Can Tea Party afford the shutdown cost?

By Nicholas Wapshott
October 23, 2013

Victories come in many sizes. The Battle of the Little Bighorn, for example, at first seemed an overwhelming win for the Sioux. But it soon became clear their success would not last. Who really won the Alamo? The Mexicans? Try telling that to a Texan. So, who won the Battle of the Shutdown 2013? The conventional view is that the Tea Party Republicans were seen off by the congressional leadership in both parties. Having made their protest, disrupted the nation and cost Americans a great deal in anxiety, time and treasure, they lost the battle — but promise to resume the war another day. Perhaps as early as January.

While moderation appears to have triumphed and dogmatic extremism held at bay, the 800,000 federal workers and those who need their services were the obvious losers of the budget and debt ceiling battle. But so were those who hoped to derail the Affordable Care Act, freeze federal government spending and balance the budget.

A complete audit of the shutdown, however, shows the Tea Partiers suffered a more profound setback than they would like to admit — or perhaps even know. The exact philosophy of the Tea Party is hardly clear, but in as much as there is a manifesto it states: the government is too big and should shrink; government borrowing is out of control and the nation should live within its means; big business executives are unfairly propped up by government even when they make sizable mistakes; the government should stop manipulating the dollar through quantitative easing, and taxes should be reduced but never be raised.

It is a visceral creed, born of anger at the government’s bailout of the bankers in 2008-9 and the scale of the borrowing to prevent a full-blown slump, heavy on dogma but light on intellectual rigor. It could be called Austria Lite — all the prejudices of the big conservative thinkers without the trouble of having to read what they wrote.

The scale of the revolution that the Tea Party is attempting to foment is vast. It would turn the last 80 years of the federal government’s largely bipartisan social and economic policy on its head. It would entail closing government departments, privatizing popular entitlements like Social Security and Medicare and shrinking the military by withdrawing U.S. troops from abroad. It would mean deliberately slowing the pace of economic growth, returning to “sound money” that does not inflate and forcing Congress to stop spending other people’s money.

Eventually, it is argued by those who have faith, unhampered by democracy’s dead hand, market forces will reassert themselves and the economy will boom even more than before. Like the exploration of Mars, it is a long-term project. Along with the Chinese, Christians, Islamists and old school Communists, the Tea Party revolutionaries are playing a long game. Vienna wasn’t built in a day.

Or at least that was the original plan — until Senator Ted Cruz (R-Texas) spotted his chance to leap ahead of the 2016 presidential pack. Instead of the Tea Party biding its time, making the long democratic march through the primaries, winning Congress and the presidency, and rolling out the Tea Party program in a hundred days of hectic executive action, they followed Cruz into the shutdown. Cruz is a middle-aged man in a hurry. Like any good consumer, he demanded action this day.

“I want it now!” is not the cry of a seasoned political operator. Only once in a while, after a landslide that sweeps the White House and both houses of Congress, can big changes be achieved quickly. The rest of the time, patience is the friend of the radical, who must bide his time until the perfect opportunity arises.

As the uproar surrounding the shutdown has shown, last month was not a good time to start an uprising.

The Tea Party may never entirely recover from its intemperate adolescent foot stomping. The political cost can be measured by the evident, irrefutable slump in electoral support for the Republicans, and by bringing into the open the chasm between moderate Republican big dogs and the Tea Party tails that wag them. The cost of the closedown, however, moves the economic goals of the Tea Party movement further away than ever.

If one goal the shutdown was to discredit conventional economic theory, it has failed. The economic argument implicit in the Tea Party’s thinking is that if you slow economic activity by halting federal spending the economy will do well. The 10 days of shutdown, however, cost $3.1 billion in lost gross domestic product and $24 billion in lost economic activity that can never be recovered.

Rather like grasping the extent of damage done by a natural disaster, the full details of the losses Americans and the United States suffered as a result of the shutdown, of the threat of a shutdown and recovering from the shutdown will not become clear for some weeks. Those in the Tea Party who hoped the shutdown might actually save money must be sorely disappointed.

An early indication of how the Tea Party’s self-harming is self-defeating can be seen from the Federal Reserve’s verdict that the shutdown has prompted the delay of the “tapering” of quantitative easing (QE), the only economic policy government is left with and one the Tea Party particularly detests. Only a month ago the prospect of an end to QE was causing the stock market to catch the vapors. Now the markets are riding high, in the sure knowledge the shutdown has put off until next year, perhaps even March 2014, the day the Fed stops pumping $85 billion into the economy each month.

The Federal Reserve chairman, Ben Bernanke, and his prospective successor, Janet Yellen, have tied the end of QE to unemployment. Joblessness is now running at 7.2 percent — and the Fed has announced it will continue QE until unemployment is below 6.5 percent. So long as the Fed is in crisis mode, business confidence will continue to wobble, and new investments will be put on hold.

The best way to pay down the national debt is to prompt the economy to recover fully — so that everyone is back to work — and then tax them. By slowing the already laggardly economy, the shutdown has not only delayed the recovery, it has postponed the Tea Party revolution sine diem.

What about the impending budget talks? Did the shutdown not force the Democrats to concede entitlement reform? No.

It may well be that the grand bargain that emerges between now and the end of the year will trade some entitlement reforms with changes to the tax code that will increase taxes. With the Senate Majority Leader Harry Reid (D-Nev.) riding high, and with Senate Minority Leader Mitch McConnell (R-Ky.) insisting he will not threaten default in the latest negotiations, it seems even the Tea Party’s hope of not raising taxes will be dashed as a result of the shutdown.

So, what was the shutdown all about? For Cruz — and the rest of us — it was an expensive episode in promoting his career. For Tea Party members, however, it was a chance to draw attention to their grievances.

The fact that they left the check to be picked up by their friends and neighbors is of little concern to them. They have fully infiltrated one of the two alternating parties of government and hope it is only a matter of time before the pendulum swing lands them in government.

However, that complacent narrative has been set back by the viciousness of the shutdown and it has drawn voters’ attention to the Tea Party’s true aims and methods. The unpopularity of closing the government has put the Tea Party on notice: be nice or be defeated.

There seems little indication that either Tea Party supporters or populists like Cruz have understood the nature of the defeat they have just suffered. Instead, heartened by friends in the press, the political wreckers and vandals are plotting their next wave of wanton destruction.

Nicholas Wapshott is the author of Keynes Hayek: The Clash That Defined Modern Economics. Read extracts here.

 

PHOTO (Top): Senator Ted Cruz (R-Texas) talks to reporters after a Republican Senate caucus meeting at the Capitol in Washington, October 16, 2013. REUTERS/Jonathan Ernst                                                        

PHOTO (Insert): People hold signs at a Tea Party Patriots rally calling for the repeal of the 2010 healthcare law on Capitol Hill in Washington, March 24, 2012. REUTERS/Jonathan Ernst

 

 

 

 

 

 

 

 

 

 

31 comments

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Obamacare is proving that the Tea Party was right. This will be a huge win for them come 2014.

Posted by NEWAGER | Report as abusive

Can anyone tell me where I will able to find the closest bread line??

Posted by 1DukeZ | Report as abusive

NEWAGER: Delusion is like a drug, it feels good, but eventually it catches up to you. It’s funny that you would post such a comment on an op-ed that include reference to the detrimental, factual, residual effects of the shutdown forced by the Tea Party and how they don’t seem capable of comprehending the harm it did to this country nor the harm it did to the Tea Party’s political aspirations. So, carry on, by all means. The biggest problem with the Tea Party is that they have such a poor grasp of reality.

Posted by flashrooster | Report as abusive

Anyone who thinks Obamacare is a good thing has a poor grasp of reality. When fully implemented, there will be a rebellion against Democrats like you have never seen.

Posted by NEWAGER | Report as abusive

NEWAGER: Bear in mind that there was no shortage of people who expressed the same animosity toward Medicare. It turned out to be a big success. You might also want to bear in mind that the question is this: Which is better, our healthcare system pre-Affordable Care Act or our healthcare system with the Affordable Care Act. There are a lot of good things that the ACA does for the American consumer.

Posted by flashrooster | Report as abusive

Corporate prostitute Ted Cruz is at it again. According to the New York Times he has put a hold on the Senate nomination of Tom Wheeler to head the Federal Communications Commission, a candidate that both parties agreed would be put up for a vote without delay. Cruz wants to find out if Wheeler would vote to require greater disclosure about political ads on television and radio bought by independent groups. The F.C.C. clearly has the authority to require disclosure of who pays for commercial and political speech on public airwaves under communications laws dating back to the 1930s. Cruz knows that and he knows Congress isn’t going to repeal the laws so he is trying to bully Wheeler into agreeing not to exercise the agency’s authority. Neither he nor supporters of Republican candidates and conservative causes want disclosure of spending on commercials by groups like Americans for Prosperity, which is backed by the billionaire Koch brothers.

Posted by Des3Maisons | Report as abusive

A few massively rich One Percenters fund the Tea Party extremists and plan to run Ted Cruz for president in 2016. This is who they are:
•Corporate billionaire brothers David and Charles Koch (front group – Americans for Prosperity)
•Venture capitalist and hedge fund manager Peter Thiel (front group Club for Growth)
•Leverage-buyout specialist John Childs (front group Club for Growth)
•Investor Howie Rich (front group Club for Growth)
•Executives of JPMorgan (front group Club for Growth)
•Crow Holdings’ Harlan Crow (front group FreedomWorks)
•Shipping magnate Richard Uihlein (front group FreedomWorks)
•Investment banker Foster Friess (front group FreedomWorks)
•Executives of MetLife (front group FreedomWorks)
•Philip Morris (front group FreedomWorks)
•Foundations controlled by the Scaife family (front group FreedomWorks)

Posted by Des3Maisons | Report as abusive

I see a different trend not mentioned in this article.

The so-called shutdown will not hurt the House Republicans with the American citizens who are still grateful to them for stopping the immigration amnesty bill last month.

I see headlines in the Wall Street Journal and Bloomberg BusinessWeek highly critical of Ted Cruz, AND a constant stream of articles in those two business publications in favor of immigration amnesty and expanded H1B visa immigration. A well-financed campaign for more and more immigration.

What does this mean?

First, remember that immigration amnesty is highly valued by the Democratic Party and Barack Obama.

It must be noted that when the Senate’s Gang of Eight Immigration Reform bill of last month passed in the Senate, it had loud support of BIG GLOBALIST BUSINESS fronted by powerful Republicans like John McCain and Lindsay Graham. In other words, the same old pattern of Republicans supporting BIG BUSINESS as opposed to the American citizen.

When that Immigration Reform bill arrived in the House of Representatives, again it had the backing of the old-guard House Republicans. (Old-guard meaning they have been in Washington long enough to have lost their souls to big money.)

It was only the young, new House Republicans who stood by the American citizen, and valiantly stood up to GLOBALIST BIG BUSINESS, and refused to pass the immigration reform act.

This is why I now support the House Republicans. They are the only part of government still fighting FOR the American citizen, and defending the American citizen against BIG CORPORATE GLOBALIST BUSINESS, and the deadly tsunami of destructive immigration that GLOBALIST BIG BUSINESS, cheered on by their mouthpieces Wall Street Journal and Bloomberg BusinessWeek, has unleashed on America.

Immigration is quickly destroying the American middle class. The only hope to stop it is the as yet uncorrupted House Republicans. That is why I support the House Republicans.

Posted by AdamSmith | Report as abusive

I agree with republican Congressman Peter King: Sen. Ted Cruz is a fraud.

Posted by LenicGB | Report as abusive

What’s missing in all of this is “demographics” changing and “compromise”! The deomgraphic change is here! No going back! So, now that everybody knows the “tactics” of the Baggers, it’s going to be darn near impossible for any democrat to negotiate with them without catching “hell” from the dem’s base! Remember the “dems” have a base too!

Posted by Bulldogz | Report as abusive

Excellent article!

I think the author is reading too much into the ideas behind the “goals” of the Tea Party though. They could care less if they ruin the economy… the main thing I think going through a Tea Partier’s “mind” is:

“We have to make the ni66er in the white house look like an ape because that’s what he is!!! JUST LOOK AT HIM!!! I WANT MY WHITE COUNTRY BACK!!!!!!!”

Posted by TomBrown | Report as abusive

The Tea Party is usually referred to in the media as ideologues imposing naïve concepts on the country and its legitimate political leaders. They are portrayed as unintelligent bumpkins who do not understand the destruction their ideas will have on our and the world’s economy.

How quick the media is to ignore those worldly political leaders that brought the economies around the globe to their knees. Their solution has been to steal the resources of the poor and middle class to create a re-dux of the inflated asset prices that got us into this mess. Who are the truly naïve bumpkins?

Posted by keebo | Report as abusive

With all the negative comments on Obamacare, one needs to research Reagan’s comments on Medicare. Reagan was an excellent governor but he did make his mistakes back then. Once you pull up his little speech, look at your family (the large, not the immediate) and note the benefactors and then think about it.

Posted by xyzyx | Report as abusive

The problem with the tea party is they are a result of gerrymandered districts and not a result of true popular vote. Since the districts are set to cater to one group, it looks at if tea party players will be here for a while.

Posted by xyzyx | Report as abusive

Excessive defense spending plus excessive costs due to a monopolistic medical system is draining this country dry. Benefits from reform aimed at social security and other safety net programs are also part of the problem. Reform should be aimed not at the already poor or near poor, but rather at the wealthy with the never-ending tax dodges, incentives and deductions which is where most of the country’s money is going, leaving a shrinking middle class to shoulder the cost of what’s left. The country will wake up when they can no longer pay their cable bill and are forced to drag themselves away from the “one eyed monster” that spews Fox and MSNBC crap.

Posted by Newsrocket | Report as abusive

The Elephant and Donkey in the room are two parties who refuse to speak, negotiate and compromise and a leader who either cannot or will not facilitate resolution.

The Tea Part may be extreme, but we need someone to stand up and do something to move the Democrats and Republicans together in a positive direction. Maybe, just maybe, the two parties will join forces against both extremes and end political divisiveness.

Posted by GSH10 | Report as abusive

By all means, AdamSmith, prevent the immigration amnesty bill… but it has the opposite of the effect you want. Those illegal immigrants are ALREADY here, legalizing them means they can be taxed, and have to be paid according to labor laws, meaning the ten million or so of them no longer drag down wages for honest Americans by their slave-labor like conditions. They make money for the system when included, but are just a drag when not included. Shoot yourself in the foot again, why don’t you.

the H1B visas, you are right about however; that needs to stop!

Posted by Benny27 | Report as abusive

@Newsrocket:
When the Idiocracy declines and reason and logic have some kind of comeback, we can ignore the heat and controversy generating media.
Faux News will continue its blatantly unfair and unbalanced political advocacy and the anchors of MSNBC will continue to yell at their viewers as if they’re all deaf, dumb, blind and utterly stupid. CNN might return from its recent decline into becoming a tabloid, but don’t hold your breath. It’s more likely that CNN will be soon dead as their “reporters” interview each other while lost out on the street expressing their personal opinions, speculations and conjectures as they discuss their own unprofessionalism – on air! Yikes! Ted Turner must be ill.

Posted by ptiffany | Report as abusive

@xyzyx:
Where did you get the idea that Reagan was a great California Governor? The fist year, he did as promised and implemented a damaging 10% sequestor, just whacked off everything equally. Then, in subsequent years, the spending in California set new records. He even wasted 25 million of a lame special election that he zero chance of passage.
Many of the policies attributed to Reagan as President by the GOP are blatantly false. Federal spending, debt and deficits set new records as when he was Governor. Reagan (as with most border States like California and Texas, but not Arizona) was also a strong supporter of the rights of braceros – “illegal/undocumented aliens” – Mexican workers who greatly bolstered the economies of their States. Meanwhile the atrocities documented by Sinclair Lewis in “East of Eden” and “Grapes of Wrath” continue to this day, especially in California.

Posted by ptiffany | Report as abusive

@xyzyx:
Where did you get the idea that Reagan was a great California Governor? The fist year, he did as promised and implemented a damaging 10% sequestor, just whacked off everything equally. Then, in subsequent years, the spending in California set new records. He even wasted 25 million of a lame special election that he zero chance of passage.
Many of the policies attributed to Reagan as President by the GOP are blatantly false. Federal spending, debt and deficits set new records as when he was Governor. Reagan (as with most border States like California and Texas, but not Arizona) was also a strong supporter of the rights of braceros – “illegal/undocumented aliens” – Mexican workers who greatly bolstered the economies of their States. Meanwhile the atrocities documented by Sinclair Lewis in “East of Eden” and “Grapes of Wrath” continue to this day, especially in California.

Posted by ptiffany | Report as abusive

The Tea Party is a party of death rather than life and worships money rather than God. What height of hypocrisy to sacrifice one’s own neighbors to promote an oligarchical form of feudalism. Knaves groveling and doing the bidding of their lords for a few pieces of silver, not unlike the Biblical Judas.

Posted by Greenspan2 | Report as abusive

with the tea party a faith based reality has trumped fact. impossible to argue with.

Posted by jcfl | Report as abusive

President Dwight Eisenhower was a Republican.

Illegal immigration can be stopped and I am supporting the House Republicans, hoping that they also will stop illegal immigration, as Eisenhower did.

Here is how President Eisenhower stopped illegal immigration.

http://www.csmonitor.com/2006/0706/p09s0 1-coop.html

Posted by AdamSmith | Report as abusive

Operation Wetback successfully stopped illegal immigration in 1954. It was the Republican President Dwight Eisenhower who protected the American worker.

Note that Dwight Eisenhower was the same General Dwight Eisenhower who was Supreme Allied Commander for Europe in World War II, the commander of the Normandy invasion, and the defeat of the Nazis.

So the House Republicans have a good antecedents for protecting the American citizen.

Operation Wetback video:

http://www.youtube.com/watch?v=zJ3u2Cc6k yE

Posted by AdamSmith | Report as abusive

I have another take on the tea party, which is they are simply motivated by money. They see the Sarah Palin model and try it for themselves. They simple pander to a certain population segment, become a political celebrity and make people pay them for their face time. It’s pretty lucrative and definitely beats working. We certainly know they don’t reall y care about what they say or even believe it. I say that because as soon as it was apparent that Obama wasn’t going to blink the funds suppliers in business (those that fund tea party campaigns) called off the revolt. It was about to really affect the bottom line of business and so the tea partiers capitulated. Had they had real convictions they would have continued. Instead they were worried about their re-elections and money instead of the country. Not that I buy their crap or anything, but they said they really believed their ridiculous rhetoric, and then they proved they didn’t.

I don’t really buy the race thing from them individually since it is my contention that they have no convictions. They simply use the race thing as any other tool to obtain the support they need to get paid. It’s simply economics and uses race baiting as a tool. Sure, still hideous and dependent on racists, but they themselves have no conviction nor care what damage is done.

Posted by brotherkenny4 | Report as abusive

I did not and REFUSE to read this persons tripe. He is not a journalist and is not offering his opinions. He merely scans the headlines for the most controversial issue and provides a leftist viewpoint of it. Please Reuters, please wake up to this and refuse to publish his refuse.

Posted by tmc | Report as abusive

“born of anger at the government’s bailout of the bankers in 2008-9 and the scale of the borrowing to prevent a full-blown slump, heavy on dogma but light on intellectual rigor” Not really, the Tea Party seems to have been hatched by the ultrarich right wingers mentioned by @Des3Maisons who used Fox News and talk radio to convince the gullible and ignorant that they were part of a spontaneous populist movement. While their anger is their own, that hatred makes them easily manipulated to do the bidding of a small number of very rich people.

Posted by QuietThinker | Report as abusive

@ AdamSmith – good link on immigration policy and another reason to like Ike. The article makes it clear that illegal employers were a big part of the illegal immigration problem, it was and is more than a matter of border patrol.

I’d like to see something similar now – reduce the illegal inflow, go after illegal employers, and offer a path to citizenship based on merit for most or on mercy for true political refugees.

That would reduce the illegal hiring as a downward force on ‘real’ wages, and increase taxpayer participation from those approved for citizenship.

We might pay the ‘real’ higher cost for some produce at stores or passed on from higher wages, but we’d reduce the hidden costs that we all now also pay for medical and education, food assistance, etc. subsidies too.

Back to a more general topic – a lot of the rhetoric in politics ignores that issues are more complex than single-cause sound bites. The role of middle-class people hiring corner labor and corporate farms or fast food employers hiring illegal workers to save a buck – illegally – and saving their buck by making other people pay more, are just as real a part of the immigration problem that needs to be solved as border security or plans for citizenship.

Posted by Decatur | Report as abusive

However, Ike wouldn’t fit in well with conservative GOP today, especially Tea Party. He took a balanced approach to immigration as your link described.

He also:

favored Egypt over France/Britain/Israel at Suez crisis.

did not escalate war to other theaters or use nukes in Korea, or to save French IndoChina

did not ‘unleash the nationalists’ (at that time something like unleashing a chihuahua, or if an attack dog, a very tired hungry and and beat-up one) on China (see above)

did use massive infrastructure projects – Interstate system & St Lawrence Seaway among them – to boost and stabilize employment

did use taxes and spending both to balance the budget, he did not pretend that could only be done by spending cuts, to the frustration of ‘old guard’ GOP back then

did use foreign aid as a cheaper alternative to foreign U.S. military presence

did expand social security

did uphold Supreme Court decisions

‘trusted but verified’ with the most ambitious air and space intelligence effort perhaps in our history

Almost all of these decisions recognized complexity in the problem at hand, and compromise in the solution best for America.

Posted by Decatur | Report as abusive

@Decatur – Well said.

Yes, the Tea Party would do well to emulate Eisenhower on many issues.

They, the Tea Party and especially the House Republicans, must be applauded for at least emulating President Eisenhower’s decisive action, in Operation Wetback, of going against the lobbying of big agriculture, and protecting the American middle class from the destructive effects of illegal immigration.

Illegal immigration today is on a gigantic scale, much larger than in Eisenhower’s day. It is part of the technology explosion. Today illegal immigrants are highly organized, like the mafia, using the cell phones, the internet, and church groups to circumvent the law and bring in whole villages of people at a time, who then bring in even more people once they are established here.

The Tea Party is the only political organization to take a stand against this accelerating destruction of America and virtual abandonment of its sovereignty from massive immigration.

Posted by AdamSmith | Report as abusive

The Tea-Party is the new Goldwater party of the GOP, and we all know what happen in 1964..good luck Teddy !!!.

Posted by albetdaniel | Report as abusive