The Tea Party: Start Drinking Coffee

Taking the Pride Out of the Tea Party, One Primary at a Time

By DAVID HAGMANN

Published: September 22, 2010

On Nov. 2, Americans will once again be asked to the polling booth to cast their votes in the midterm elections. This year, some of the Republican candidates will be backed by a populist conservative movement, the Tea Party. The group’s rhetoric may sound appealing, but a closer look is warranted.

When President Obama took office, Congress passed the American Recovery and Reinvestment Act of 2009, also known as the stimulus bill. These large government expenditures gave rise to the widely covered popular conservative movement. Although it has mostly been in the news for things it opposes (government spending of any kind and the health care bill), when its candidates ran in the Republican primaries, they also had to come out in favor of policies. In doing so, a flaw with popular movements in general emerged: ideas that may seem reasonable in the abstract can lead to terrible policy.

Rand Paul, who won the Republican primary for Senate with significant backing from Tea Party supporters, provides an excellent case study. Earlier this year, he said in an interview that he opposed the Civil Rights Act, which prohibits businesses from discriminating against people on the basis of race. He argued that the government does not have the right to force business owners to do business with African-Americans if they don’t wish to do so. He later retracted the statement.

His first opinion was, however, consistent with his libertarian ideology: if you want the government to stay out of the market, you cannot accept intervention to prevent discrimination. The very assumption of the Tea Party ideology is that the free market works. Businesses that discriminate against customers (or employees) based on their race, gender or sexual orientation would lose them to the competition and eventually go out of business. History shows that this doesn’t happen on its own. This example shows how easily dogmatic application of ideology can fail in practice.

However, not all of it can be chalked up to inexperience. The Tea Party also began to rally behind a push for a flat rate tax, termed the Fair Tax. In short, the Fair Tax would abolish all current taxation and replace it with a sales tax. It seems fairly simple: replace the complexities of the tax code with a tax where everyone pays the same rate.

However, there are numerous technical problems associated with such a change (consider, for example, what happens to the value of your savings when everything gets 30 percent more expensive); but most importantly, the entire claim rests on one fallacious assumption: that the government pays the tax on all its purchases, which becomes part of what makes the change supposedly revenue-neutral. But if the government has to pay a 30 percent tax on everything, then maintaining the same services would cost 30 percent more. The Fair Tax proposal does not account for this and instead assumes the total spending would remain unchanged. Effectively, this would be an unprecedented cut to government spending that may well be equivalent to abolishing everything but social security, Medicare and the military.

Despite having “fair” in its name, the Fair Tax is anything but. Low-income households spend a larger part of their income than those who earn more. Because a sales tax only applies to money that has been spent, high-income households would have a significantly lower tax rate than low-income Americans.

The Tea Party has also rallied against the Environmental Protection Agency, which regulates pollution and may in the future regulate carbon emissions. Profits can be expected to increase greatly if there is nothing stopping a firm from polluting rivers. Americans can’t be faulted for not knowing just what government agencies do all day. However, we just recently witnessed a recall of eggs suspected of being infected with salmonella, courtesy of the Food and Drug Administration (FDA). We also saw the devastation that can be caused by a lack of regulation or proper enforcement thereof—see the financial crisis and the BP oil spill. Surely we cannot all agree with Rand Paul, who said that President Obama. chastising BP after the spill, sounded “really un-American in his criticism of business.”

Indeed, we also only recently saw that government can be effective. The Chief Economist of Moody’s Analytics, Mark Zandi, and a Princeton economist, Alan Blinder, recently published their analysis of the government’s response to the financial crisis. They considered both the stabilizing measures (starting under the Bush administration) and the stimulus package, finding that both had a tremendous positive impact. They argue that without them, our Gross Domestic Product would have been 11.5 percent lower this year (a loss of about 1.6 billion dollars—an unimaginably large number) and we would have lost an additional 8.5 million jobs. Their analysis is in line with others who have found a similar effect.

The message from populist movements can sound very appealing—that’s how they get a following. However, it pays off to exercise critical thought and to carefully examine their claims before casting a vote. If a policy proposal sounds like common sense, the very first question to ask oneself is whether there may be a reason for why it is now done differently.

It is that kind of critical thinking that college is supposed to convey, and hopefully Americans around the country will exercise it when it comes time to mark (or puncture) a ballot.