The rising tide of populism claimed its first victim in the Massachusetts Senate race. A new Tea Party message was delivered, but the message continues to be garbled.
The detonator for the MA bomb was the sense that government was willing to help any bank or institution that contributed to the crisis. It would try to provide welfare for anybody out of a job. Everybody else, pay your taxes and get back to us later. The stimulus was a boost for mainstream democratic supporters…especially unions. The major effects of stimulus wouldn’t begin until 2010…an election year. Whether this is a fair perception of the administration efforts is beside the point. It is apparently what the majority of voters believe.
Economists and the financial leadership of the administration have to take a lot of blame for this state of affairs. Clearly, there was a belief that a heavy dose of stimulus and continued low interest rates would quickly revive the economy. Unless there is a sudden recovery this year, that belief is obviously wrong.
From a political perspective, we are at a tipping point. The Tea Party is a major new force in the in the country. But the Tea Party is a conglomeration of a lot of different beliefs…doctrinaire Libertarians, Populists, and people afraid for the economy and their jobs. Probably the single force holding this group together is a singular distrust of government and institutions.
Most of the people in the Tea Party continue to rely on government for their social safety net. Most look forward to Social Security and Medicare. Most know that Food Stamps, Medicaid, Unemployment and other social programs should be there if they need them. But, for the first time, there is growing doubt that the government can deliver those promises.
A major fraction of the Tea Party supporters want the FDR New Deal affirmed. “Where are our freebies?” Another major fraction believes that government should be sharply curtailed. “Throw all of the rascals out.” The New Deal depended on freebies. Growing benefits have been delivered for 70 years without adequate consideration of future costs. Demographic and cultural changes have greatly exaggerated this imbalance. Soon it will become clear that benefits will be adjusted either by reforming basic programs or via financial collapse. Will the Tea Party coalesce around fundamental reform? Or will it take a more sinister form and attempt to overthrow the existing order?
Democrats have taken the lead in promoting entitlement programs, but the Republicans have contributed as well. Both parties are in danger of being replaced by a new Tea Party coalition. Changing the message or the “spin” will have very little long term effect, because the financial problems are real and urgent. So far, neither of the major parties has shown any ability to garner broad support for broad reform. Instead, both seem content to pursue power for its own sake.
The Tea Party could be the route to a civilized adjustment. Objective leadership of the new party could forge a new political base. But this new leadership will have to rein in government to make it workable. Will the people trained to receive freebies accept this new reality? Or will our country descend into chaos?
All of this turmoil could have been avoided if financial governance as proposed in the Hedgetax kept voters focused on the general welfare. Instead, we got the result of special interest pandering. January 24, 2010