Sugar, Lemon or Milk

When I started my website, the first issue I tackled was the ever-growing deficit and debt accrued by the federal government.  During the first decade of this century, it grew by leaps and bounds.  Two years ago the economy started heading south and the money spent by the government really started mounting.  That was when the Tea Party started gaining attention and ground in the public arena.  Now it has started to affect elections.  They seem to be a very angry bunch of people, judging from what one sees of their demonstrations on television.  The Tea Party website states they are interested in “fiscal responsibility” and “constitutionally limited government.”

Since the TEA in Tea Party is an acronym for Taxed Enough Already, I take it that they construe fiscal responsibility with low taxes, like most conservative groups.  The thing I don’t understand is that right now, taxes are at an all time low, the lowest they have been in over a generation.  I don’t really see how they could get much lower.  They argue that the TARP (Troubled Asset Relief Program) was a bad move by the federal government.  The irony is that the non-AIG money given to banks should bring in a tidy sum for the government on the interest attached to the loans.  This doesn’t even count the proposed tax on banks that took TARP money and then made the turn-around so quick they were able not only repay the loans but also hand out bonuses to their upper management.

In addition to the TARP, the Tea Partyers have railed against the stimulus spending.  While the stimulus package was being arranged, I didn’t hear a single economist say the money should not be spent, though how was a different matter.  Even conservative thinkers said the federal government had to do something.  So they did.  Independent analysts, including the Congressional Budget Office, has noted that the stimulus has so far provided 120 billion dollars in tax relief (something apparently the Tea Partyers missed), has funded 12,000 construction projects around the country, and has saved or added two million jobs to the economy.  Many of these jobs have been in education and police.  Would the Tea Partyers prefer the unemployment rate to be around 12.5 percent rather than the current ten percent?

Fiscal responsibility does not mean ever-decreasing taxes, it means paying for what the government is undertaking.  PayGo was in place to help with balancing the budget, but it was removed at the beginning of the decade.  It should be re-instated.

I can understand people being angry with the government for a wide variety of reasons, but I would ask the people to pay attention to what is actually happening rather than jerking their knees every time they listen to their favorite talking head on TV or radio.

I have no idea what the Tea Party mean by “constitutionally limited government.”  I take it this is just a euphemism for “smaller” government.  Smaller government, this time meaning fewer regulations on banking institutions, is what caused the economic meltdown in the first place.  Like the economists above concerning the stimulus, I haven’t seen a single expert in the banking or financial arena that hasn’t advocated new and more robust regulations on banking and investment firms; this is true even within the industry itself.

Since the recession has started to moderate, I have already heard Republicans pulling back from increased regulatory vigilance.  Do the Tea Partyers think these regulations will put themselves in place and then enforce themselves?  No.  There has to be people that will enforce the new regulations.  If there is nothing done concerning financial regulations, I think I can safely predict another similar downturn in the next twenty years.

It is true the deficit needs to be dealt with, and yes, at some point this means higher taxes for everyone, but the short-term deficit was necessary to get out of the quagmire the lackadaisical regulatory system brought about.  Otherwise, things would be much worse than they are now.  Too much reliance should not be put on free enterprise to save the day either, since we have seen that the heads of large businesses are even willing to abandon their stockholders in favor of large, short-term profits and bonuses for themselves.  I understand people being angry right now, but just saying everything sucks doesn’t really help the situation.  Calm heads and reasoned expertise are needed, not a bunch of people chanting sound bites.