The Tea Party’s Moment of Truth

The Tea Party looks like it’s won a big victory—the “grand bargain” that President Obama and Speaker of the House John Boehner were negotiating has collapsed, and with it any hope by Democrats that a big deficit-reduction package would include anything like tax increases.

Tea Party Rally in Washington. Photo Credit: Rena Schild / Shutterstock.com.

Now, as the clock ticks towards August 2nd, when Administration officials and many private forecasters warn that the $14.3 trillion debt ceiling must be raised, the Tea Party has a big decision to make: take “yes” for an answer or snatch defeat from the jaws of victory.

Republicans took over the House of Representatives last November with the help of more than 80 Tea Party freshmen. Their focus has been on cutting government spending, and by standing firm they’ve held the whip hand in this crisis. Both the president and Speaker Boehner have caved to their pressure, and now only spending cuts are on the table.

The Tea Party has shown the power of a determined minority—they represent maybe 25% of the American public, according to polls—and they’ve performed a public service by putting the deficit front and center for the first time since H. Ross Perot in the early 1990s.

But now with default looming they’re in danger of overplaying their hand. Having passed the “cut, cap, and balance” bill last week with almost no Democratic support and no chance of getting through the Senate, they actually think they’ve done their job.

“Then what else is there?” freshman Rep. Michael Grimm (R-NY) told the Washington Post. “Honestly, I don’t think there’s any more the House can do.”

Really? Comments like this are either naïve or delusional—or maybe Grimm and his colleagues really believe a default by the US government is just a small battle in a much bigger Holy War.

Lots of people are responsible for the long-term debt problem, Democrats and Republicans alike, and I’ll have more to say about the president’s role later.

But the Tea Party took the routine legislative procedure of raising the debt ceiling and manufactured a crisis. Instead of engaging in the long, hard work of educating the American public on the dangers of deficit spending, which would likely take years but would actually build a consensus for real change, they are holding the country’s credit rating hostage.

Now it’s time to face reality. Pick a plan, any plan, and vote for it. Extend the debt ceiling and keep hammering away at the deficit and spending. But don’t let the country default. Or you and everyone else will face the consequences.

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59 Responses to The Tea Party’s Moment of Truth

  1. StocksDoc July 27, 2011 at 3:32 pm #

    Howard .. your plan is what we've been doing for years!
    Your plan is to keep doing what we've been doing to get into this mess.
    I would much rather have our credit-card taken away and face the consequences for a better future . . . .
    just like I do with my wife when our debt gets too large.

  2. Bart July 27, 2011 at 3:38 pm #

    <<Now it’s time to face reality. Pick a plan, any plan, and vote for it. Extend the debt ceiling and keep hammering away at the deficit and spending. But don’t let the country default. Or you and everyone else will face the consequences.>>

    well said!

  3. D Rieser July 27, 2011 at 3:52 pm #

    Passing a bill that may or may not reduce spending by a trillion dollars over ten years when the current spending will add between 7 and 9 trilion to the deficit over the same period is ludicrous and I support the members of Congress who think that this gravy train must stop. I agree that Default is not an option. However, Speaker Reid can call a true vote on CC&B at anytime. The Senate can pass it. It is the only legislation written throughout this debacle that addresses the long term spending cuts that the rating agencies are looking for to avoid some kind of downgrade. Imagine what would happen in this country if a downgrade leads to losing our place as the global currency… the printing press would have to stop. Let the Senate grow up and do what they were elected to do… what's best for this country. Pass CC&B.

  4. Tretka July 27, 2011 at 3:56 pm #

    It is convenient to blame fellow citizens,hmmm? The truth is painful and scary but once you face it, you can correct the problem. There is plenty of blame Howard, and it goes back 100 years, it does belong to the member of the Republic (us), our congress, and a few unknown manipulations along the way. If you are going to be vocal for the moderate, independent crowd that goes with whichever way the wind blows, know better the 25% you write about it, who are vastly different than loosely planted citizens.

  5. Jim July 27, 2011 at 4:04 pm #

    Aug. 2 is an arbitrary "default" date. Anyone who's really paying attention knows this and that excludes the mainstream media. It's the debt, not the debt ceiling, that's eroding our AAA rating. "Just pass anything" won't get it done. Tax hikes won't get it done, but they will kill jobs and seriously damage an already anemic economy. Fake spending cuts won't get it done, either. Why not say we're cutting $200 gazillion over the next 10 years? It never happens. Even if they really did cut $1 trillion over 10 years, the baseline goes up 7% per year, so we'll really be adding another $8 trillion to the debt. The only thing that can save the AAA rating is immediate, REAL cuts in the current budget cycle. Barack Hussein Obama and Harry Reid refuse to do that. So where are we?

  6. alpha beta July 27, 2011 at 4:10 pm #

    I don't know why you think passing an increase in the debt ceiling is routine.

    It's not like it's been done over 100 times before…

    oh wait a minute, it HAS BEEN DONE OVER 100 TIMES BEFORE including 17 times under Reagan and 8 times under Bush

  7. ArnoldLayne July 27, 2011 at 4:17 pm #

    "Instead of engaging in the long, hard work of educating the American public on the dangers of deficit spending, which would likely take years but would actually build a consensus for real change"
    Now THAT'S ridiculous! The TP should take YEARS to educate the public? LOL In a few years, the DEBT will be 100% of US GDP and US credit rating much lower than AA.

  8. Ron July 27, 2011 at 4:24 pm #

    What a bunch of hog wash, when will people like you realize that kicking the can down the road does nothing but hurts us more exponetially the longer we do it. Would you prefer a rating down grade?
    The politicians, big bankers want nothing more than to artifically prop up the status quo that is no longer viable. I'm a small business owner in CA.. Yes, CA… I have had to downsize 80%, let my personal finances go to hell and work 80+ hours a week for virtually no profit as I watch a gov't with a blank check spend foolishly on everything. No more…
    Your an idiot!

  9. methuselah July 27, 2011 at 4:41 pm #

    What? A blogger that actually said something that was true and made sense. That'll never happen again.

  10. Stephen R. Marks July 27, 2011 at 4:52 pm #

    Do you suppose that if the debt ceiling is increased again, then the politicians will reduce spending? The debt ceiling has been raised over 70 times previously – maybe now is the time for action. And even if the U. S. credit rating is lowered following a default, then interest rates will rise and people that save their money – unlike our government – will receive an interest rate that actually increases savings after inflation. Unfortunately, all of America’s problems are the voters’ fault – for not paying attention to our elected officials and removing them when necessary – which should be often.

  11. Peter July 27, 2011 at 5:08 pm #

    The long hard work of educating the public?
    That's been going on for 20 years at least – if they're not educated by now they never will be.
    Vote for any plan?
    Most of these plans cut projected deficits by less than 20% over the next 10 years. What would that get us when we've tripled the annual deficit in the last two years?
    I'd rather have a "manufactured" crisis today that an unsolvable "real" one in 3 to 5 years.

  12. Woody July 27, 2011 at 5:22 pm #

    Well said, thank you.

  13. NoThanks July 27, 2011 at 5:46 pm #

    Howard, If not now then when? Sometimes the line in the sand is most appropriate. Now is the time.

  14. HowardRGold July 27, 2011 at 7:07 pm #

    Thanks for all the great comments!

    I do think the deficit is a critical problem that needs to be faced now. I've thought so for years, since well before 2008 when only 2%–2%!–of Americans thought it was our biggest economic issue. How many of you thought that then?

    Now the number is 12%, well short of the 40% that thought that in the early 1990s. That and Ross Perot's 19% of the popular vote in 1992 pushed Bill Clinton to work with Newt Gingrich and Republicans to turn deficits into surpluses and helped create nearly a decade of prosperity. That's the enduring value of building consensus. MORE

  15. HowardRGold July 27, 2011 at 7:08 pm #

    But 70-80% of the public doesn't want anyone touching their Medicare or Social Security. Huge majorities think we should tax the rich to cut the deficit. They clearly don't understand we're going to have to do more than that, so I would suggest the education process is just beginning. It's still a democracy and the majority is not on the Tea Party's side, though a large, passionate minority is.

    As I said, I think the Tea Party did us all a service by putting this issue front and center and holding politicians' feet to the fire. But now it's time to get the biggest deficit reduction you can, declare victory and set up a process where more cuts–and yes, revenue and tax increases of various kinds–will be considered as a way to get our fiscal house in order.

    But don't screw around with our credit rating or flirt with default. That way lies disaster.

  16. Jack Kessler July 27, 2011 at 7:38 pm #

    I believe the US credit-rating spat is part of a long-term geopolitical & economic shift, away from Europe and toward Asia, with the US somewhat balancing in-between. In 1950 the US controlled about 50% of the global economy: no more… And all through the 1950s the dollar bought 360 yen: no longer… The shifts away from both those post-WWII heights have been pretty steady ever since. As they should: 50% is a lot of global power, and exposure — too much — for any one nation.

    But I'm not too worried about the downsides for the US of the current credit-rating spat. No single successor to the US has emerged, yet — we're still the only viable act in town, for any global investor, bad as we've done at times the others all have done lots worse, so far — anyone want more Dubai bonds, instead? how about more Japanese bonds? So we the US are coasting on our laurels. Whatever debt-limit deal we cut won't matter fundamentally: at 25-30% of GDP the government counts about 1/2 as much in the US as other governments do elsewhere — the US economy is strong, and sound — so overseas investment dollars still will pour into the US.

    In the meantime the US patiently & cleverly has maneuvered into a you-scratch-my-back / I'll-scratch-yours balance with #2 China on fundamentals, a balance which boosts both economically, and keeps both in check politically. Our Tea Party bunch is just local extremists sniping for local power — other nations have extremists, too, doing the same — the biggest worry is the Europeans, now, who can't afford all that. But the US & Asia can.

  17. shakes July 27, 2011 at 9:04 pm #

    "they are holding the country’s credit rating hostage." ???? Are u for real? The difference in our view is that you believe the US currently has good credit rating and that the Tea Party is using it as a bargaining chip. I argue that the US does not deserve good credit rating as of today and that the Tea Party is trying to get people to face the fact and fix the problem. Do you give someone a good credit rating when they spend more than they earn?

  18. Ross July 27, 2011 at 10:28 pm #

    I have read several of your posts wherein you take the Tea Party mentality to task. As in: "But the Tea Party took the routine legislative procedure of raising the debt ceiling and manufactured a crisis." Yes they did, right or wrong; I don't know – – – I am not a Tea Partyer, nor a Democrat, nor a Republican. Not now, not ever. I hope that will attest to my bona fides.

    BUT, I was fascinated by the follow comment: "Instead of engaging in the long, hard work of educating the American public on the dangers of deficit spending . . ." Pray tell, just what do you think the Tea Partyers are trying to accomplish? I would think that that part of the American Public that have been educated to the dangers of deficit spending are exactly those (Tea Partyers?) who are now attempting to make a drastic change to the business as usual crowd in Washington. If all they can see to do is throw the baby out with the bathwater, a least they will have a clean receptacle for the next time,
    The people who need the education are the nabobs in Washington. They are supposed to listen to the people; to act in according to the demands of the people that elected them; not do what they want to feel better, all warm and fuzzy – – – and powerful. One only need to look at Ms. Pelosi's antics and demands to see the truth of that.

    The Tea Partyer is the new Minuteman – – – and not a second to soon. Please remember the the American Revolution was brought forth by not more than 30% of the colonists.

  19. scelerant July 28, 2011 at 5:54 pm #

    The core problem is that with a debt of $14.000.000.000.000 if the U.S interest rates the debt goes up 1% that’s a total of $140000000000 that must be paid in additional interest on the debt. There is a norwegian expression that translates to “Saving yourself into the poorhouse” and that’S more or less what the less than stellar intellects behind the Tea Party seem to desire.

    Now, I shouldn’t question the intelligence of the Tea Party, after all they are the movement named after a tax revolt in which a rumored 90% though their taxes had gone up under Obama, so in short, 90% of them have no clue what’s going on with taxes. They also have sordid love affairs with Sarah Palin, Michele Bachman and countless other no-brains. Therefore, I hope you accept my sincere apologies for questioning the intelligence of the Teabaggers.

    One may also want to ask, what is the most important, the deficit or the jobs deficit? Because if the deficit is cut that means jobs are cut, so that sends unemployment back up unless the private sector increases hiring. The private sector isn’t going to start spending the stockpiled cash until a government it relies heavily upon stops playing a game of chicken with the world economy. They may not even start spending it until the children who are currently in congress have been booted out.

    The longer this goes on, the more incompetent and ineffective congress looks, not only to the voters, but also to the corporations, foreign governments, the IMF and finally the rating agencies. There is a reason for the thinly veiled threats from S&P and the other rating agencies, namely that the Republican Party lead by Boehner and McConnell have proven that all they care about is the Teabaggers.

  20. tim oden July 29, 2011 at 5:12 pm #

    I agree with StocksDoc.
    It's time for the politicians to face the music and cease their smoke and mirrors show.
    Do they really expect us to believe the debt will gradually be lowered over ten years, when it has been raised 78 times in 50 years?
    The fed should live within its means, just like every american household does.
    How many american companies today still have a AAA Bond rating?

  21. je Je Je July 29, 2011 at 6:13 pm #

    Anyone speaks cantonese? I just got a call from a bill collector, calling from China!

  22. Gail July 29, 2011 at 7:04 pm #

    If we default and, perhaps, some say whether we default or not, our credit rating will go to a AA rating. What does that mean? Higher interest rates on our debt for the next however many years.

    Higher intrerest rates doesn't sound like a wise solution to me. I say keep the AAA rating, continue to educate the accurately educate the public regarding our deficit issues.

    But for God sakes, let's not add more to the debt we already have by higher interest rates. Personally, I think that the newly elected Tea Party members are not in a position to fully understand the complexities of our deficit issues until they have been in Congress for a while, and yet, they are creating a crisis that I am not so sure that we can recover from.

  23. Rick Olson July 29, 2011 at 7:39 pm #

    NO MORE DEFICIT SPENDING!!! BALANCE THE BUDGET NOW!!!

    Do NOT kick the can any further down the road!!!!!!

  24. Whoever July 29, 2011 at 8:04 pm #

    What makes people think that if there was a constitutional amendment requiring Congress to pass a balnced budget each year that Congress would be able to do it? And would we want them to pass such a budget if the only ways to balance the budget was to raise revenues (taxes) or cut expenditures, such as social security benefits, medicare and medicaid benefits or the military? Be careful, tea partiers, what you ask for, you may just get it.

  25. ann July 29, 2011 at 8:35 pm #

    II think you are spot on. This was a problem that was manufactured and a lot of careers will be ruined because of the actions of a few5. The American people are going to pick and choose who is responsible if grandma doesn't get her check this month or if government jobs are lost because the Congress refuses to pay it own bulls! The tea Party lacks direction and needs an experienced mentor. Right now, they seem to lack the knowledge and finesse to succeed in getting something productive done. What they have done is manage to appear as extremists who need to be removed from office. This was really unnecessary and if America's credit rating drops, I know exactly who I believe who should receive the bulk of the blame.

  26. scelerant July 29, 2011 at 11:00 pm #

    If we start the name-calling, I just don’t care to be honest. We are talking about a group of people who elected to hang teabags from their founding father hats despite the fact that the teabag wasn

  27. Disgusted in OH July 30, 2011 at 3:23 am #

    Of course the ceiling must be raised for now.
    Since the Rebs don't want to increase taxes to correct our debt, they should be the fore runners in eliminating the entitlements " that members of congress have". How about giving up some of the travel expenses, perts offered within the Congressional buildings, expense accounts, retirement packages after serving one term!, breaks on sending their kids to college. Come on Rebs, you're the ones that say stop spending. Who is going to introduce such a bill as this? Three guesses and the first two don't count!

  28. Mark July 31, 2011 at 2:39 pm #

    Tea Party, Republican or Democratic Party- the problem lies right there. These partisans continue to put their energy and their votes into their party affiliation and the perpetuation of their careers instead of our country. If anyone believes that any DC politician is worried about anything other than their own careers, you have been proven naive and mistaken time and time again and more frequently each year.
    Each party has taken their numerous turns selling us out in favor of their gain. Perpetuation of a system that has created an aristocracy of our national senators and representatives is their first order of business…see Machiavelli.
    We need to institute term limits. We need to end professional political careers and return to citizen politicians. Two terms, do your best, go home to what you used to do or what you want to do now. No more special health or retirement programs that only serve to keep our elected officials from sharing the consequences of their decisions. These people have taken our faith and spent it on themselves.

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