Musings From The Edge: A Non Economist View of the Tea Party Ideology

Along with many others I have been watching the debacle in the nation’s capitol that has been referred to a the debt ceiling debate. I wouldn’t really called it a debate. It was more like two parents trying to deal with a two year old child pitching a temper tantrum in the middle of Wal Mart and not doing a very good job of it. Essentially, the group of Americans who call themselves the Tea Party Movement, I guess because they think they are back in Boston and are going to be throwing bales of tea into the harbor, would be the two year old. The problem seems to that they don’t like the way the government handles their tax money. Much of their discontent seems to center on something called entitlement programs which includes things like Social Security, Medicare, Medicaid, Veteran’s Benefits, etc. They want those programs cut back along the lines of traditional Republican thinking that the government can cut taxes which will leave them more money. So, let’s examine their philosophy and see how it works out.

During the current negotiations they were demanding cuts in the budget, no increase in taxes, no modifications in the tax code to take away tax breaks from the oil companies or corporate millionaires, and a constitutional amendment to require the federal government to have a balanced budget. Cutting the budget is a good idea since during the Bush administration the government managed to squander a budget surplus by cutting taxes, entering into two wars without worrying about how to fund them and watching the banking system destroy the economy. So cutting back on spending does seem prudent. The question is where and how we cut spending. For example, there is, or should be a dramatic cut back in defense spending since the Iraq war is over and most troops are home, or at least should be home. In the coming years the Afghanistan war is winding down and we should see some fairly substantial cuts in spending there also. Those who argue against cuts in defense spending are simply ignorant and giving in to the DOD special interest groups.

Should there be cuts in the entitlement programs? The Tea Party folks would be saying yes because they rarely think things through. They are the same group who held up signs saying “Keep your Government Hands Off My Medicare.” Ultra right wingers like Congressman Paul Ryan would throw Medicare, and future senior citizens under the bus, by trying turn everything over to private sector health insurance companies which have already proven to have failed to provide affordable healthcare insurance. In turn they shy away from visiting the tax code to plug the loop holes which favor the rich. They are still stuck in the Reaganomics trickle down philosophy which has never worked. They and their Republican brethren have consisting argued that any tax increase, even modifications in the tax code, are job killers. There is actually no evidence anywhere that supports that claim. It is simply a slogan that the Republicans mouth over and over to protect the incomes and wealth of the top 2 or 3 % of the country’s richest people. It would seem that a rational analysis here would be that unless there is hard evidence to support the idea that higher taxes kills jobs then law makers should stop saying it and think about how best to serve all of the people and not those who give them the most money.

The balanced budget idea is perhaps one of the more farcical ideas they are pushing. The idea sounds good but the basis of the argument fails when put to a reality test. They point to families, businesses, and states that have to operate within a balanced budget. That is simplistic thinking at best which is something the Tea Party is good at doing. Families, businesses, and states, do not have to conduct foreign relations, protect the nation against the world, manage interstate commerce, and a myriad of other complex tasks that the other entities do not have to face. The idea behind a balanced budget is that the government is restricted to spending either no more than than its tax revenues, or its spending is tied to a specific percentage of the nations GDP. Reality suggests that when tax revenues are down or when GDP is down is when the economy is in tough shape and there is most likely a problem with the cash flow situation in the country. Kind of like we are in right now. The banks and the wealthy are sitting on their money and they really see no reason to spend it. A tax reduction for business will not help the situation because the people who would be buying their goods have no money to spare so they are sitting on their money. What the country needs right now is an influx of cash into the economy which the opposite of what is happening right now. If we had a balance budget amendment right now we would be withdrawing even more money than we are from circulation which would be pushing the country further into another recession.

In an earlier post I made an argument for a war tax to replace the monies spent on the two wars the the Bush administration and congress left unfunded. Whether it is called a war tax, a catch up tax, a “we goofed” tax or whatever, congress has to take responsibility for a massive outlay of cash with planning on how to recover it. It may not have been exactly the same congressional make up but those in power have to fix what the others screwed up. Additionally, they should not try to make only a part of its citizens, primarily the poor, senior citizens, and middle class Americans pay for the bulk of it. It should be a graduated tax based upon ability to pay, or on how much wealth the wars protected, and it should seek to recoup a specific amount of money over a specified time period. Just as the loans to the banks and the auto makers had to be paid back, so must the war money be paid back. This would immediately begin to recover three to four trillion dollars. This money could then be reinvested into upgrading this country’s infrastructure which would begin to add money back into the economy. This should also cause the banks to loosen their coffers to small businesses to begin repair on the infrastructure and the businesses that support it.

Does this solve all of our problems? Nope, not by a long shot. Someone needs to take a sharp pencil to the bloated budgets of some of the governmental agencies whose department heads ride in limos and other wastes in the health care systems. Someone needs to find out why Medicare can’t negotiate for prescription drugs like the VA does. There are many other places where the government can cut cost as I am sure most of you know. I am just as sure there are tax loop holes that are allowed to the rich and the corporations and the wealthy that are less than fair that can be eliminated without really hurting their ability to be competitive. This is especially true if we can get sensible trade policies with other countries like China and South Korea.

As mention earlier this is a non economist view of this situation and regardless of the vote on the debt extension and the cuts today I still think they are ideas worth considering. Now it is your turn. What do your think?

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