Although post-election research may ultimately reveal that the Democrats, Independents, and Republicans who voted for Scott Brown did not consider themselves Tea Partiers, let's, for the sake of argument, say that the Massachusetts U.S. Senate race was another election won by the Tea Partiers, and the values and planks they stand for.The above assumed, let's evaluate the Tea Party's complaints to see where they might take the nation, economically.
Angry About Health Reform
First, Tea Partiers were angry about the health-care reform bill, so they voted for Brown, who opposed President Obama's revision. Further, there's a good chance, as a result of the stunning upset, that Congressional Democrats and President Obama will not try to modify the current health-care reform bill to make it more acceptable to House Democrats, nor is it likely that the Senate will pass a new bill. Hence, in that sense, the Tea Party complaint has helped end health-care reform.
The problem? The health-care problem -- with its the 35 million uninsured, its ballooning Medicare/Medicaid costs and private health insurance premiums, and its emergency-room-as-primary-care-for-the-uninsured absurdity -- is not going to disappear.
Second, Tea Partiers were angry at the bank bailout, including those large bonuses and pay packages for bailed-out bank executives. Well, as flawed as it was, the bank bailout averted the collapse of the U.S. financial system and probably an acute crisis for the global financial system, if not its outright collapse, as well.
U.S. Chose Success With Banks
New York Times (NYT) Business Journalist Floyd Norris said it best about a year ago when he predicted that the banking crisis "would be one in which justice and success don't come together" -- the U.S. had to choose one. The U.S. chose success, and the result was (predictably), a lot of angry citizens.
Third, Tea Partiers were angry at the General Motors and Chrysler bailout and the fiscal stimulus package. GM and Chrysler, according to Tea Party members, should have been allowed to fail. Capitalism includes the risk of failing, and if your business model doesn't work, too bad for you.
The problem with that policy stance is that the terrible 2007 to 2009 U.S. recession -- and the high level of unemployment that's hurt millions of Americans, including Tea Partiers -- would have been much worse had GM been allowed to fail. Millions more Americans in GM's support sectors would have lost their jobs. Likewise with the fiscal stimulus package, which supported automatic stabilizers that helped put a floor under the recession.
Who Are The Tea Partiers?
Tea Partiers also voted to make a statement about the direction they want the United States to go in, and it's been said that the Tea Party movement is populist. Populist? Have you seen any calls by Tea Partiers to establish a single-payer, national, public health care system? A national, minimum wage of $10 per hour? A national, public day-care service?
All of the aforementioned are populist actions, and none have been advocated by the Tea Party movement. The Tea Party movement is conservative and libertarian, but to-date it has not been populist. A key Tea Party value? Limited government. At the federal level, that basically means a government for national defense and to enforce contracts, and little else. In other words, the Tea Party is a very conservative form of political activism.
Tea Partiers are also upset about taxes, which they argue are high. Certainly some Tea Partiers favor a universal tax cut, including tax cuts that benefit the middle class and working class. But since Tea Party activism is in it infancy, it's hard to predict with certainty whether they'd favor middle/working class tax cuts, or simply mirror current Republicans, who skew tax cuts to benefit upper-income groups.
Upset About Budget Deficit
And concerning taxes on those upper-income groups, they're already low. President Bush proposed and Congress approved a massive $1.1 trillion income tax cut in 2001 that really benefited upper-income groups.
Tea Partiers are also upset about the U.S. budget deficit and the $12.3 trillion national debt, and their impact on the U.S. dollar. But the tax cuts the Tea Partiers favor would increase the budget deficit and national debt. And the impact on the dollar? Well, let's just say another tax cut, absent large spending cuts, would not support the dollar.
And concerning spending cuts, consistent with their limited government value, Tea Partiers want to both reduce government spending and the role of government in society and the economy, in general. The problem is, a major cost growth area for the federal government -- health care spending for Medicare and Medicaid -- requires health care reform.
Draconian Cuts In Social Security?
But as we've seen, Tea Partiers oppose health-care reform. Another major cost area is Social Security. Are Tea Partiers ready to advocate draconian cuts in Social Security? If they opposed health care reform, they'd have to, because cuts in other, discretionary programs, by themselves, will not produce a balanced budget.
Finally, there are those who charge that the Tea Party is really being led by upper-income groups and lobbies that simply want...(surprise) even lower taxes on upper-income groups.
We'll need more data on who their members are and more group history before one can form a supported conclusion on Tea Party backers, but on a larger level, that's besides the point. We do know that the Tea Partiers favor free markets. The problem is, it was the free market that led to the financial crisis that created the miserable economic conditions the Tea Partiers protest.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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