and counter-revolution in the same moment. New social forces emerge on the scene and there are always leaders who are thrown up by the moment. Oftentimes these leaders are not themselves revolutionaries but are caught up in the general convulsion that shakes the foundations of the old society. Toussaint L'Ouverture was one such revolutionary in Haiti who joined the revolution in 1793 and agreed that the old system of slavery must end. But Toussaint believed in the plantation model and wanted to restore the economic relations of the plantation where the former enslaved were supposed to work for a planter class.

Toussaint dithered when the people wanted a new mode of economic organisation and in the midst of these dithering internal and external forces removed Toussaint and he ended up as a tragic figure who emerged out of a revolution. While Toussaint is still celebrated as a great revolutionary, the tragedy of the bloodletting and stagnation of Haitian society cannot be separated from the fact that as a political leader he could not grasp the reality that the mass of the people wanted a new form of economic organisation.

Barack Obama as the president of the United States risks ending up being irrelevant like Toussaint as he continuously dithers and places his faith in a system that is now obsolete. Barack Obama believes in American capitalism at a moment when the environmental crisis, the economic recession, the changed international situation along with the financial meltdown demanded a new turn in social and economic relations.

When the Obama administration agreed with the leaders of the Republican Party to extend the tax cuts for the wealthiest US citizens for another two years, there was outrage within the ranks of the progressive movement. This justifiable outrage clearly focused on the fact that as a candidate for the presidency Barack Obama had vowed that he would not renew the tax cuts that had been instituted by George W. Bush. No doubt, tax cuts for wealthy America are repugnant. But however much progressive forces are distressed by the fact that the Obama administration caved in to the top capitalists, this debate about tax cuts is misplaced for as long as it does not capture the dangers of the attempt to save America’s moribund capitalist system on the back of the ordinary people. It is imperative that the debate on tax cuts also grasps the larger picture on the paths that are open to society so that one can grasp the increasing concentration and centralisation of power in the hands of a few. Only a few days ago it was none other than The New York Times that outlined the unlimited powers of the top nine banks that control the derivatives market, in an article entitled ‘A secretive banking elite rules trading in derivatives’.

Before outlining the power of the top nine banks in this multi-trillion gambling enterprise called derivatives, the Times noted: ‘In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.’ From this analysis we were regaled with the absolute powers of these bankers who were a law unto themselves to the point where we are learning of their power from other Wall Street bankers who are excluded from this elite group.

The legislation to extend the Bush tax cuts comes at a time when there are already talks about freezes in pay rise for some workers, squeezes in social services for working people, increased property taxes and other taxes on ordinary people. There is no gainsaying that the American capitalist system is organised around the exploitation of the poor, the working people and the profligate consumerism of the privileged class.

THE BUSH TAX CUTS

The tax cut for the richest US citizens by George W. Bush was one of the many ways in which the Bush administration supported the richest 1 per cent of the population. One estimate of this tax handout for the richest Americans during the eight years of the presidency shows that the wealthiest 400 Americans increased their wealth by over US$380 billion. 400 families increased their wealth by US$380 billion. This translates into an average of a US$1 billion giveaway to each of the richest 400 Americans. Senator Bernie Sanders clearly spelt out the fact that during this period of enriching the top income earners, the top Fortune 400 companies and families were further strengthened to dominate the political and intellectual spaces. It was revealed that the 400 richest Americans have accumulated US$1.27 trillion in wealth.

The Bush tax cut legislation entitled ‘The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)’ was for 10 years and was designed to end or revert to the provisions that were in effect before it was passed. EGTRRA was supposed to sunset on 1 January 2011 unless further legislation was enacted to pronounce otherwise. By passing the US$858 billion tax plan to extend the Bush tax cuts, the Obama administration has joined with and strengthened the forces of US society who believe that the rich should get richer regardless of what is happening in the real economy. Inequality has skyrocketed in US society to the point where by 2007, the top 1 per cent of all income earners made 23.5 percent of all income. In his brilliant speech before the US Senate Bernie Sanders held forth that:

‘The percentage of income going to the top 1 percent nearly tripled since the 1970s. The fact is, 80 percent of all new income earned from 1980 to 2005 has gone to the top 1 percent. Let me repeat that because that is an important fact. It explains why the American people are feeling as angry as they are. They are working hard, but they are not going anyplace. In some cases, in many cases, their standard of living is actually going down. Eighty percent of all income in recent years has gone to the top 1 percent. The richer people become much richer, the middle class shrinks. Millions of Americans fall out of the middle class and into poverty.’

The inequality gap deepened by tax cuts for the wealthy was a major reason that the debate over tax questions was one of the major issues of the 2008 presidential campaign. Then, candidate Barack Obama vowed that when the tax cuts expired in January 2011, he would not renew them. Yet as president Obama has now agreed to extend the Bush tax cuts. This relief contains a plum of lowering the estate tax on the richest capitalists from 55 per cent to 35 per cent, with an exemption on the first US$5 million of an individual's estate and $10 million for couples.

These new subsidies to the rich were passed by a Senate that is itself dominated by millionaires. According to The New York Times:

‘The tax plan would extend all of the lowered income tax rates enacted under President George W. Bush, as well as the 15 percent rate on capital gains and dividends, which were due to expire at the end of this month. And it would set new estate tax parameters, including an exemption of $5 million per person, or $10 million per couple, and a maximum rate of 35 percent. All these provisions would last for two years. The estate tax lapsed entirely this year, but was set to return on Jan. 1 with an exemption of $1 million per person and a maximum rate of 55 percent. House Democrats were particularly infuriated by the White House’s agreement on the estate tax, which provides a more generous exemption and lower rate than many of them wanted.’

The Obama administration attempted to justify the extension with claims that the compromise with the Republicans was the only way to get the Republican Party to agree to a 13-month extension of unemployment benefits for millions of Americans affected by the capitalist crisis. This was a hollow claim because at no point during the past two years did the Obama administration seek to educate the mass of the population on the real consequences of the sharp inequalities that have enveloped the society since the dismantling of the safety nets of the New Deal of the last depression. There are those from the progressive camp who argued that Obama did not do enough to mobilise the ordinary working people against the Republican position of tax cuts for the rich. However, Obama had surrounded himself with the ideologues from Wall Street so that he (like Toussaint) believed that supporting the super rich would be the way to recharge the US economy.

TAXING THE POOR FOR FREE LUNCH FOR THE WEALTHY

According to the United States Government Accountability Office (GAO), two out of every three corporations in the United States paid no federal income taxes between 1998 and 2005. These corporations had a combined US$2.5 trillion in sales but paid no income taxes to the IRS (Internal Revenue Service). In the book, ‘Free Lunch: How the Wealthiest Americans Enrich themselves at Government expense (and Stick it to You with the Bill)’, David Cay Johnson, explained in great detail the numerous subsidies granted to the capitalists. What David Cay Johnson did not elaborate on was that on top of the subsidies for insurance companies, banks, oil companies, telecommunications and pharmaceutical corporations, there was the major subsidy of the trillions of dollars spent on the military to protect this class. Despite the massive subsidies, the recklessness and chaotic nature of economic relations ensure that this system of capitalism generate repeated and severe crises. Under social-democratic capitalism, there is a degree of social solidarity among the citizens, providing the conditions for more regulation over capitalist enterprises and for there to be a higher degree of taxation for the capitalists so that the state can invest in social services such as health, education, social services and infrastructure. US capitalists eschewed the social-democratic model of capitalism where there was regulation of the rapaciousness of the top capitalists. The US opted for the Friedrich August von Hayek version of capitalism that is based on unlimited free enterprise. This is the idea of trickle-down economics that believes that government should leave the economy to private individuals, and that cutting tax rates for the richest Americans will improve the standard of living for the working class.

Trickle-down economics – or supply-side economics – is the old liberal version of capitalism that maintained that laissez-faire will benefit not just those well-placed in the market but also the poorest. After the economic crash of 1929, this liberal version of free enterprise was shelved only to re-emerge in the era of Ronald Reagan where the neoliberal version of supply-side thinking and economic planning was trumpeted with the view that increases in real gross domestic product are almost always good for the poor. According to this neoliberal concept of economics and politics, reducing the top tax rate is supposed to lead to economic growth, prosperity and overall income growth for all through the expansion of the economy with the creation of new jobs. However, as Senator Sanders clarified, during the Bush years alone, some 48,000 factories shut down. The US society went from 19 million manufacturing jobs to 12 million manufacturing jobs.

All of the evidence from the Bush tax cuts proved just the opposite to the logic of trickle-down economics. By every measure the economic situation has deteriorated for the vast majority of the population. This was at the same time when the top corporations were sitting on US$2 trillion that they were hoarding to use in the speculative market for derivatives.

Between 2001 and 2003 the top 82 companies in the USA paid no income tax, though they earned US$102 billion in profits. The figures from the Citizens for Tax Justice (CTJ) clarified that instead of paying US$35.6 billion in income taxes, as the statutory 35 per cent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury totaling US$12.6 billion. Overall, data from the past 10 years strongly refutes any arguments that cutting taxes for the richest Americans will improve the economic standing of the lower and middle classes or the nation as a whole. At the same time the top 1 per cent now owns more wealth than the bottom 90 per cent. The US has also successfully exported this brand of neoliberal economic organisation since the era of Ronald Reagan and Margaret Thatcher. This was the counter-revolutionary era when the neoliberal forces decided to wage an economic war against the poor internationally. The election of Obama was inspired by a revolutionary moment when the peoples wanted a break from this brand of counter-revolutionary thinking.

The refutation of the trickle-down philosophy, as defended by President Barack Obama and the Republicans, was clearly articulated by Senator Bernie Sanders of Vermont. Senator Sanders stood on the Senate floor for eight hours to outline clearly why another subsidy for the capitalist classes was not needed in the midst of a ‘great recession’. His eloquence was backed up by the hard figures on the subsidies for the top 2 per cent of the population, whose income has tripled since 1970. Sanders spelt it out clearly that:

‘It makes no sense to me to provide huge tax breaks for millionaires and billionaires while we drive up the national debt that our children and grandchildren will have to pay.’

The senator then went on to outline the trillions of dollars that have been doled out in corporate welfare for the rich. What is significant about this statement was the way in which Sanders, an independent socialist senator, brought to the fore the reality that the tax cuts represent socialism for the rich. This is how America taxes the poor to offer unneeded free lunch to the wealthy.

SAVING A MORIBUND CAPITALIST SYSTEM

Our present global realities show that American capitalism is a moribund system. The tax cut for rich Americans is one symbolic effort to save American capitalism. Capitalism proves itself to be a system whose workings not only generate repeated and often severe economic crises, but which also systematically shifts the costs of that instability down the social scale to the majority in the middle and the bottom. The current debate on taxes is indeed a distraction from realities of both controllable and uncontrollable factors related to the real economy and the ‘end’ of the US consumption-led form of economic growth which cannot be created again. Even if it could, the policies of saving the banks and allowing the wealthy to accumulate more wealth only make it less likely that a consumption-based economy can be recreated. The debate about taxes must transcend the revival of a moribund system. The debate should be centred on how to organise society for ordinary people and for the survival of planet earth.

A real debate on the economy needs to include a discussion of the massive military expenditures and the deployment of over 800 military bases around the world. This debate must also include a discussion of the prison–industrial complex and the opportunity costs it places on society in terms of resources not invested in education and the millions of youths who are prevented from contributing to the real economy, both in the short term (while they are locked up) and over the long term.

A real debate on the economy needs to include discussions about the fact that for decades now, wages have stagnated while productivity has gone up – while the benefits and profits have been captured by the wealthiest. This fact of the super-profits is another reason for the ‘break’ in the ability of the economy to have sufficient demand. Of course we know that the only reason why this break did not cause a crisis a decade ago is that the financial sector was able to create a ‘credit–debt’ industry to allow society to maintain the myth of consumption-led growth while at the same time having fewer total workers and less total wage income. It was this financialisation of the system that hollowed out the real economy.

The financial crisis has forever broken this structure. The world has changed.

The realities of the current revolutionary moment dictate that the sustenance of this economic mode of organisation is moribund. The urgency to address the global environmental crisis; the beginning of the end of a uni-polar world, where the limitations of military might becomes more glaring; and the increasing need for a shared humanity in socio-economic organisation of society are only few indicators of the non-sustainability of American capitalism.

OBAMA AND TOUSSAINT L’OUVERTURE

From all the economic analyses of nine years of the tax cut, it is clear that the wealth of the richest Americans did not trickle down to the average American, nor did it cushion US capitalism from the economic crisis. It is therefore counterintuitive that the tax cut was an economic prescription. It is even more alarming that despite the economic doldrums orchestrated by the old policy characterised by this tax relief for the wealthy, the Obama administration is extending it by two more years. In the midst of the ‘economic recession’, the tax breaks for the wealthy meant that the US society is sliding away from the model of safety net for the poor that was carved into the social security system of the New Deal. With every day of the economic crisis there is a further shift to an even more unjust economic system where it shifts more of its tax burden onto the shoulders of the majority of the working peoples, especially those at the bottom of the economic ladder. Along with this burden is the added confusion where sections of big capital mobilise poor whites to organise against their own interests. The political mobilisation of the conservative forces have been so successful that the discussions on the Bush tax cuts are carried out to bamboozle the ordinary people and to confuse the working people.

As Barack Obama is trapped by the ideal of liberal economic theory, a major question is whether he can save capitalism. Even a more urgent question is, as Toussaint attempted to take Haitians back to the plantations, would Obama’s attempt to save capitalism not take ordinary people back to the era of ultra-Reagonomics along with the cowboy-like military adventures? What is the moral justification for trying to save a moribund system by pleasing the financial oligarchs at the expense of the working people and planet earth? A serious concern is that if Obama displeases the people to please the capitalists, and yet is unable to satisfactorily please them, he may end up like Toussaint L’Ouverture.

The capacity to reverse the political and economic power of the wealthiest US citizens and ensure that Obama does not end up like Toussaint depends on a level of political mobilisation that has not yet been contemplated by even those critical of the administration.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* Horace Campbell is a teacher and writer. Professor Campbell's website is www.horacecampbell.net. His latest book is 'Barack Obama and 21st Century Politics: A Revolutionary Moment in the USA', published by Pluto Press.
* Please send comments to [email protected] or comment online at Pambazuka News.