America’s Tea Party has a simple fiscal message: the United States is broke. This is factually incorrect – US government securities remain one of the safest investments in the world – but the claim serves the purpose of dramatizing the federal budget and creating a great deal of hysteria around America’s current debt levels.This then produces the fervent belief that government spending must be cut radically, and now.
There are legitimate fiscal issues that demand serious discussion, including how to control growth in health-care spending and how best to structure tax reform.
But the Tea Party faction of the Republican Party cares more about small government than anything else: its members insist, above all, that federal tax revenue never be permitted to exceed 18% of GDP.
Their historical antecedent is America’s anti-revenue Whiskey Rebellion in 1794, not the original anti-British, pro-representation Boston Tea Party in 1773.
Most importantly, their tactics have proven massively destructive of wealth in the US. Since the prolonged showdown over the budget began earlier this year, the stock market has lost about 20% of its value (roughly $10 trillion).
In effect, the Tea Party is working hard to reduce publicly funded social benefits – including pensions and Medicare – even as its methods dramatically reduce the value of private wealth now and in the future.
Part of the Tea Party’s founding myth, of course, is that smaller government will lead to faster growth and greater prosperity for all. Never mind that the eye-popping growth projections in Representative Paul Ryan’s budget plan, for example, are utterly implausible; these projections matter politically, because, without them, the full sting of Ryan’s proposed Medicare cuts would be readily apparent.