Haiti Erupts!!!
Jude Wanniski
February 11, 2004


Memo To: Rep. Charlie Rangel [D NY]
From: Jude Wanniski
Re: The Poorest Country in the Hemisphere

There was a time, Charlie, when you were really concerned with conditions in Haiti. There was a point where you played a major role in persuading the Clinton administration to send our armed forces to Port au Prince threatening invasion unless Haitiís military government stepped down and allowed Jean-Bertrand Aristide to return to power. Thatís what happened, almost a decade ago, and after a few years of U.S. military occupation of Haiti while Aristide was getting his footing, we now must accept the fact that Aristide has been a total failure, and that life under the military government of General Cedres, as bad as it was, was marginally better than it is now. When I saw the front page of the New York Times yesterday with headlines of insurrection bordering on civil war, I thought of you and how you seem to have washed your hands of the situation and walked away from the poorest country in the hemisphere.

If you remember, Charlie, I told you repeatedly over all these years that Haiti was not poor because Haitians are lazy or dumb but because they have been victims of the International Monetary Fund. The practice over the years has been to lend Haiti money and when it has trouble paying its debts to offer to lend them enough more to pay interest on the debts as long as they agree to IMF ďconditionsĒ that make matters worse. That is, conditions involving currency devaluation and higher rates of taxation. These cause the Haitian economy to become LESS able to service its dollar debts, which in turn causes the IMF to do another round of lending and perverse conditions. We have now arrived at a state where 8 million impoverished Haitians are more than $1 billion in debt and the taxes that are squeezed out of them are making it impossible for them to make ends meet even at the lowest standards of living.

Your staff has been helpful to me in tracking down similar conditions in Black Africa, and it also helped direct me to at least some sketchy data on Haiti, which I hope they will bring to your attention. On the personal income tax, I find a worker hits the 10% tax bracket at $444 per year, the 25% bracket at $5,555 per year and the 30% bracket at $16,000 per year. On top of these rates there is an additional 10% VAT tax, and an old age and disability tax on wages of 6% per month on all wages over $25 per month. Then there are the business taxes on top of the VAT: 35% on all profits over $16,000, but with graduated rates from all profits up to $444 per year, 15% over $444, and 30% over $5,555. These are disgraceful numbers, Charlie, adding up to such an oppressive tax take by the government that enterprise cannot get started, much less survive. Of course there is rampant corruption and crime alongside the political insurrection.

It will not get any better unless you personally use your influence in the Democratic Party to do something about it. As the ranking Democrat on House Ways and Means, you have one of the most important and powerful levers of power in your hands, especially the power to make yourself heard on an issue as deplorable as this one. You will recall, I hope, that I urged you to get the Clinton Administration to send a team led by your old friend Jack Kemp to Haiti, to sort out the mess created by the IMF and its powerful supporters in the big banks. Iíve urged my Republican friends to do the same over the years, but there is even less interest there than Iíve had from members of the congressional black caucus. It would be an easy thing to fix, because the fix so obviously lies in sweeping away the Haitian tax code and replacing it with a simple system with income thresholds at much higher levels. For all the billions U.S. taxpayers spent on the military solution in Haiti, it could also be arranged to have a good chunk of Haitiís IMF debt forgiven. The first step, though, is to put yourself back into the picture instead of walking away from it. If youíre no longer interested in Haiti, who will be?

Here is the New York Times editorial today, ďHaiti Erupts,Ē which of course makes no mention of the IMF or Haitiís insane tax structure:

Haiti's long smoldering political crisis has exploded into insurrection, with armed gangs driving the police out of the country's fourth-largest city, Gonaves, and at least 10 other towns. Some are now back in government hands, but more than 40 people have been killed so far, and the violence is far from over. Haiti's democratically elected president, Jean-Bertrand Aristide, helped bring this crisis on himself, with his encouragement of mob violence, politicization of the national police and failure to ensure fair legislative elections. Yet many of the insurrectionists are former Aristide allies with even weaker democratic credentials.

Whoever ultimately prevails in this conflict, democracy and the Haitian people are likely to be the big losers if it unfolds along its present violent trajectory. Spreading unrest could send tens of thousands of desperate refugees fleeing to neighboring countries, including the United States.

If this story is to have a happier ending, those nations must act now, with Washington in the lead. The 14 other countries of the Caribbean Community have commendably tried to mediate. But they lack the authority and influence needed to lead Haiti back from the brink. America alone has that kind of prestige. It must take constructive action, not just drop hints that Mr. Aristide should resign.

Nearly a decade ago, the Clinton administration's dispatch of American troops helped persuade a murderous Haitian military junta to step down, paving the way for Mr. Aristide to complete his first presidential term, which had been interrupted by a coup. Unfortunately, Washington's involvement wound down before the kinds of steps that would have deepened the roots of Haitian democracy like creating a professional police force and independent electoral institutions were completed. That kind of unglamorous institution-building would most likely have prevented the current insurrection and much of the political crisis that preceded it.

Mr. Aristide's survival in office for the nearly two years remaining in his presidential term may depend on his willingness to accept an American-led police retraining effort and international supervision of the next parliamentary and presidential elections. Washington should now be offering that kind of assistance and urging Mr. Aristide to accept it.

Copyright 2004 The New York Times Company