15 April has been proclaimed the American Nationwide Tax Day Tea Party. The date coincides with country’s tax filing deadline; the theme is a reference to the Boston Tea Party in 1773 when 342 crates from the East India Company were dumped into Boston Harbour in protest at the three pence import duty.
236 years later, groups of fiscal conservatives and libertarians are gathering at events around the country. Their anger targeted at Obama’s spending plans, and the tax rises that they think will follow. There are four problems with their protest.
First, the historical allusion is wrong. Obama won the election in part because of his promise not to raise taxes on Americans making less than $250,000, while cutting taxes for lower- and middle-income Americans. This would mean no tax rises for about 95 per cent of all Americans. This means that the cost of the recovery plan and budget will need to be met by cuts elsewhere or rises in taxes on the highest earners, corporations, or capital gains.
In any case, the eighteenth century controversy was not over the level of taxation, but whether parliament had the right to impose, or in this case retain, taxes on subjects in the colonies. “No taxation without representation,” was then the clarion call. There can be little doubt that Obama has a mandate to govern. In the November election, he won the highest percentage of the vote for any presidential candidate in 20 years and has enjoyed steady job approval ratings of 60 per cent since taking office.
Second, while democracy is strengthened by grassroots acts of protest, Paul Krugman has unveiled that, “the tea parties don’t represent a spontaneous outpouring of public sentiment. They’re AstroTurf (fake grass roots) events.” For example, FreedomWorks, run by former House majority leader Richard Armey, is one of the main organizing bodies. The events have also received heavy promotion on Fox News.
Third, many of the campaigners’ specific targets are red herrings. An email from one regional organiser says, “Spending revenue not yet collected for honeybee insurance, a bullet train from Disney to Vegas, a Frisbee park or for lobbyists in Texas and Washington is frivolous and inexcusable.” As I have written before, honeybee insurance was a minor part of a program for all livestock producers which in total made up 0.02 per cent of the stimulus; the Frisbee park came from a wish list of mayoral proposals which is unlikely to be approved; and the unprecedented steps to ensure transparency that Obama is taking will ensure that no lobbyists receive any backhanders.
Finally, there is an element of hypocrisy. The scale of the economic crisis which has necessitated the recovery plan, as well as the once-in-a-lifetime reforms to healthcare and energy policy, is in part due to the inertia of President Bush’s policies which were supported by many attending the events. Additionally, the build up of deficits to pay for current spending has normally taken place on a Republican’s watch. Since reaching a high in 1946, publicly held debt as a percentage of GDP (see Table 7.1) has risen in 24 of 61 years. Only four of these years have taken place under a Democratic president. Indeed, the largest sustained increase took place during the Reagan-Bush Snr period when it rose from 25.8 per cent to 49.4per cent. President Clinton brought debt levels down to 33.0 per cent only to see them rise to an estimated 39.0 per cent under Bush. So much for Republicans being fiscally conservative.
The protesters are entitled to their tea parties, but their complaints are more in keeping with Alice in Wonderland than the revolutionary history that they wish to invoke.