President Trump and House Republicans have unveiled their long-promised proposal to reform America’s tax code, with Trump calling it a “big, beautiful Christmas present” for the American people. Critics say the gift is a tax cut for the richest Americans. We discuss the proposal with economist and former Greek Finance Minister Yanis Varoufakis, who argues, “It’s an out-and-out class war waged against the poorest, the weakest, the disenfranchised—the very same people that Donald Trump appealed to in order to get elected.”
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: You heard in this introduction the tax plan that has been put forward. And you’re here in this country, and this is your specialty. You’re an economist. You taught at what? University of Texas, Austin?
YANIS VAROUFAKIS: That is right.
AMY GOODMAN: And you’re at University of Athens now in Greece. You’re the finance minister, former finance minister in the Syriza government. President Trump calls this a Christmas gift for the American people. What is your assessment of it? And then, fit it into the picture of global capitalism.
YANIS VAROUFAKIS: He has a very interesting definition of the American people. He considers the set of the American people to be exactly the same as the set of his friends.
Look, it’s déjà vu. We’ve seen it all before. It all began in the 1980s under Ronald Reagan, this mass redistribution of income from the have-nots to the haves. We saw it under George W. We’re seeing it again. But there is a difference now. The difference is that American capitalism has exhausted its capacity to reproduce itself through a process of tax cuts—the trickle-up effect of wealth rising from the bottom to the top 0.1 percent. In the 1980s, when Ronald Reagan first applied this kind of tax cut-based policy, the United States was still in control of what I call the recycling of global profits and surpluses. The United States economy was, if you want, the engine of growth internationally. The tax cuts in this country were fueling demand for the net exports of Japan, back then, Germany, Holland, later China. And this was keeping capitalism globally in that state of irrational exuberance, if you remember.
But then, after 2008, those pyramids collapsed. The American economy does not have that capacity anymore. The increase of the federal budget deficit, that supposedly the Republicans are all against—nevertheless, they are going to boost it magnificently now—are at the very same time, Amy, as they are antagonizing China, that owns a large chunk of American public debt, which now they’re going to keep increasing in order to line the pockets of their mates. You couldn’t design a more catastrophic economic policy than that—boosting the budget deficit by lining up the pockets of the rich, continuing to stagnate the incomes of the middle class and the working class, and antagonizing your main creditors. I rest my case.
AMY GOODMAN: So, President Trump is headed to Asia, and he’s going to visit a number of countries. He’s going to start off by playing golf—
YANIS VAROUFAKIS: It’s very frightening, isn’t it? Yes.
AMY GOODMAN: —with Shinzo Abe in Japan, and he’s going to China, the country you were just talking about right now. The significance of all of this? And, of course, in the midst of this, you have the escalation of the crisis with North Korea. You have the pope just giving a speech saying we’re heading toward war.
YANIS VAROUFAKIS: Well, it’s a very dangerous game that the United States administrations of the last 10, 15 years have been playing, by antagonizing China through an alliance with Mr. Abe in Japan and his predecessors. It’s a very dangerous game, because—and, actually, very irrational game, because the United States completely and utterly depends on China. Let’s face it. The only reason why the 2008 collapse of the financial sector did not lead to a Great Depression in this country is twofold. One is the Fed, that kept printing money, and they’re floating the banking sector, Wall Street, down the road from here. And the other is China. The Chinese boosted their own credit production, their own bubble, credit bubble, in China, intentionally, from something like 140 percent of their total income, GDP, to 280 percent. They did this on purpose, because they were facing the prospect of an additional 40 million unemployed people. And by doing this, they stabilized American capitalism, to a very large extent. Now, we have an administration in Washington, D.C., which simultaneously is ganging up with Prime Minister Abe in Japan against China while increasingly needing China to keep rebalancing the global and the American economy. This is precisely what the global economy and the American economy do not need.
AMY GOODMAN: I want to ask you something about language. I mean, you’re here in New York, not far from Zuccotti Park, where, what, six years ago was the massive protests, Occupy Wall Street. They changed the language. You say the word “1 percent,” you say “99 percent,” everyone knows what you’re talking about. So I want to talk about the language used now around the tax bill. We use language like “tax cuts,” “tax relief.” But is there another way to describe, to refer to the one-and-a-half trillion dollars in austerity?
YANIS VAROUFAKIS: Class war. It’s an out-and-out class war waged against the poorest, the weakest, the disenfranchised—the very same people that Donald Trump appealed to in order to get elected.
AMY GOODMAN: We’re going to break and come back to this discussion. Our guest is Yanis Varoufakis, economist, author of the new book, Adults in the Room: My Battle with the European and American Deep Establishment. And that’s where we’re going to start after break: What is the European and American deep establishment? Yanis Varoufakis served as finance minister of Greece in 2015, the chief negotiator of Greece’s debt and bailout with the European Union. This is Democracy Now! We’ll be back in a minute.