“Well written and an interesting perspective.” Clan Rossi --- “Your article is too good about Japanese business pushing nuclear power.” Consulting Group --- “Thank you for the article. It was quite useful for me to wrap up things quickly and effectively.” Taylor Johnson, Credit Union Lobby Management --- “Great information! I love your blog! You always post interesting things!” Jonathan N.

Friday, July 29, 2011

In Defense of the Tea Party

In the wake of the U.S. House’s “Tea Party” caucus in the Republican caucus effectively delaying the Speaker’s bill for raising the debt ceiling, it might be useful to row against the current for a moment if only to present a defense of the Tea Party’s agenda. To be sure, problems exist in it, but a defense can be made. I submit that the media has not been particularly accurate, or fair, concerning the movement or its involvement in the U.S. Government.

Most notably (but not obviously), Tea Party representatives are correct that August 2nd does not necessarily bring with it default, for that refers only to the Treasury department not making the required interest and principal payments on the debt. That some government agencies have to shut down does not constitute default, for the latter pertains ONLY to serving debt. Indications are that the U.S Government could service its debt August from incoming tax revenue. If so, default would only be voluntary—if the Treasury should decide to use the tax revenue for other uses.

It is more accurate to say that delaying raising the debt-ceiling would increase the likelihood that the U.S. Government’s credit rating will be lowered to AA from AAA. On this front, the refusal to compromise can be excoriated. For its part, the Tea Party might say that it is worth risking if a structural re-alignment could occur.

What does the Tea Party really want: a reduction in government or a reduction in the federal government? Or both? Other things equal, I suspect that the party would prefer a given domestic program to be at the state level, but even there the spending (and taxing) would receive some ire. If the goal is primarily to restore federalism, the Tea Party is on firmer ground. Since the CSA-USA war (1861-1865), the United States has been trending toward political consolidation at the expense of the innate diversity coming with an empire-scale. Nothing—not even Ronald Reagan and his Supreme Court—could turn the tide. One could not blame the Tea Party for saying: if not now, when? Indeed, the existence of a $14.3 trillion U.S. Government debt—roughly the amount of the annual GNP—can be viewed as a manifestation, or symptom, of the imbalance.

So it makes sense to pick the debt-ceiling as the matter on which structural adjustments can be made. However, what if the majority of the people, or branches, prefer consolidation to federalism in any meaningful sense? Is it fair to foist a structural shift on the majority? Would not it be fairer to promote a constitutional amendment directed on the question of federalism?

Of course, the Tea Party representatives could simply be opposed to the debt, and therefore of increasing it. If it is unsustainable already, then raising the debt ceiling might make matters worse even if it assuages short-term difficulties. If the leverage possible in a debt-ceiling decision is given up, there might not be another chance to stop the trend of more and more debt being added to what is already unsustainable. Rather than force massive short-term spending cuts in federal programs and agencies, however, the leverage could be used to agree to longer-term cuts, say over ten years. This is what the Tea Party has been for, though at the risk of short-term shock.

However, it could be countered that were the Tea Party really focused on reducing the debt, the objection to increasing tax revenue, especially for the rich whose effective rate is eighteen percent, would not exist. That is to say, even if citizens and residents are being taxed too much, it is not too much relative to the debt (past spending that was borrowed). This is different than saying that spending should be cut, for that applies to current and future deficits. An enhanced Tea Party position would be to come down hard on the debt (and further deficits), and thus be for both spending and revenue means of closing the gap. Even combined, it will be difficult to pay off the $14.3 trillion.  From this perspective the spending/revenue debate is premised on a false dichotomy wherein one or the other is assumed to be sufficient. The magnitude of the debt relative to GNP—the highest since the end of WWII in the twentieth century—suggests that the Tea Party is not radical enough.