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So why at this moment in our history has the Tea-Party movement risen to prominence?  There are many answers to this question, some are easy and obvious, others are harder to determine.

First, like many populists movements (see previous section) it has emerged as a result of the economic problems facing this nation.  Second, in some respects it is a reaction to the election of Democrat Barack Obama as President.  Third, it can be associated with a fear of change and the increasing scope and reach of the Federal Government.  Fourth, it can be attributed to some fanciful conspiracy theories.  All of which have combined to given credence’s to Tea Party message.

I think the best way to understand the Tea Party appeal is to look at the issues.  In looking the issues I will attempt to dissect what they are stating as a cause and from my analysis look at the rationally and probably of success of the agenda.  While I listed a number of issues in my introduction, I am going to focus on the Contract From America as I have concluded it is the best summary of issues which seem to be the foundation of beliefs of the Tea Party movement.

Here is the listing of issues from the Contract From America, I have reordered to put like issues together.  Hopefully no one will object.

1. DEMAND A BALANCED BUDGET  Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike.

Clearly the nation is upset by the large deficits being run by the United States government.  The last President to submit a Balance Budget to Congress and which Congress passed was Bill Clinton.  I think a Constitutional Amendment for a Balance Budget is plausible and worthy of consideration.  However in considering such a proposal without radically altering the makeup of Government the second part is not plausible.  If the intent is to radically reduce the size and scope of Government, then several facts need to be considered.  First, over 25% of the Fiscal Year Budget goes to the Department of Defense.  To reduce the size of the Federal Budget to achieve a balanced budget the size of the Department of Defense will have the be reduced.  The largest expenditure in the Department is personnel cost—so how small are we going to make the Armed Forces of the United States.  Now for the rest of Budget, what are we willing to give up.  Are we willing to give up our National Forest and Parks, are farmers willing to give up their crop payments, how many are willing to give up their Medicare, are we willing to close the Smithsonian, these are the types of questions which have to be answered.  If coupled with an impossible threshold for taxes the Amendment will result in catastrophic economic hardship on the nation.  How you ask?  There are over a million men and women in the Armed Forces, if we reduce the size of the Armed Forces by 50% where are they going to work?  How are they going to live?  If we reduced the size of the 2 million plus Federal Workers by 50% the same questions need to be asked.  What will our unemployment rate be then?

2. STOP THE TAX HIKES  Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.

Again, great sentiment, but if you want a balanced budget you have to have revenue.  There are several ways to balance the budget, one, reduce the Budget; two, raise taxes, and three, combination of one and two.  While taxes are burdensome, as a nation, fighting two wars, we have not been asked to sacrifice to the extent that our nation was in World War II.  There is no question we need a fairer tax system.  Clearly we need to consider a combination of a single rate tax system (e.g. flat tax) and a Value Added Tax (VAT).  In order to enact a flat tax as a nation we are going to have to give up some of our cherished tax breaks; home mortgage deductions, business expenses, medical deductions.  The VAT tax in Germany and most of Europe is fifteen per cent with a portion shared between the Central Government and State and Local Government.
Any roll backs of the taxes hikes scheduled to expire in 2011 can not be accomplished without a discussion of both Budget Reduction and Tax Reforms.

3. PASS MARKET-BASED HEALTHCARE & HEALTH INSURANCE REFORM  Make health care and insurance more affordable by enabling a competitive, open, and transparent free-market health care and health insurance system that isn’t restricted by state boundaries.

To have true Health Insurance Reform which would allow health insurance to be sold across state lines will require a fundamental change to how all insurance is regulated in the United States.  First, and foremost, Congress will have to repeal the McCarran-Ferguson Act (http://en.wikipedia.org/wiki/McCarran–Ferguson_Act) which precludes Federal Regulation of Insurance and exempts Insurance from Anti-Trust concerns. Any roll back of the McCarran-Ferguson Act will result in the regulation of Insurance passing from State Government to the Federal Government.  This would not be what I believe the Tea Party activists want.

4. RESTORE FISCAL RESPONSIBILITY & CONSTITUTIONALLY LIMITED GOVT  Create a Blue Ribbon taskforce that engages in a complete audit of federal agencies and programs, assessing their Constitutionality, and identifying duplication, waste, ineffectiveness, and agencies and programs better left for the states.

Great idea.  There are a number of programs that have clearly outlived their usefulness.  We should insist that this Commission be bi-partisan and be composed of citizens from each of the states.  While it is great to say some of these programs should be left to the states, there needs to be a consideration of the impact of transferring the responsibility of programs to the states on both the size of state employees and the impact on state budgets.  Regarding the Constitutionality of programs, while reasonable people can debate the constitutionality of a particular program the reality is ultimately it is to the Courts to decide Constitutionality.  I think it would be better for the Commission to work to determine the need, eliminate duplication, gain accountability, and eliminate underperforming agencies and programs than to waste time and effort in determining constitutionality.

One area, which the Commission should tackle, is to reduce the number of Presidential appointments or to create a two-tier system; those who are granted a Federal Commission and those who are appointed for a specific term without Congressional approval.  It has become increasingly evident over the last several presidential administrations that it takes too long for appointments to occur, often times leaving executive departments directionless.

5. COMMIT TO REAL GOVERNMENT TRANSPARENCY Every bill, in its final form, will be made public seven days before any vote can be taken and all government expenditures authorized by any bill will be easily accessible on the Internet before the money is spent.

This is already the case.  One can go to http://thomas.loc.gov/ and find any bill, its current status, to include the statutory language.  This includes appropriations acts.  We need to understand there are two actions regarding the Presidential Budget.  There is first and foremost an Authorization Act for each Executive Department which includes language which authorizes programs for coming fiscal year.  The second is the Appropriations Act for each Executive Department which may or may not fund the programs authorized in the Authorization Act.  I think it is reasonable for a web based accounting system be established to show the gross expenditures of each department during the course of a fiscal year.  This would create transparency.

6. ENACT FUNDAMENTAL TAX REFORM  Adopt a fair and simple single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words—the length of the original Constitution.

Concur.  Most legislation is too long, however in order to achieve this is going to require the American taxpayers to give up many of their cherished tax deductions.  See discussion in 2 above.

7. END RUNAWAY GOVERNMENT SPENDING  Impose a statutory cap limiting the annual growth in total federal spending to the sum of inflation rate plus the percentage of population growth.

Not sure what this accomplishes.  Generally the Federal Budget, over the last decade, except for the Defense Department and service of the National Debt, has gone up less than the rate of inflation.

8. LET US SAVE  Allow young Americans the choice of opting out of Social Security and Medicare payroll taxes, creating both real financial security in retirement through the freedom to own your personal retirement savings, and reducing the long-term unfunded liabilities of the federal government.

While I concur with the late Colgate Darden, Democratic representative from Virginia’s 2nd District, who voted against social security in 1936, on the basis it was a Ponzi scheme.  For this action he was defeated in the next election.  But having said this by allowing younger citizens to opt out of the system, in order to finance those who eligible for benefits we will either have to:  a.  Reduce the benefits  b.  Raise taxes.

9. STOP THE PORK  Place a moratorium on all earmarks until the process is fully transparent, including requiring a 2/3 majority to pass any earmark.

Concur.  But the American people have got to quit asking their members of Congress to bring home the bacon.

10. PROTECT THE CONSTITUTION  Require each bill to identify the specific provision of the Constitution that gives Congress the power to do what the bill does.

Nice sentiment, not sure what it accomplishes.

11. PROTECT PRIVATE PROPERTY RIGHTS  Block state and local governments that receive federal grants from exercising eminent domain over private property for the primary purpose of economic development or enhancement of tax revenues.

Concur.  The Supreme Court decision Kelo v. The City of New Haven needs to be overturned.  Congress can take a step to ensure there is Federal legislation and to ensure that Federal condemnation is used only for the purpose outlined in the Constitution.  State Government can best protect the property rights of their citizens by passing legislation, which counters Kelo v. The City of New Haven.

12. STOP CAREER POLITICIANS & CURB LOBBYIST POWER  Begin the Constitutional amendment process to require Congressional term limits.

Let not kid ourselves term limits will not cure the problem.  Senator George Voinovich and former Governor Tommy Thompson who both once supported term limits have concluded that the cure is worse than the illness.  The people have the power to limit member of congress through voting.  More important than voting however, is for each state to find a way end the gerrymandering of Congressional and State legislative districts to protect incumbents, regardless of party.  Nebraska currently uses a bi-partisan commission to redistrict and the result has been true elections, not the creation of safe districts where legislators once elected no longer are accountable to the voters because they represent safe districts.  Once we curb the excessive creation of safe districts or to borrow a phrase from British History “rotten borough” legislative election, most importantly Congressional elections will become more competitive.

13. PROTECT FREEDOM OF THE PRESS  Prohibit the Federal Communications Commission (FCC) from using funds to reinstate the Fairness Doctrine in any form, including requiring “localism” or “diversity” quotas.

Let us not kid ourselves, what the those who want to do in keeping the “fairness doctrine” is trying to impose “I like my views and I don’t want to hear another side.”  This is well and good, in a free society we are able to turn on or turn off the Radio or Television, read whichever newspaper or blog we choose.  However, as a nation, we should consider, requiring any TV or Radio station, all of which are licensed by the Federal Communications Commission, should be required to provide any candidate running for any elective office up to 60 minutes a day of free political advertising.  Now who would this favor it would favor the challenger and not the incumbent.

14. PROTECT INTERNET FREEDOM  No regulation or tax on the Internet.

I doubt if anyone in their right mind would even suggest taxing the Internet; however there is a movement to apply sales taxes to purchases made on the internet.  I believe this is right and proper, as it is state and local governments who are the big losers when individuals circumvent sales taxes by buying on the Internet.  While no one likes to pay taxes sales taxes go only to state and local governments and support such mundane things as schools, road maintenance and public safety.

15. GIVE PARENTS MORE CHOICES IN THE EDUCATION OF THEIR CHILDREN  Improve American education by reforming the broken federal role through eliminating ineffective and wasteful programs, giving parents more choices from pre-school to high school, and improving the affordability of higher education.

I like many am not enamored with American Education, however I less enamored by those who want to destroy what we do have by tearing it down.  American Education, particularly in Urban settings is largely ineffective, however there are reforms which can be taken which will, I believe improve education.  First, let us close the schools of education, every teacher should major in a hard subject and not in Education.  Second, while there are good reasons to centralize schools, the most effective schools are governed locally.  We should consider breaking up large school districts into smaller schools, however state and local governments should define the size and scope of the school districts and more importantly the size and scope of school administration.  Lastly school choice, e.g. home schooling, and private schooling should be options for which parents should receive some modicum of tax breaks in order to assist in the education of their children.

16. PASS AN “ALL OF THE ABOVE” ENERGY POLICY  Authorize the exploration of proven energy reserves to reduce our dependence on foreign energy sources from unstable countries and reduce regulatory barriers to all other forms of energy creation, lowering prices and creating competition.

Concur, this is a good idea, but it must include the incentives for the United States to end its dependence on oil.  This should include clean energy sources such as solar, nuclear, and wind energy sources to support the needs of the United States.  As a nation we need a comprehensive program for nuclear energy.  By that I mean, we need to have standard designs that would enable quick regulatory approval and would lower the overall cost.  Our current system allows each utility company to decide on their design of their nuclear power plants.  There is an example of what centralized planning accomplishes in this area and that is France.

17. REJECT CAP & TRADE  Stop costly new regulations that would increase unemployment, raise consumer prices, and weaken the nation’s global competitiveness with virtually no impact on global temperatures.

Depends which side you believe.  We need to reduce CO2 in the atmosphere, although I am doubtful of the dire warning of scientist.  As this issue has become a political hot potato I am not sure there is any middle ground.

18. AUDIT THE FED  Begin an audit of the Federal Reserve System.

Okay, and what will that prove?

19. NO MORE BAILOUTS  The federal government should not bail out private companies and should immediately begin divesting itself of its stake in the private companies it owns from recent bailouts.

Agree, however let us not eliminate bailouts as an option.  Saving Chrysler and General Motors was stupid, all we did was prolong the death of heavy industry in the US.  Saving banks, which underpin the economy, is another issue, unless we reinstate the provisions of the Glass-Steagall Act, we will be faced with prospect of saving a bank that is too big to fail.

20. SUNSET REGULATIONS & ENACT FUNDAMENTAL REGULATORY REFORM  Sunset all regulations in order to eliminate those that are wasteful, unconstitutional, and ineffective, and place strict limits on the ability of agencies to create regulations.

Concur, this makes good sense.  Many of our regulations are out of date and no longer serve a useful purpose, but in doing this we must also look at the enacting legislation from which the regulation was derived and do they need to be brought up to date.
While it would be nice to assume that there would be no need for Government Regulation, the reality, even in the fledgling days of our republic, there was a need to have regulation amongst the thirteen states in order to ensure a degree of equality and fairness; e.g. one state was not charging a lower or higher customs duty.  It would be nice to believe that Wall Street and financial markets would regulate themselves, but they won’t and someone needs to be there to ensure they meet the modicum of standards of conduct as they operate in and amongst the public financial sphere.  It would be nice to believe that industries and businesses will not pollute, will not exploit workers, will not sell unsafe products to the public; but unfortunately our history says otherwise.  Hence the need for regulation.

21. LET US WATCH  Broadcast all non-security meetings and votes on C-SPAN and the Internet.

Already done.  C-Span covers almost everything, and what is not covered is available on the C-Span is available on both the House and Senate Television which are streamed over the internet.

If there is one common theme in the Tea Party it is the need for fundamental reform of our republican institutions—specifically the Congress of the United States and how it manages their fiscal and fiduciary responsibilities.  The underlying theme to the Tea Party movement is they are the true conservatives wishing to return our nation to its roots.

On the first point, regardless of political leanings; I doubt if anyone in our nation would disagree with the need to get our public finances in order; and that Congress has done a poor job in exercising their fiduciary responsibilities.

It has been argued by some of the Tea Party movement that we need to lower taxes and reduce the size of the Federal Government.  But the same members of the Tea Party have demanded that the Federal Government remain strong and vigilant against all enemies foreign and domestic.  Unfortunately you can’t have it both ways.

In the almost twenty years since the fall of the Berlin Wall the United States military has been committed, both in the United States and foreign countries, than it was during the “Cold War.”  If you count both the Active and Reserve forces of the United States there are almost two million men and women in Uniform.  After paying for the day-to-day operations and maintenance of the military, the largest single expenditure is people.  It could be argued ten years ago that military pay was not on par with comparable positions outside the military, recent studies have indicated that military studies have indicated that military pay has achieved parity with civilian pay.  The base budget of the Department of Defense accounts for twenty percent of the Presidential Budget.  Given we are currently involved in two wars would it be prudent and responsible to cut the size of the Department of Defense Budget—I think not.

Since the Presidency of Ronald Reagan we have lived a lie that by cutting taxes we can increase prosperity for all Americans.  The so called “tickle down” economics or as George H. W. Bush referred to it in 1980, “Voodoo Economics” has seen the tax burden shifted from those earning the most, to the middle class.  While we have seen the upper income brackets of our economy increase their wealth; the middle class has seen modest gains.  The net result has been, except under Bill Clinton, we have seen increasing Budget Deficits and reluctance by either side of the aisle to address balancing our budget.  Moreover we have tried to fight two major wars on the cheap, asking our servicemen and women to make sacrifices through multiple tours to Iraq or Afghanistan without asking the American people to make any sacrifices.  It can be said that the military has been fighting the wars while the American people go to the mall.

The goodness of the Tea Party movement is they have highlighted the problem, the downside is they have not identified the culprit.  They have made the politicians the enemy, when in reality, it is we the people who are the culprits.  We have demanded more and more government services without the willingness to pay for it.  Our politicians have been more than willing to feed our and their addiction to providing without asking us as citizens to pay the piper.  Now we are going to have to pay the piper, and unfortunately politicians and the tea party are not admitting that to reduce deficits it is going to require more in way of taxes; and it is going to require shared hardships.

In Part 3 I will talk about why the Tea-Party resonates today, where they stand in the spectrum of American Politics, and offer some suggestions for achieving fiscal responsibility.

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