Tea Is Just Goldwater

Folks talk about Rep. Bachmann, her caucus, and their supporters as if they're new. Listening to some, both Republican and Democrat, you'd think the Tea Party formed in some kind of virgin birth from the Great Recession or from the stimulus efforts that reversed it.

"The tea parties are mostly an honest spontaneous effort by ordinary people from all over the political spectrum to express their outrage at government hubris from absurd spending, corporate bailouts, etc." - Mike Huckabee (R-Fox News)

or

"The Tea Party was born because of the economy" - Sen. Reid (D-NV)

But the origins of the Tea Party go back much further than this recent flare-up. To see that, we must first have a clear idea of what exactly the Tea Party means.

• The Tea Party Patriots [TPP] list their core values as Fiscal Responsibility, Constitutionally Limited Government, and Free Markets. In explaining what they mean by Fiscal Responsibility, TPP describes taxation as unjustly restricting liberty. They reference states rights while outlining what they mean by Constitutionally Limited Government. And they "oppose government intervention into the operations of private business".
• The National Tea Party Federation lists the same three items under its "objectives" as the TPP's "core values" (see above).
• The Nationwide Tea Party Coalition lists core values of "Limited Government, as authorized by the Constitution", Fiscal Responsibility, and Free Markets. In other words, the same three as the TPP in a different order.

In all cases, the Tea Party orientation is conservative. And it is a particular familiar flavor and traditional style of conservative. This is the same conservative position as President Reagan, who called for limited government, preached fiscal responsibility, and spoke of "free and open markets". While for one reason or another Reagan did not always practice his ideals during his term (with huge deficit increases and some protectionist policies), those were his ideals nonetheless. But Pres. Reagen didn't invent that stance either, as he learned his conservative politics campaigning for Barry Goldwater and took over spearheading Goldwater's platform after Goldwater failed in the 1964 Presidential campaign.

"My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed in their purpose, or that impose on the people an unwarranted financial burden. I will not attempt to discover whether legislation is 'needed' before I have first determined whether it is constitutionally permissible." - Barry Goldwater in The Conscience of a Conservative

Goldwater's conservative stance was not stamped out by his 1964 loss. It continued under the banner of Reagan and others. There is no big difference. There is only an additional name, "Tea Party", and more funding from the likes of the Koch brothers who have realized that Goldwater's talking points could be the most effective way to fight reasonable environmental regulations.

But this begs the question: why call it the Tea Party? Calling them the Tea Party, we've been practicing a deceptive comparison to a the Boston Tea Party. The Boston Tea Party protested against a monopolistic corporation and imposition by an authority other than our duly elected representatives. Today's inheritors of Barry Goldwater have no resemblance whatsoever to that Boston Tea Party. They fight for the corporations involved in their issues and the policies they oppose were implemented by duly elected representatives. Shouldn't we be calling a spade a spade? The so-called Tea Party of today are merely re-packaged Goldwater conservative Republicans with corporate conglomerate funding. Michelle Bachmann is just the leader of the Goldwater wing of the GOP, unless they should decide to finally split and form a full-fledged Goldwater-based political party.

They're not Boston-style Tea ... they're just Goldwater.  JJH55DM59KYR

GOP Seeks Lower GDP

Sen. Rand Paul

Sen. Richard Shelby (R-AL) feels we can cut 30% across the board. Or maybe 10%. According to Ben Armbruster of ThinkProgress, "It is unclear which reduction figure, 10 percent or 30 percent, he is officially advocating." On ABC's "Top Line", Rep. Michele Bachmann (R-MN) says that she's found "about $450 billion worth of cuts." That'd be around 12%. Sen. Mike Lee (R-UT) has talked about cutting the budget by 40%. Sen. Rand Paul (R-KY) strikes it at a balanced budget, which means roughly 33%.

As previously detailed, when we cut the budget to avoid borrowing, those cuts don't come from nowhere. They come out of spending, reducing demand, lowering our nation's GDP. In good times, that's fine. When GDP growth is high enough, we can afford to cut. But we can't afford to drop our growth below around 2.5%. Otherwise we get rising unemployment. One would hope that these members of Congress understand national budgets, have done the math, and wouldn't propose a drop that would take us below 2.5% GDP growth, right?

So what would each of those figures mean? We can plug these into a rough formula. Some of the lower estimates figure the government around a 25% share of GDP. To give these members of Congress the most benefit of the doubt, we'll go with this low estimate. So when you cut government spending by a percentage, you effectively cut the GDP (or more precisely lower the percentage change in GDP) by roughly 1/4 of the percentage by which government spending was cut. Applying Okun's Law (or Okun's Rule of Thumb), we can expect roughly a 1% drop in employment per 2% reduction of the GDP growth below 2.5%. It's a rough figure, but it tells us more or less what we should expect.

Govt budget cut % / 4 = -% GDP impact

Our baseline is 3%. Why? That's a typical estimate for our GDP growth for 2011. Since the stable point for unemployment is around 2.5%, we might theoretically be able to take about a 0.5% drop in GDP without adding more to the unemployment roster and reducing our payroll tax revenue (thus increasing the deficit).

Let's start with the most modest of these, Sen. Shelby's 10% (assuming he didn't really mean 30%).

10% budget cut / 4 = 2.5 % GDP impact

est. 0.5 % GDP meaning 1% added to unemployment rate

Well, that's not very pleasing. So what do we get from the others?

Rep. Backmann's 12%:

12% / 4 = 3%

est. 0% GDP meaning 1.25% added to unemployment rate

Sen. Paul's 33%:

33% / 4 = 8.25%

est. -5.25% GDP meaning 3.875% added to unemployment rate

Sen. Lee's 40%:

40% / 4 = 10%

est. -7% GDP meaning 4.75% added to unemployment rate

So just how much unemployment do they suppose we can handle? Either the answer is above, or they just don't realize that their slash and burn plans would raise unemployment. Even the most modest of them would cause unemployment to rise at this point of not particularly fast growth.

Meanwhile, each of these increases in unemployment would mean fewer people on payrolls. That means less income tax revenue. Since a drop in revenue doesn't generally cause our costs to drop, that means that assuming we went with Sen. Paul's balanced budget, we'd build ourselves a brand new deficit because of that extra almost 4% tacked onto the unemployment picture. So to use Sen. Paul's "ironclad" balanced budget rules, we'd have to make further cuts. Assuming nothing else rescued our GDP from outside, that'd mean a further drop in GPD and more unemployment. Let's not do that. Not now. Not while we don't have enough growth to afford cuts.