The Next Evolution of the TEA Party Must Be a SEA Party

December 16th, 2007 was the 234th anniversary of the Boston Tea Party, and Ron Paul used the occasion to throw a “money bomb” that took in $6 million dollars, primarily through smaller donations. He used imagery of our nation’s early tax revolts via the Sons of Liberty to draw followers to do their part to protest what they viewed as unfair and excessive modern taxation.

This event, a decade ago, sparked off a series of protests which gave rise to the TEA Party. This wasn’t a new political party, more of a new moniker (or at least a reused one) for fiscal conservatives that felt let down by both major parties which seemed to tax and spend more every year regardless of which one was in power. It was, and has remained, a largely decentralized movement without an official “leader” or a agreed on statement of principles. However, one basic principle tied supporters together, supporters who often disagreed on social policy or foreign policy. This principle, in a nutshell, was that we were “Taxed Enough Already”.

Specifically, their first main federal grievances were Bush’s Emergency Economic Stabilization Act of 2008, and Obama’s American Recovery and Reinvestment Act of 2009, which nicely highlighted their bipartisan disgust with being ignored by the leadership of both major parties. Yes, they leaned almost exclusively “right”, but they no longer felt the Republican Party did as a whole.

The movement gained national attention and traction on February 18th 2009, when Rick Santelli delivered his epic rant from the floor of the Chicago Mercantile Exchange. He railed against government distorting incentives to promote bad decisions and suggesting that traders hold a tea party to “dump derivatives in the Chicago river“. His speech inspired the first nationwide TEA Party protests, which met across 40 different cities later that month.

Their first major electoral victory happened in the 2010 midterms, when Republicans won congressional races overwhelmingly, but more important to the TEA Party, “their guys” won many of the primaries first. TEA Party candidates were often underfunded and inexperienced compared to their more “establishment” opponents, and the TEA Party has never achieved anything even approaching a majority of Republicans in office. However, they’ve been a vocal minority able to influence policy disproportionate to their numbers, primarily through their willingness to break with party leadership even when vote counts are close.

Now, nearly a decade to the day after their emergence, they arguably have their first legislative victory. Their laser-like focus on taxes has made the first major legislation of Trump’s term to pass both houses tax reform. Now, some may say that the bill doesn’t go far enough, or it goes too far, or even that it wanders in the wrong direction. Many are divided on specific portions of it, given the length of such bills. It’s presentation was about as transparent as Obamacare’s, with votes being conducted before the Senate had an adequate time to read and review the final version… and there still needs to be reconciliation between the House and Senate versions. But the original aim was to simplify the tax code and lower rates overall, and that’s exactly what the bill appears to do. Such a bill, regardless of any warts, represents the largest step towards what has always unified the TEA Party, and it would not have existed without them.

I’m not saying that this represents anything like “mission accomplished” for the TEA Party at all, or that it provided them with all they wanted. But I think that the passage of this bill does beg the question…

What’s next for the TEA Party?

Specifically, what’s next for fiscal conservatives, now that a major tax reform bill has passed? I would like to humbly submit a proposal for the movement that expresses what should be the exact and obvious focus for fiscal conservatives given current political realities.

I’m calling for a SEA Party, because the government spends more than enough already.

Taxing and spending have always been opposite sides of government coinage, inexorably linked to one another. All government spending comes from some form of taxation eventually. The most visible forms of federal taxation may be things like income, corporate, capital gains, FICA, excise taxes, etc. However, debt is merely a tax on future generations, and inflation is merely a regressive tax that hits hardest savers and those on fixed incomes. Any cuts to direct taxes without accompanying spending cuts merely raises the tax rates of indirect taxation.

The strategy of “starve the beast”, or at least the term, hearkens back to the Reagan years of the eighties. It posits that tax cuts force spending cuts, because without the revenue stream of taxation, spending cannot occur. Reagan explained it this way…

“Well, if you’ve got a kid that’s extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker.”

The problem with that, of course, is that in the case of Reagan’s kid, the allowance is presumably his only revenue stream. If that kid were the federal government, he could get loans from the bank on demand with no collateral necessary and credit assumed by law, indefinitely. As Alan Greenspan put it…

“Let us remember that the basic purpose of any tax cut program in today’s environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending.”

What… exactly… is that trust based on?

Seems to me that no political price seems to be paid for deficit spending whatsoever. Whenever Congress approaches any set debt limit, they simply raise the limit, and promise that reforms will come later, just to repeat the process the next time. Even when announcing things like the sequester, baseline budgeting protects some programs while creative accounting protects others. We’ve run a yearly deficit nearly every year of my lifetime, and if a $20 trillion debt sitting at over 100% of GDP isn’t enough to persuade us to change course, I don’t know what will. Cheney was right, in the political sense, when he claimed that

“Reagan proved that deficits don’t matter.”

Of course, functionally they matter, and few in the TEA Party would question that. It’s merely that the financial effects of deficits don’t directly correlate immediately to negative outcomes in the minds of voters, and therefore they don’t matter to most politicians. Increasing our debt may increase interest payments, harm future generations, increase dependency on foreign nations, increase the influence of investment firms on policy, limit economic growth, in the long run destroy our currency, and a whole host of other ancillary effects. But it never seems as concrete to voters as the simply dichotomy of their tax bills versus their favored programs.

Politically speaking, calls for lowering taxes will always be more effective than calls for lowering spending when specifics are involved. But many in the tea party see themselves as non-political, or at least non-partisan and more focused on policy than the average voter who’s often more swayed by cultural signaling. To the extent that self-styled tea party politicians are fiscal conservatives, it seems obvious to me that since significant tax reform is accomplished, spending reform must follow. Deficits and debt are not fiscally conservative policies.

Besides, there is a big picture battle here that’s also politically popular. According to polling, roughly three out of every four American adults support a balanced budget amendment that would make deficit spending unconstitutional. Yes, budgets under such an amendment could be balanced by higher taxes, not just lowered spending, or a combination of each. But at least such an amendment would force the choice, rather than allowing for an increase in spending every single year, even automatically through baseline budgeting. Our current system nearly guarantees spending increases continually over time, while a BBA at least offers hope.

In the wake of the victory of significant tax reform, this is the next battlefront for fiscal conservatives, the next big ticket item that accomplishes more than nibbling around the edges with some minor tweaks. For fiscal conservatives to move forward, they need to evolve past the TEA Party and become a SEA Party, or suffer the same fate of stagnation and co-option by a Republican party unconcerned with economics as their predecessors.