Why is the US at war in West Africa?

By Eddie Haywood
14 October 2017

The October 4 killings of four US Green Berets in Niger has provided a rare glimpse into the far-reaching American military operations throughout the African continent which have been conducted almost entirely in secret.

Pentagon officials on Friday told reporters that the ambush was carried out by a self-radicalized group supposedly affiliated with ISIS. The Pentagon additionally admitted that at least 29 patrols similar to the one that was fatally ambushed have been carried out by American soldiers in Niger.

According to AFRICOM, the US military command based in Stuttgart, Germany, the US special forces deployed to Niger are tasked with providing training, logistics, and intelligence to assist the Nigerien military in fighting militants affiliated with Al-Qaeda in Mali and Boko Haram in neighboring Nigeria. AFRICOM has officially stated that its forces interact with the Nigerien army in a “non-combat advisory” capacity.

The circumstances surrounding the ambush which resulted in the deaths of the four Green Berets expose AFRICOM’s claim of non-engagement as a lie. The killings occurred during a joint patrol of elite American soldiers and Nigerien forces in a remote hostile region on the border with Mali known for frequent raids conducted by Islamist militants. Some 800 US commandos are deployed to bases in Niamey and Agadez making quite clear the offensive role that the American military is playing in Niger.

Underlining the incident is Niger’s configuration in Washington’s imperialist offensive across Africa. The expanding levels of US military forces arrayed across the continent have increasingly taken on the character of an occupying army. According to the Pentagon, there are a total of 1,000 American troops in the vicinity of the Chad River Basin which includes northern Niger, Chad, and the Central African Republic. An additional 300 troops are stationed to the south in Cameroon.

After its establishment in 2008 as an independent command, AFRICOM has significantly expanded American military influence and troop deployments on the African continent. Measuring the breadth of US military expansion is the construction of a $100 million base in Agadez in central Niger, from which the US Air Force conducts regular surveillance drone flights across the Sahel region.

Augmenting the special forces contingent in the region are military personnel stationed at several dozen bases and outposts including a US base in Garoua, Cameroon.

The special operations units in Africa have their genesis in 1980, after the Pentagon created Special Operations Command (SOCOM) to conduct a raid on the US embassy in Tehran, Iran to rescue American hostages. Over the years, SOCOM has vastly broadened its scope, and currently has forces stationed on every continent around the globe.

Made up of various units of the US military, including Green Berets, Delta Force, and Navy Seals, SOCOM carry out a broad spectrum of offensive operations including assassinations, counter-terrorism, reconnaissance, psychological operations, and foreign troop training. Under AFRICOM, these forces form a subgroup of SOCOM designated as Special Operations Command in Africa (SOCAFRICA).

Between 2006 and 2010 the deployment of US special forces troops in Africa increased 300 per cent. However, from 2010 to 2017 the numbers of deployed troops exploded by nearly 2000 per cent, occupying more than 60 outposts tasked with carrying out over 100 missions at any given moment across the continent.

The scale of the military expansion which began in earnest under the Obama administration is part of a renewed “scramble for Africa”, comprised of a reckless drive for economic dominance over Africa’s vast economic resources which threatens to transform the entire continent into a battlefield.

The immediate roots of the Niger ambush can be traced to the 2011 US/NATO war in Libya which resulted in the removal and assassination of Libya’s leader Muammar Gaddafi. Under the Obama administration, Washington cultivated and armed various Islamist militant groups with ties to Al-Qaeda as a proxy force to carry out its aim of regime change. The resulting US/NATO bombardment left Libyan society in shambles, and the Islamist fighters spilled forth and out across North Africa and south to the Sahel.

In 2012, as a consequence of a US and French backed coup against the government in Bamako, Tuareg rebels in Northern Mali took advantage of the chaos resulting from the coup to stage a rebellion. After the Tuareg militants began taking control over cities and territory as it cut deeper into southern Mali, France with the Obama administrations backing deployed 4,000 troops to the country to neutralize the Tuareg rebels, eventually stabilizing the government it placed in Bamako.

While the Tuareg rebellion may have been halted by the US-backed French offensive, Islamist fighters from Libya were pouring into Mali, with many taking up arms against the Western backed puppet government. The Islamist fighters largely united into one large group, declaring allegiance to Al-Qaeda in the Maghreb (AQIM). The military forces of Niger and Chad which participated in the US/French intervention in Mali have become frequent targets by the Islamist militants who began conducting cross-border raids and launched attacks on patrols and garrisons.

The rise of these warring Islamist militias which have transformed West Africa into a battlefield is the end result of Washington’s decades-long strategy in cultivating these forces as a proxy army in its wars for regime change, at first, in the Middle East and Afghanistan, and subsequently in Africa.

Underscoring France’s military deployment are the French economic interests it seeks to protect not only Mali, but throughout West Africa, the region which was once part of its colonial empire. In Niger, the French energy giant Arven has established mining operations extracting the country’s rich uranium resources.

For its part, Washington has enlisted the participation of the military forces of Burkina Faso, Cameroon, Nigeria, Niger, Chad, and Mali in its drive for dominance of the Sahel and West Africa, with all of these countries featuring US outposts or bases.

A key element of Washington’s military expansion in the region are the significant economic resources that it aims to secure for American corporate interests. On behalf of these interests, and complimentary to its military operation, Washington has constructed a $300 million embassy in Niamey.

Washington’s military interventions in Africa must also be seen as an effort to offset China’s growing economic influence on the continent. Beijing in recent years has secured investment deals with African governments in nearly every sector of Africa’s economy.

China National Petroleum Company (CNPC) purchased the permit for oil drilling in Niger’s Agadem Basin, and CNPC also constructed and operates the Soraz refinery near Zinder, Niger’s second largest city. Deals by Beijing for the construction of pipelines traversing through Chad, Niger, Burkina Faso, and Cameroon are currently in the development stage, causing no small amount of consternation in Washington.

WSWS

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Abolish the debt that is drowning Puerto Rico

We need to organize for immediate disaster relief for Puerto Rico–but we can also expose and oppose the debt disaster that came before the hurricanes.

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

SOCIALIST WORKER supports President Trump in his call to cancel Puerto Rico’s punishing debt.

We can pretty much guarantee you’ll never see the first five words of that sentence here ever again–and the supervisors of the “adult day care center” at 1600 Pennsylvania Avenue are obviously trying like hell to make sure we never have reason to.

But it says a lot about the Wall Street-made catastrophe that has plagued Puerto Rico for years before Hurricane Maria that even a reactionary fanatic like Trump didn’t think twice before stating the obvious.

“They owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said in an interview last week with Geraldo Rivera of Fox News. “I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”

“Wall Street promptly freaked out,” Politico reported the next day. That was an understatement. Heavy trading on the normally stable bond market pushed the value of Puerto Rico’s general obligation bonds–already devalued to 56 cents on the dollar after the island effectively declared bankruptcy earlier this year–down to 37 cents on the dollar.

The White House then “move[d] swiftly to clean up Trump’s seemingly offhand remarks,” Politico continued. Again an understatement. Office of Management and Budget Director Mick Mulvaney was rushed in front of a television camera to tell CNN: “I wouldn’t take it word for word with that.”

Just to make sure Wall Street got the message that no one in the Trump administration had any intention of doing what the head of the Trump administration had just said, Mulvaney was more explicit–and more contemptuous of the Puerto Rican people–in a second interview with Bloomberg: “We are not going to bail them out. We are not going to pay off those debts.”

Anyone want to bet that Trump doesn’t talk about “saying goodbye” to Puerto Rico’s debt again?

But the simple fact is that justice demands exactly that: The cancelation of all of Puerto Rico’s debt repayments, by the action of the U.S. government, taking responsibility for the Wall Street loan sharks who inflicted the damage in the first place.

Puerto Rico is caught in the same kind of debt trap that has ensnared poor countries in hock to the International Monetary Fund and World Bank–or more advanced economies like Greece, at the hands of European bankers and bureaucrats. The aim is to force vulnerable societies to knuckle under to the will of the ruling class.

And now, the devastation of neoliberal policies has made Puerto Rico’s crisis following Hurricanes Irma and Maria much, much worse.

People who want to show solidarity with Puerto Rico today will rightly focus on ways to provide immediate relief to communities desperate for food, water and critical supplies. SW hopes its readers will raise what money they can to donate to grassroots efforts–see the What You Can Do box with this article.

But we have another job to do now, while Puerto Rico lingers in the media spotlight: expose the debt trap that made the island more vulnerable when Maria struck and demand that it end.

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IN MAY of this year, Puerto Rico’s government went to federal court to file for the equivalent of bankruptcy on a debt that includes over $74 billion in repayments on government bonds and $49 billion in pension obligations. But in return for immediate relief, Puerto Rico will have to abide by even harsher austerity dictates.

The debt burden–which is larger than the annual economic output of the island when pension obligations are added in–is one consequence of a recession that has lasted for more than a decade.

The economic slump began when Corporate America–after many years of making super-profits off operations in Puerto Rico, particularly pharmaceutical production–abandoned the island after favorable tax incentives for investment were phased out starting in the early 2000s. Annual corporate investment in Puerto Rico peaked at 20.7 percent of gross domestic product in 1999–it has fallen to under 7.9 percent as of 2016.

Successive governments–whether led by New Progressive Party, which is aligned with the U.S. Republicans, or the Popular Democratic Party, tied to the Democrats–imposed policies that were guaranteed to make the crisis worse: neoliberal austerity.

Social spending was cut drastically–reductions in the island’s education budget led to hundreds of schools being closed, for example. Public-sector workers have been under intense pressure, with tens of thousands of layoffs and attacks on their unions. Regressive taxes have been hiked, making the sales tax of 11.5 percent higher than any U.S. state.

A succession of state assets were privatized on terms guaranteed to benefit the private purchasers: Back in the 1990s, conservative Gov. Pedro Rosselló González sold off hospitals that were part of a public health care system that was once fairly accessible and affordable at around half their market value.

Austerity measures propelled the vicious circle: Continuing economic decline made shortfalls in government revenues worse, leading to more spending cuts and regressive taxes that caused further economic contraction, and on and on.

The consequences even before Hurricane Maria were dire: Official unemployment is 11.7 percent, well over double the rate in the U.S. as a whole. Just under half of people on the island live in poverty, including three in five children.

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THROUGH IT all, debt was the straitjacket to make sure Puerto Rico didn’t stray from austerity.

Faced with declining revenues as a result of the contracting economy, various branches and agencies of the Puerto Rican government issued bonds to raise money–but these came not only with the usual obligation to repay the cash with interest, but increasing pressure to intensify neoliberal measures.

The vultures of Wall Street were eager to set up the increasingly complex bond issues. They paid better than most municipal issues, and interest on income from Puerto Rico bonds is exempt from city, state and federal taxes.

But the biggest gamblers on Wall Street see more than a tax loophole in the suffering of the people of Puerto Rico. A 2015 report from the Hedgeclippers.org website paints an ugly picture:

Several groups of hedge funds have bought up large chunks of Puerto Rican debt at discounts and have also pushed the island to borrow at extremely favorable terms for creditors. Hedge fund managers are also recommending the implementation of austerity measures.

Known as “vulture funds,” these investors have followed a similar game plan in other debt crises, in countries such as Greece and Argentina. The spoils they ultimately seek are not just bond payments, but structural reforms and privatization schemes that give them extraordinary wealth and power–at the expense of everyone else.

It’s been obvious for several years that Puerto Rico’s debt burden is unpayable, but the hedge-fund vultures are counting on enforcers in the form of the U.S. government.

A law pushed through Congress last year by Barack Obama and the Democrats established a seven-person Fiscal Control Board with broad powers to direct government agencies on the island and dictate laws and policies. It has ordered, for example, exemptions to federal standards on the minimum wage, Medicaid and Temporary Assistance to Needy Families.

To top it off, the seven members of the board include some of the same financiers who imposed neoliberal policies and arranged the deals that caused the debt burden.

Bondholders may still be forced to take a “haircut”–that is, accept less than what they are owed on Puerto Rico’s bonds. But the mission of the Fiscal Control Board is to make sure working people on the island, not investors, pay as much of the price as possible.

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ALL THIS “reads like the 21st century equivalent of the metropolitan looting of wealth from the colonies,” as Lance Selfa wrote for SocialistWorker.org after Hurricane Maria struck Puerto Rico head on.

And we know who the looters and their accomplices are.

The hedge-fund parasites who are trying to inflict more suffering on Puerto Rico rather than lose a penny from their investment gambles should face pickets outside their offices. Members of Congress–Republican and Democrat alike–should be greeted at public events by solidarity activists demanding that they remove the noose that is strangling the island.

There is much work to be done to organize for immediate relief in Puerto Rico after the hurricane catastrophe. But the left has an opportunity to also expose and oppose the unnatural disaster that came before Irma and Maria.

We may not hear any more about canceling the debt from Donald Trump, but we can raise our own voices to demand that this crushing burden be lifted off the people of Puerto Rico.

https://socialistworker.org/2017/10/11/abolish-the-debt-that-is-drowning-puerto-rico

Wall Street demands Puerto Rico pay up

By Rafael Azul
5 October 2017

A day after Trump’s visit to Puerto Rico, where he contemptuously told survivors that they were not facing a “real catastrophe” like Hurricane Katrina in 2005 and that their demands for emergency aid were throwing the US budget “out of whack,” administration officials made it clear there would be no debt relief for the hurricane-ravaged US territory.

Trump tossed out paper towels and other supplies at a local church in what might be described as the billionaire president’s “let them eat paper towels” moment. With 95 percent of the island’s residents without power, half the population without clean water, a lack of gasoline and medical supplies, and a death toll, which is officially 34 now and potentially hundreds more, the president said the condition on the island due to the federal response was “nothing short of a miracle.”

This contrasts sharply with a statement of the UK-based anti-hunger organization Oxfam, which said last week that it would provide relief to the island because of the Trump administration’s “slow and inadequate” response.

Prior to the visit, Trump sat down with Fox News correspondent Geraldo Rivera. In a pre-recorded interview, which was aired Tuesday night, the president blurted out that it was likely that Puerto Rico’s massive debt would have to be wiped out due to huge recovery costs now estimated to be $90 billion.

“We are going to wipe that out,” declared the president in reference to Puerto Rico’s $74 billion debt obligation. “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out,” Trump said in pseudo-populist fashion. “I don’t know if it’s Goldman Sachs but whoever it is you can wave goodbye to that.”

The president’s remark produced a sell-off on Wednesday of Puerto Rico’s defaulted bonds, which dropped from 56 percent of face value to 36 percent.

Administration officials rushed to downplay the president’s remarks and reassure the vulture capitalists which control the island’s debt.

Trump’s own budget chief, Mick Mulvaney, told CNN, “I wouldn’t take it word for word with that. We are not going to deal right now with those fundamental difficulties that Puerto Rico had before the storm.”

The head of the government’s Office of Management of Budget made it clear that there was no plan to relieve the island of its debt burden. “Puerto Rico’s going to have to figure out how to fix the errors that it’s made for the last generation on its own finances.”

In other words, Puerto Ricans did this to themselves. Storm or no storm, they must pay up.

In fact, the island’s massive debt is the result of its colonial legacy, a decades-long economic recession resulting from runaway US corporations seeking cheaper labor elsewhere, and the financial looting of the island by Wall Street which has long profited from buying up its high risk and high return debt.

In June 2015 then Puerto Rican governor Alejandro Padilla, declared Puerto Rico was in a “death spiral” because its debt is “not payable… There is no other option… this is not politics, this is math.” Having already imposed draconian austerity measures, Padilla demanded concessions from debt holders.

However, the Promise Act, passed by the Obama administration, mandated that the debt crisis would be resolved with ever more savage austerity measures that involve the dismantling of public budgets and social services. The Promise Act imposed a non-elected Financial Oversight and Management Board that would administer Puerto Rico’s budget and distribute the debt payments among debt holders.

The appointed members were front men for powerful financial interests. For example, two of its members, José Ramón Gonzalez and Carlos García came straight out of Banco de Santander, one of the banks that, operating in the middle, between Puerto Rico and the hedge funds, profited greatly from designing “financial instruments” and then selling them to investors.

And not just Banco de Santander; other Wall Street banks, including the infamous Goldman Sachs helped convince Puerto Rican officials to borrow more at terms that have been described as “payday loans” in a report by the Refund America Project.

The report describes how a $4.3 billion loan quickly morphed into a $33.5 billion debt, through the mechanism of compounded interest. It suggests that this portion of the debt violated Puerto Rican law and amounted to “unconstitutional debt” that can justifiably be repudiated. Tellingly, the current administration of Governor Ricardo Rosselló refused to cooperate with this study.

“We plan to do more with less,” was the phrase Rosselló used this June to describe his administration’s plan to deal with Puerto Rico’s financial implosion. He then went on to list the various austerity measures and job cuts that had already been enacted since he took office this January.

The Puerto Rican government’s $74 billion in tax-exempt bond debt to hedge funds and wealthy investors is the result more than ten years of negative economic growth, at the rate of about two percent per year, and mass emigration of skilled and professional workers in the context of some three decades of deindustrialization.

Prior to the storm the official rate of unemployment was 11.5 percent. Forty-six percent of all households existed under a dismal poverty line. One-third of workers were ineligible for Social Security benefits. A record 400,000 Puerto Ricans have left since 2007 with another 240,000 are expected to leave by 2025.

Retirees are among the most vulnerable. Three years ago, the Puerto Rican government changed the retirement system that guaranteed public sector workers a full pension after 30 years of employment to a system that forces workers to work up to 15 additional years for full benefits.

Driving the discussion in the bankruptcy court over further public pension cuts is the fact that the system is scheduled to run out of money this July, leaving some $50 billion owed to retirees unpaid. It is anticipated that ten percent or more may by slashed from existing pensions. Caps on Medicare imposed by the federal government force many seniors to pay more for their medical care

Had the US Federal Reserve bank adopted the same criteria toward Puerto Rico that it did toward Wall Street financial institutions behind the 2008–2009 crash and deemed “too big to fail,” it would have bought up Puerto Rico’s toxic assets long ago. That never happened and now the suffering people on the island are to be squeezed again.

Instead, the working class in Puerto Rico and on the US mainland should demand the cancellation of the debt and an end to the plundering of public assets. The Wall Street banks and other giant financial institutions should be transformed into public enterprises democratically controlled and collectively owned by the working class.

Only in this way can the necessary hundreds of billions be poured into Puerto Rico to repair and update the electrical power grid, the water system and flood control system, roads and schools, which are essential for the functioning of a modern society.

WSWS

Trump’s photo-op in Puerto Rico

By Rafael Azul
4 October 2017

Two weeks after Hurricane Maria struck Puerto Rico, leaving millions without electricity, water and other basic necessities, US President Donald Trump did a quick fly-in and fly-out Tuesday to pronounce what a wonderful job his administration has done to address the crisis.

Trump’s entourage included his wife Melania, some cabinet members, New Jersey Governor Chris Christie and Jenniffer González, chairwoman of the Puerto Rico Republican Party and the island’s nonvoting member of the US House of Representative.

The president’s handlers made sure that Trump—who clearly did not want to be there—appeared in public as little as possible to prevent any opportunity for public protest. After a little more than four hours, the president flew off, an hour ahead of schedule.

The people the president did speak to were preselected. He visited an upscale neighborhood in Guaynabo, west of the capital city of San Juan, which has been one of the fastest areas to have electricity, communication and other services restored. At a local church, he threw rolls of paper towels out to a crowd in the most demeaning fashion, later saying, “There’s a lot of love in this room, a lot of love. Great people.”

During his press conference, however, Trump could hardly contain his contempt for the population of the US territory. The recovery effort and the current situation on the island, he claimed, was “really nothing short of a miracle,” adding that it was nothing like the “real catastrophe” that occurred during Hurricane Katrina in 2005.

Following the press conference, Trump visited the Muñoz Rivera housing project in Guaynabo. One of the housing project residents, Raúl Cardona, told Trump “he should visit the central parts of the islands, where a lot of people have no food, no water, where a lot of people have died. What he saw in Guaynabo was nothing compared to the rest of the island,” Cardona told the ElNuevo Día newspaper about his words with Trump.

Only four percent of the island’s 3.4 million residents have power, more than half do not have clean water, and many residents are washing in rivers. With temperatures in the 90s, the lack of air conditioning and medical attention could lead to further fatalities, particularly among the elderly and infirm. Roads are blocked with debris and standing water is attracting mosquitos that can carry deadly diseases.

Thousands remain in shelters, gasoline is scarce, ATMs are out of money, and many of the supplies sent to the island have been left on docks because of the lack of diesel for trucks. Public schools, which suffered devastating destruction, may not open for six months or more, officials have said.

Trump repeated the official claim of 16 hurricane-related fatalities. After the president left, Governor Ricardo Rosselló raised the death toll to 34. The number of fatalities is expected to grow once rescuers reach more isolated rural and mountainous areas.

Earlier in the morning, the island’s Secretary of Public Health Héctor Pesquera announced there were more than 100 cadavers in hospitals around the island, which are currently being examined to determine if they died as a result of the hurricane, the most powerful storm to hit Puerto Rico in nearly a century.

Governor Rosselló—the MIT-trained politician who was a Clinton delegate during the Democratic Party convention last year—dutifully suppressed this information during Trump’s visit. The president later praised Rosselló for “not playing politics.”

Trump previously denounced Puerto Rican residents for the massive debt owed to the Wall Street banks, which is the result of the island’s colonial legacy, a decades-long economic recession and wholesale looting by financial speculators who control Puerto Rican debt. Rosselló and his predecessors have imposed savage austerity measures, and the island, which declared bankruptcy last May, is currently under the dictatorship of a financial oversight board imposed by the Obama administration.

During a press conference, Trump—who is proposing the largest tax cut for corporations and the rich in history—complained that the recovery effort was costing the US government too much money. “Now I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack because we’ve spent a lot of money on Puerto Rico. And that’s fine. We’ve saved a lot of lives.”

Rosselló, who has revised upward his government’s estimate of the cost of rebuilding the island’s infrastructure to $90 billion, is seeking a low-interest emergency line of credit as soon as possible, saying otherwise the government will run out of public funds by next week.

Trump has complained that Puerto Rican residents are not helping themselves enough and are essentially expecting government handouts. Last week he poured scorn via text message from his luxury golf course on local officials, including the mayor of San Juan, for complaining about the slowness of the administration’s response.

Shortly after Trump had left the island, US federal authorities denied Puerto Rico’s petition that recipients of food stamps (which are used by 46 percent of the population) be allowed to purchase meals in fast-food restaurants, given the scarcity of food in the island’s supermarkets.

WSWS

 

 

A tax plan by and for the US oligarchy

By Fred Mazelis
29 September 2017

The tax cut proposals announced by President Donald Trump this week constitute yet another massive transfer of wealth from the working population to the parasitic ruling elite.

Trump on Wednesday unveiled the plan drawn up in secret talks between congressional Republicans and administration economic spokesmen Steven Mnuchin and Gary Cohn. The tax overhaul would mean an unprecedented windfall for the super-rich, on top of the fact that virtually all income gains during the period of the supposed recovery from the financial crash of 2008 have gone to the top 1 percent income bracket.

The proposed legislation would reduce the number of income tax brackets from seven to three. The “simplification” would increase the lowest rate from 10 percent to 12 percent while reducing the highest tax rate from 39.6 percent to 35 percent.

All of the annual tax savings, to the tune of hundreds of thousands of dollars, will go to the wealthiest taxpayers. The bottom third will get nothing, many of them below the income level for income tax liability in the first place. Broad layers of better-off workers and the middle class will get almost nothing after the deduction for state and local taxes is eliminated from the federal income tax. There is no proposal for an increase in the earned income tax credit, which would help the poor, or any reduction in payroll taxes, disproportionately hitting the working class and the working poor.

Even more important are proposals to do away with the alternative minimum tax (AMT), reduce the corporate tax rate from 35 percent to 20 percent, slash the tax rate on so-called “pass-through businesses” to 25 percent and eliminate the estate tax.

The alternative minimum tax, which applies overwhelmingly to those with annual incomes over $200,000, dates back to 1970 and was devised to prevent the wealthy from avoiding taxes altogether through the use of itemized deductions and other techniques. Trump himself is reported to have paid an additional $31 million in taxes in 2005 because of the alternative minimum tax.

The reduction of taxes for pass-through businesses has been promoted by dominant sections of the ruling class, in typical demagogic style, as a means of aiding small entrepreneurs and family-owned enterprises. In fact, small businesses already pay less than 25 percent in tax and this windfall would apply almost entirely to hedge funds, private equity firms, giant law firms and other partnerships and limited liability companies (LLCs). LLCs have become more and more common in recent years, used by multimillionaires for such purposes as hiding ownership of luxury residences.

Among the various proposals, the elimination of the estate tax has the greatest ideological significance. Here too, the argument has been presented that inheritance taxes spell the ruin of family farmers and other hardworking Americans. Nothing could be further from the truth. The estate tax currently applies only to inheritances of more than $5.49 million, which is up from a $1 million threshold 15 years ago. It currently affects only 0.2 percent of individuals who leave bequests annually.

The modern estate tax in the US dates back almost exactly one century. It was introduced as part of the 1916 legislation that enacted the federal income tax. Against the perennial argument that it constitutes “double taxation” by targeting savings on income, the estate tax was seen as necessary to prevent the ever-increasing concentration of wealth. The American bourgeoisie, from the Progressive Era of the early 20th century through the New Deal and the post-World War II boom, saw this tax, including its redistributive effects, as insurance against social revolution. The tax rate on inheritance rose to 77 percent on the largest estates.

This began to change in the 1970s and 1980s, part of the social counterrevolution that has escalated in recent decades. In 1981, under Ronald Reagan, the top estate tax rate was reduced from 70 percent to 50 percent. It was phased out in 2001 under the George Bush administration, but this was not permanent. In the absence of new legislation it returned in 2011.

The demand for the removal of all taxes on inherited wealth amounts to a modern version of aristocratic privilege. The parasitic ruling cliques that sit atop the US economy are out to further entrench a system of American royalty in opposition to any claim that the offspring of the multimillionaires and billionaires should “earn their own way.” After several decades in which the top 1 percent has doubled its share of the national wealth, it now insists on measures that will make even the current levels of inequality seem quaint by comparison.

Some observers have pointed to the big tax cut legislation enacted in the first years of both the Reagan and George W. Bush administrations, in 1981 and 2001, respectively. Now, less than 20 years later, Trump seeks to make his mark, an even bigger one, in the tax-cutting competition.

The economic crisis of 2017 is a vastly deeper one than in recent decades, however. When Bush promoted his tax cuts, for instance, the US Treasury forecast a surplus of $5.6 trillion over the coming decade.

Although this prediction would not in fact have come to pass even if the tax cuts had not been enacted, today’s situation is quite different. The forecast is for a cumulative deficit of $10.1 trillion over the next ten years, with the annual deficit reaching the stratospheric level of $1 trillion by 2022 and going up from there.

The historical pattern of the past two generations is repeating itself today, although capitalist politics has in the interim moved very sharply to the right. The Republicans, utilizing varieties of right-wing populism that are verging on fascism, are spearheading the class war waged by the super-rich. This is summed up in the person of billionaire Trump himself, who declared, in Big Lie style last week, that “it’s time to take care of our people, to rebuild our nation and to fight for our great American workers.”

Anti-tax demagogy has played a viciously reactionary role over the past 50 years. For the vast majority of working people, the problems they face have increasingly centered on obtaining decent full-time jobs at wages that make it possible to raise a family, as well as affordable health care, housing and education. Anti-tax campaigns have been consciously used to divert attention from these issues.

The Democrats, more and more basing themselves on Wall Street, differ only on tactics and tempo. They are looking for a bipartisan deal to attack the working class. Democratic Senate leader Charles Schumer, known as the senator from Wall Street, is ready to do business with the Trump White House. To the extent that the Democrats criticize the Republican tax proposals, it is primarily on grounds of “fiscal irresponsibility.” They are no less hostile than the Republicans to any measures to redistribute wealth from the top to the bottom.

WSWS

The White House is Donald Trump’s new casino

ECONOMY

Trump Is Trying to Run the Government Like His Businesses: This Is Really Bad News for America and the Globe

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Photo Credit: Donkeyhotey / Flickr CC

During the 2016 election campaign, Donald Trump repeatedly emphasized that our country was run terribly and needed a businessman at its helm. Upon winning the White House, he insisted that the problem had been solved, adding, “In theory, I could run my business perfectly and then run the country perfectly. There’s never been a case like this.”

Sure enough, while Hillary Clinton spent her time excoriating her opponent for not releasing his tax returns, Americans ultimately embraced the candidate who had proudly and openly dodged their exposure. And why not? It’s in the American ethos to disdain “the man” — especially the taxman. In an election turned reality TV show, who could resist watching a larger-than-life conman who had taken money from the government?

Now, give him credit. As president, The Donald has done just what he promised the American people he would do: run the country like he ran his businesses. At one point, he even displayed confusion about distinguishing between them when he said of the United States: “We’re a very powerful company — country.”

Of course, as Hillary Clinton rarely bothered to point out, he ran many of them using excess debt, deception, and distraction, while a number of the ones he guided personally (as opposed to just licensing them the use of his name) — including his five Atlantic City casinoshis airline, and a mortgage company — he ran into the ground and then ditched. He escaped relatively unscathed financially, while his investors and countless workers and small businesses to whom he owed money were left holding the bag. We may never fully know what lurks deep within those tax returns of his, but we already know that they were “creative” in nature. As he likes to put it, not paying taxes “makes me smart.”

To complete the analogy Trump made during the election campaign, he’s running the country on the very same instincts he used with those businesses and undoubtedly with just the same sense of self-protectiveness. Take the corporate tax policy he advocates that’s being promoted by his bank-raider turned Treasury secretary, Steve Mnuchin. It’s focused on lowering the tax rate for multinational corporations from 35% to 15%, further aiding the profitability of companies that already routinely squirrel away profits and hide losses in the crevices of tax havens far removed from public disclosure.

We, as citizens, already bear the brunt of 89% of U.S. tax revenues today. If adopted, the new tax structure would simply throw yet more of the government’s bill in our laps. Against this backdrop, the math of middle-class tax relief doesn’t work out — not unless you were to cut $4.3 trillion from the overall budget for just the kinds of items non-billionaires count on like Medicaid, education, housing assistance, and job training.

Or put another way, Trump’s West Wing is now advocating the very policy he railed against in the election campaign when he was still championing the everyday man. By promoting tax reform for mega-corporations and the moguls who run them, he’s neglecting the “forgotten” white working class that sent him to the Oval Office to “drain the swamp.”

Since entering the White House, he’s also begun to isolate our country from the global economy, essentially pushing other nations to engage in more trade with each other, not the United States. Whether physically shoving aside the leader of Montenegro, engaging in tweet-storms with the President of Mexico over his “big, fat, beautiful wall,” or hanging up on the prime minister of Australia, Trump has seemingly forgotten that diplomacy and trade matter to the actual American economy. His version of “America First” has taken aim at immigrants, multinational trade agreements, regulations, and the U.N. Calvin Coolidge acted in a somewhat similar (if far less flamboyant) manner and you remember where that led: to the devastating crash of 1929 and the Great Depression of the 1930s.

What’s In a Shell?

As a new report by Public Citizen makes clear, the glimpses we’ve gotten of inner Trumpworld from the president’s limited financial disclosures indicate that his business dealings, by design, couldn’t be more complex, shadowy, or filled with corporate subterfuge.  He excels, among other things, at using shell companies to hide the Trump Organization’s profits (and losses) in the corporate labyrinth that makes up his empire. And even though the supposedly blind trust run by his sons is designed to shield him from that imperial entity’s decision-making, it still potentially allows him maneuver room to increase his own fortune and glean profits along the way.

So, what’s in such a shell? The answer: another shell, a company that usually has no employees, no offices, and no traceable capital.  Think of such entities as financial gargoyles. They offer no real benefits to the economy, create no jobs, and do nothing to make America great again. However, they have the potential to do a great deal for the bottom lines of Donald Trump and his offspring.  

Think of the corporate shell game he’s been engaged in as his oyster.  After all, anonymous buyers now make up the majority of those gobbling up pieces of his empire. Two years prior to his presidential victory, only 4% of the companies affiliated with people buying his properties were limited-liability, or LLC corporations, which are secretive in nature. Following his victory, that number jumped to 70%.

What that means in plain English is that there’s simply no way of knowing who most of those investing in Trump properties actually are, what countries they come from, how they made their fortunes, or whether there might be any conflicts between their buy-ins to Trumpworld and the national interest of this country.

Trump Lawsuits Meet Pennsylvania Avenue

Secret as so many of his dealings may be, there’s a very public aspect to them that Donald Trump has brought directly into the White House: his pattern of being sued. He’s already been sued 134 times in federal court since he assumed the presidency. (Barack Obama had 26 suits against him and George W. Bush seven at the same moment in their presidencies.)

In other words, one of the nation’s most litigious billionaires is in the process of becoming its most litigious president. A pre-election analysis in USA Today found that Trump and his businesses had been “involved in at least 3,500 legal actions in federal and state courts” over the previous three decades. That volume of lawsuits was unprecedented for a presidential candidate, let alone a president.

It’s fair to say that the public will, in one fashion or another, bear some of the expenses from such lawsuits, as it will, of course, from a lengthening list of ongoing federal investigations, including those into Trump’s business dealings with wealthy Russian businessmen and their various affiliates. According to Public Citizen, Trump formed at least 49 new business entities since announcing his candidacy (including some that were created after he was sworn in as CEO-in-chief). Of those 49, about half were related to projects in foreign countries, including Argentina, India, Saudi Arabia, and Indonesia. Since entering the Oval Office, Trump has met with leaders from each of those countries. And while it’s hardly atypical of a President to meet with foreign leaders, in this case there can be little doubt that national policy overlaps with private interests big time.

As Public Citizen concluded, “Although just prior to being inaugurated as president, Trump announced plans to ‘separate’ himself from his business empire, he still maintains ownership in his corporations and merely reshuffled his businesses into holding companies that are held by a trust that is controlled by Trump himself.” It added that he now has an ongoing stake of some sort in more than 500 businesses. Three-quarters of them are legally registered in Delaware, the largest tax-shelter state in the country.  So expect plenty more trouble and suits and investigations to come.

The Era of Golf-plomacy

Trump has always had a knack for promoting his own properties.  Now, however, he gets to do it on our dime. Indeed, we taxpayers fork over a million dollars or more every time the president simply takes a trip to visit his Mar-a-Lago private club in Florida, his National Golf Club in Bedminster, New Jersey, or any of his other properties. During his first 241 days in office, he spent 79 days visiting his properties.

Meanwhile, a near-army of his well-connected friends and wannabe friends have been sharpening their golf games at Trump locales. At least 50 executives of companies that bagged sweetheart government contracts, as well as 21 lobbyists and trade group officials, are members of Trump golf courses in Florida, New Jersey, and Virginia. As the president’s son Eric Trump told The New York Times,“I think our brand is the hottest it has ever been.”

They’re not just paying for golf, of course; they’re paying for access. About two-thirds of them “happened” to be golfing during one of those 58 days when Trump, too, was present. It doesn’t take an investigative reporter to show that whatever happens on a Trump golf course undoubtedly does not stay there. And keep in mind that the upkeep of the Trump entourage that travels from D.C. to those clubs with him is at least partially funded by us taxpayers, too.

Trump may tilt isolationist when it comes to countries that don’t put money into his clubs and hotel suites, but the nations that do tend to be in big with him. To take one example, Saudi Arabia, the first stop on his first foreign tour, recently disclosed that it had spent $270,000 for lodgings and food at the new Trump International Hotel just down Pennsylvania Avenue from the White House. Trump’s lawyers have pledged to donate any money foreign governments pay that hotel to the Treasury Department. Yet, so far at least, Treasury’s website has no such line item and the money promised for 2017 has now been pushed into 2018. Keep something else in mind: the Trump family forecast that it would lose about $2 million on that hotel in 2017. So far, it has made nearly a cool $2 million profit there instead.

While gaining unprecedented international coverage for his family-owned, for-profit business locales, Trump has created an ethical boundary problem previously unknown in the history of American governments. After all, we, the people, functionally pay taxes to his business empire to host foreign dignitaries, to feed them and provide appropriate security.  In this context, the president has made a point of having official state visits at his properties, which ensures that we taxpayers get hit for expenses when, say, Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe stay at Mar-a-Lago. Though the president swore he would cover Abe’s stay, there’s no evidence that it was more than a “fake claim.”

Meanwhile, the Trump brand rolls on abroad.  Though his election campaign took up the banner of isolationism, the Trump Organization didn’t.  Not for a second.  On January 11th, days before placing his hand on the Bible to “defend the Constitution,” Trump proudly noted that he “was offered $2 billion to do a deal in Dubai with a very, very, very amazing man, a great, great developer from the Middle East… And I turned it down. I didn’t have to turn it down because, as you know, I have a no-conflict situation because I’m president… But I don’t want to take advantage of something.”

He also promised that he wouldn’t compromise his office by working privately with foreign entities.  His business empire, however, made no such promises.  And despite his claims, Dubai has turned out to be ripe for a deal.  This August, the Trump Organization announced a new venture there (via Twitter of course): Trump Estates Park Residences. It is to be “a collection of luxury villas with exclusive access to” the already thriving Trump International Golf Course in Dubai, a Trump-branded (though not Trump-owned) part of an ongoing partnership with the Dubai-based real-estate firm DAMAC. Its president, Hussain Sajwani, is well known for his close relationship with the Trump family. Units in the swanky abode are expected to start at about $800,000 each.

Meanwhile, DAMAC gave a $32 million contract to the Middle Eastern subsidiary of the China State Construction Engineering Corporation to build part of Trump World Golf Club, also in Dubai. That’s the same China that Trump regularly chides for not working with us properly. The course is scheduled to open in 2018.

So buckle your seatbelts. U.S. foreign policy and the Trump Organization’s business ventures will remain in a unique and complex relationship with each other in the coming years as the president and his children take the people who elected him for a global ride.

His Real Inner Circle

President Trump has made it abundantly clear that sworn loyalty is the route to staying in his favor. Unwavering dedication to the administration, but also to the Trump Organization, and above all to him is the definition of job security in Washington in 2017. Take the latest addition to his communications team, Hope Hicks, who has rocketed into her new career by making devotion to the Trump brand, including defense of daughter Ivanka, a central facet of her professional life.  The 28-year-old Hicks has now been anointed the new White House communications director.

But she doesn’t have as much job security as one other group: The Donald’s personal legal team.  For make no mistake, Trump’s financial dealings lie at the heart of his presidency, raising conflicts of a sort not seen at least since Warren Harding was president in the 1920s, if ever. And yet, even though they should be secure through at least 2020 and possibly beyond, one little slip about Russia in the wrong D.C. restaurant could see any one of them ushered out the door.

In 2011, the Supreme Court’s Citizens United decision rendered corporations people. It erased crucial campaign finance and lobbying restrictions, and elevated billionaires to the top ranks of the American political game. It was a stunning moment — until now. Donald Trump’s presidency is doing something even more remarkable. The billionaire who became our president has already left Citizens United in a ditch.  He’s created not just a political campaign but a White House in which it’s no longer possible to imagine barriers between lobbying efforts, government decisions, and personal interest, or for that matter profits and policy.

In November, after the election, Trump announced that “the law’s totally on my side, the president can’t have a conflict of interest.” Recently, however, the Sunlight Foundation, a non-profit dedicated to government transparency, revealed 530 active Trumpian conflicts of interest and that’s after only eight months in office.

Theoretically, we still live in a republic, but the question is: Who exactly represents whom in Washington? By now, I think we can take a reasonable guess. When the inevitable conflicts arise and Donald Trump must choose between business and country, between himself and the American people, who do you think will get the pink slip? Who will be paying for the intermeshing of the two? Who, like the investors in his bankrupt casinos, will be left holding the bag? At this point, we’re all in the Washington casino and it sure as hell isn’t going to be Donald Trump who takes the financial hit. After all, the house always wins.

Copyright 2017 Nomi Prins

© 2017 TomDispatch. All rights reserved.

Nomi Prins, a TomDispatch regular, is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive.

http://www.alternet.org/economy/white-house-donald-trumps-new-casino?akid=16120.265072.hl6U-A&rd=1&src=newsletter1082929&t=4

Why We Need a Universal Basic Income

ECONOMY
America is in desperate need of both a universal basic income and a federal jobs guarantee.

WASHINGTON D.C. – OCTOBER 8: Protesters march through the Nations capitol during the 2011 Occupy movement on October 8, 2011 in Washington D.C. 
Photo Credit: Evan McCaffrey/Shutterstock

As Labor Day approached this year, I awaited the lip service of Republicans praising “job creators” and business owners. I knew full well there was no chance they’d honor the common laborer – the people who feed, house, and transport them; the workers who keep their cities clean and their towns sanitary; the men and women who have raised their children and taken care of their aging and dying parents.

I didn’t have to wait long to be proven right. Long devoid of any meaning to most American laborers, the holiday now serves as little more than a day for our current politicians to shamelessly adulate their donors – while people in the service industry are forced to work longer hours.

Yet as disheartening as the desecration of Labor Day is, the policies of the current administration are worse.

As Noam Scheiber recently wrote at The New York Times, amidst all the loud, sensationalist stories, the current administration quietly has worked to dismantle the few rights and protections the common American laborer once had. The Trump White House has “proposed a 40 percent cut for the government agency that conducts research into workplace hazards, undone Obama-era guidances on enforcement of employment laws and sought to eliminate a roughly $10.5 million program that helps some unions and nonprofit organizations…to educate workers on how to avoid injury and illness.”1

This assault on worker’s rights is only the beginning.

Wage theft has become one of the most widespread worker violations of our times. This illegal but ubiquitous practice includes making laborers work off the clock, whether through breaks or before or after shifts. It also includes not paying workers a higher overtime wage, and misclassifying laborers as contractors who are then unable to qualify for benefits or employee protections. Wage theft even encompasses the simple violation of minimum wage laws.

Like so many other labor problems, wage theft affects women and minority workers most severely. What’s more, enforcing wage and hours laws is largely left to the individual worker because the Department of Labor, especially under the current administration, has no interest in being proactive. Therefore, violations are prevalent as jaywalking and don’t get policed.

One study of low-wage workers in Chicago, Los Angeles, and New York showed that two-thirds of laborers experienced wage theft at least once a week, averaging during the course of a year about $2600 per worker. If these three cities are representative of the rest of the country’s thirty million low-wage workers, wage theft effectively steals over $50 billion a year from hard-working men and women.2

But wage theft is only one of our many problems. As such scholars as Mark Paul and William Darity point out, while the government purports that unemployment is currently under 5 percent, broader measures of classifying unemployment – including “discouraged” and part-time laborers seeking full-time work – nearly double that number to 10 percent. Unemployment also is twice as high in the black community, where African American workers have never experienced rates below 7 percent.3

Still, the main reason for poverty in America is not necessarily the lack of jobs, but the lack of a living wage and a social safety net. According to the Economic Policy Institute, a full quarter of full-time workers still earn poverty-level wages. A living wage – the minimum pay needed for the basics of living – has become a rallying cry for workers all over America recently, as calls for an increase in the minimum wage, like Fight for Fifteen, have gained steam.

Full employment, therefore, is important: people need jobs that are year-round (as opposed to seasonal work), pay a living wage, and include benefits like health care, disability insurance and retirement funds.

Without these things, even people who work more than full time still can expect to spend years living below the poverty line. As technological innovation and the loss of American jobs overseas further threatens the plight of laborers, nothing short of drastic changes to the system will truly help alleviate hardship and suffering among the nation’s most impoverished.

In addition to standard social safety nets such as single-payer universal health care, America is in desperate need of both a universal basic income (UBI) and a federal and a federal jobs guarantee (FJG).

The UBI would be for those who truly needed it – those who could not endure traditional full-time employment, either because of age, illness, disability, care-taking or student-status. As baby boomers grow old and need care, as students struggle to earn an education without becoming hideously indebted, and as parents yearn to stay home with infants and very young children, a UBI would truly revolutionize society.

Proposals vary, with costs depending on whether or not UBI would be paired with other social programs, like universal health care. Karl Widerquist, a Georgetown professor of political philosophy, estimated that at $6000 per child and $12,000 per adult, the net cost of UBI would be $539 billion per year.

This number may sound astronomical, but to put it into perspective, Widerquist writes, a UBI would cost “less than 25 percent of the cost of current US entitlement spending, less than 15 percent of overall federal spending, and about 2.95 percent of Gross Domestic Product.” It would immediately lift more than 43 million people out of poverty, including 14.5 million children.4

But as basic income advocate Scott Santens points out, for the cost of UBI to truly be accurate, economists need to deduct the cost of all the social safety-net programs and tax credits that UBI would replace. Depending on the other choices that we, as a country, make, the total cost of UBI would be somewhere in the “hundreds of billions of dollars range.” The cost of not eliminating poverty? It’s over $3 trillion a year.5

UBI would work best if paired with a federal jobs guarantee. The vast majority of Americans want to work; they derive a sense of pride and fulfilment and identity from their jobs.

A FJG undoubtedly would transform the United States. Taking the best aspects of the New Deal (and learning lessons from the era about what not to do), a FJG would have the power to completely rebuild our nation’s infrastructure, modernizing the country and making it accessible to most non-car owners.

It would radicalize our choices in aging and end-of-life care, as more Americans could stay at home with loved ones and have medical professionals and caretakers come to them. Additionally, we might finally have enough qualified professionals to engage in mental health care, helping to alleviate some of the nation’s rampant drug and alcohol abuse.

A FJG would unquestionably help narrow the achievement gap in schools, as high-quality universal childcare could be offered from infancy. For many women with children, this fact alone would allow them to continue their own careers without worrying about earning less what their childcare costs.

Just as with UBI, costs associated with a FJG vary widely according to multiple factors. According to the Center for American Progress, a FJG could create 4 million jobs at $15 an hour plus benefits at a cost of “something like $158 billion a year,” a figure equaling only a quarter of the currently proposed tax cuts for the rich. On the higher end, Duke University economist William Darity estimates the cost at $750 billion a year, but this includes benefits and health insurance.6

Further, with at least one-third of workers in the private sector not getting paid sick leave, and a full quarter of Americans never enjoying paid vacation or holiday time, a federal jobs guarantee would offer benefits to every hard-working person who wants them.7

If private companies underpaid or abused their workers in other ways, laborers could always leave their jobs for government work. The FJG’s brilliance is perhaps most obvious here: it keeps private companies — who historically have shafted their workers at every turn to make a dime — as honest and humane as employers in a capitalist system can possibly be.

This fundamental restructuring of our society would also usher in a cultural and spiritual renaissance of sorts, as we connect labor – any kind of labor – back to dignity. No matter the job, we must learn to see the intrinsic value of our fellow human beings. We must learn to honor all work – not just work that turns a profit.

My lamentations for a Labor Day that honors laborers, I fear, have only just begun. Unless and until all non-elite American workers band together across racial and social and educational lines, our money-hungry politicians will continue to serve the interests of people just like themselves: the rich and already-powerful.

[1] Noam Scheiber, “Trump Shifts Labor Policy Focus From Worker to Entrepreneur,” The New York Times, Sept. 3, 2017.
[2] See UCLA Labor Center, “What is Wage Theft?,” online, http://www.labor.ucla.edu/wage-theft/; Brady Meixell and Ross Eisenbray, “An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year,” Economic Policy Institute, Sept. 11, 2004.
[3] Mark Paul, “A Job for Everyone: A federal job guarantee is a good All-American policy,” US News and World Report, Oct. 7, 2016.
[4] Karl Widerquist, “How Much Does UBI Cost?,” Basic Income Network, May 26, 2017.
[5] Scott Santens, “The Cost of Universal Basic Income is the Net Transfer Amount, Not the Gross Price,” Huffington Post, July 10, 2017.
[6] Annie Lowrey, “Should the Government Guarantee Everyone a Job?,” The Atlantic, May 18, 2017; Paul, “A Job for Everyone.”
[7] Bryce Covert, “Back to Work,” New Republic, July 18, 2017.