5 Ways The Tea Party Sabotaged The Economic Recovery
The far right had been trying to spark some sort of populist movement for decades. Finally in February 2009, as the public began to comprehend the magnitude of the financial crisis that had been killing an average of half a million jobs a week for months, a dry weed caught fire.
CNBC’s Rick Santelli spoke for millions of Americans when he expressed his frustration with the bailouts being rained down from Washington D.C. But his target on February 19, 2009 wasn’t the big banks or the auto industry. Santelli blasted the real villains of the financial crisis, at least for the right — the millions of Americans who were losing their homes:
How about this, [Mr.] President and new administration — Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages, or would we like to, at least, buy cars and buy houses in foreclosure and give them to people who might have a chance to actually prosper down the road, and reward people that could carry the water, instead of drink[ing] the water.
Within days, the “Tea Party” Santelli had called for in his epic “rant” became a reality, with Fox News literally advertising, then broadcasting events all over the country. And resentful Americans gathered in person and online to blast the first African-American president of the United States for not immediately fixing the enormous problems he had inherited.
A Republican Party with a brand that had been in critical condition after eight years of Bush and Cheney suddenly had a new way to sell itself to millions of Americans facing sudden uncertainty and turmoil unlike anything America had faced en masse since the Great Depression. The Tea Party gave the right new authority to suggest solutions. However, nearly every solution they suggested — including less government regulation, lower taxes and less government spending — had either been a cause of the crisis or effectively strangled any chance of a real recovery.
Five years later, the Tea Party is less popular than it ever has been, and less popular than the Republican Party itself, which has lower favorable ratings now than in 2009. But the damage the movement did to our economy lives on. Here are five ways the Tea Party stopped the economic recovery.
Austerity — Especially At The Local Level
Tea Partiers were shocked to discover that after two huge tax cuts, two wars and the worst economic crisis in a half-century, there was a large budget deficit that threatened to create a trillion dollars in debt, every year. But they were not shocked enough to consider raising any taxes — even though taxes were at a 60-year low. “Taxed Enough Already” wasn’t just a convenient, retrofitted acronym to describe the movement, it was the party’s core belief.
Thus their only solution for an economy hemorrhaging jobs was cutting spending.
Since Democrats had large majorities in Congress and a White House willing to finance a one-time stimulus while holding off cuts to the emergency spending triggered during downturns, most of the cuts came initially on the state and local levels. Josh Bivens and Heidi Shierholz of the Economic Policy Center explained the damage in 2012:
In June 2009 there were 7.3 public-sector workers for every 100 people in the U.S.; to keep that ratio constant given population growth, the public sector should have added roughly 505,000 jobs in the last three years. This means that, relative to a much more economically relevant trend, the public sector is now down more than 1.1 million jobs. And even against this more-realistic trend, these public-sector losses are dominated by austerity at the state and local level, with federal employment contributing only around 6 percent of this entire gap.
The Tea Party’s first electoral victory came by electing a moderate Republican Scott Brown to fill Ted Kennedy’s Senate seat. Brown promised to be the 41st vote against the Affordable Care Act. But he was too late. So he ended up being the 60th vote for financial reform — but only after he practically neutered the bill by removing a tax on banks and weakening the Volcker Rule, which was designed to prevent the gambling that nearly led to the complete collapse of the global economic system. Thus the already mild attempt to rein in the nation’s largest banks was wasted.
Today, the banks are larger today than they were during the financial crisis. And Scott Brown works for a law firm that represents some of the titans of Wall Street.
After the 2010 election sent dozens of Republicans elected under the Tea Party banner to Washington, newly elected House Speaker John Boehner found a caucus that wanted a fight. For the first time ever, the House majority demanded dollar-for-dollar cuts in exchange for raising the debt limit. If they didn’t get it, they were willing to purposely default on America’s debts for the first time ever — though some self-proclaimed Tea Partiers like future 2012 candidate for president Rep. Michele Bachmann (R-MN) refused to believe that default was even possible. Wall Street believed it and shed thousands of points, weakening an already weak recovery.
The crisis ended with a deal that resulted in the automatic cuts known as the sequester, which the Congressional Budget Office said would lead to the loss of 750,000 jobs in fiscal 2013.
Then in October of last year, Senator Ted Cruz (R-TX) — who has become the personification of the Tea Party — led Republicans into a government shutdown that lasted weeks and shed billions in economic activity.
Screenshot via Senator Ted Cruz YouTube channel
Fixation On Social Issues
Once the Tea Party wave saw Republicans flood into office, their obsession with restricting reproductive rights could not be contained. In the three full years since 2011, more abortion restrictions have been passed at the state level than in the past decade. Both in the House of Representatives and at the state level, defunding Planned Parenthood — an organization that had been uncontroversial since Richard Nixon first signed legislation granting it federal subsidies — became the standard GOP position.
Desire To Punish The Victims
Rick Santelli’s animosity toward the “losers” was euphemistically embraced by Rep. Paul Ryan (R-WI) — the architect of a plan widely supported by his party that aimed to radically gut the public assistance offered via the federal government — who described millions of Americans as being lulled into a “safety hammock.” This mentality of “makers” versus “takers” pervaded the presidential campaign of Mitt Romney, who based his convention around the theme of “You Built This,” riffing off a speech by President Obama that stressed the role government plays in building our shared success.
Ultimately, a waiter in Boca Raton, Florida caught the GOP nominee fully expressing this philosophy along with his disdain for 47 percent of Americans who “don’t pay federal income taxes.”
Despite the evidence that Romney lost because people thought he didn’t care about them, Republicans have transformed their anger toward those who are suffering most during the crisis into actual policy. Cuts to those receiving SNAP benefits have been paired with the failure to renew emergency unemployment benefits for the first time ever during a long-term unemployment crisis. Meanwhile, the “carried” tax break that allows many of the bankers and money managers who helped engineer the financial crisis to pay lower tax rates than nurses has not been touched.