How the Tea Party Saved America's Economy

In the midst of the scandal over the Internal Revenue Service (IRS) unconstitutional and likely criminal targeting of Tea Party and other conservative groups, the Wall Street Journal released some fascinating data about the comparative performance of the U.S. and European economies. Both fell and rose at roughly the same pace from 2008 to early 2011. But beginning in early 2011, they diverge sharply, with the U.S. continuing to recover slowly and the Euro zone falling back into a decline. 

The timing of the split is no coincidence.

Early 2011 is when the Tea Party-backed Republican majority officially took the House of Representatives. And though the Tea Party was maligned by the media, lost some of its political momentum, and failed to reach many of its own ambitious goals, it imposed a modicum of discipline on Washington that created much-needed economic stability. 

Most significantly, the Tea Party ensured that there would be no more bailouts–especially of profligate “blue” states; no large tax increases; and no new major regulations by Congress.

The President, his party, and the many Keynesian enthusiasts for government spending in the mainstream media derided what they called the Tea Party’s “austerity” policies. They even cast the Tea Party as “hostage takers” or “terrorists” for being willing to face sequestration or default rather than accede to large tax hikes or spending increases. They point to Europe’s ongoing struggles as evidence that fiscal discipline does not work, and they have continuously warned–against the evidence–that lower spending will doom our own recovery.

Yet Europe has not been experiencing actual “austerity,” but half-hearted reforms instead. Though increases in government spending have slowed in many European countries, few have carried out real spending cuts, and many have enacted self-destructive tax increases. 

As the Journal points out elsewhere, Europe has failed to introduce pro-growth reforms–and “if borrowing money for the government to spend on “growth” worked, Europe wouldn’t be in this mess.” Europe represents what happens if spending its left unchecked for too long.

The U.S. has not experienced anything like “austerity,” either. Congress has even continued to raise spending modestly, wile raising the debt ceiling and passing a small income tax increase in the “fiscal cliff” debacle in early January. 

Yet the Tea Party has pushed the Republican caucus to enforce some boundaries around the profligacy that began well before the financial crisis and bailouts of late 2008 and reached a fever pitch under former Speaker Nancy Pelosi (D-CA) during a time when Democrats controlled both sides of Capitol Hill.

On the state level, new Republican governors and Republican-led legislatures put in place by the Tea Party wave of 2009-10 began to balance public budgets and confront the bargaining power of the public sector unions. The Tea Party’s most important political victory was arguably not in November 2010 but in June 2012, when Wisconsin voters decisively rejected the last of a string of labor-led attempts to seize power from Gov. Scott Walker after he enacted collective bargaining reforms against undemocratic Democratic resistance.

The Tea Party has had some stumbles, too–principally its failure to develop national leadership that could guide it past assaults from the media and the D.C. establishment. The president and his supine press corps blamed the Tea Party for the Tucson shooting of January 2011, unfairly but effectively. 

Meanwhile, the IRS carried out what we now know amounted to a campaign of political repression prior to the 2012 elections that prevented the Tea Party from institutionalizing its momentum and mobilizing the conservative grass roots.

Yet without the Tea Party, and the 2010 victories that locked in conservative gains for a decade through redistricting, there would be little opposition to the decidedly European direction in which Obama and the Democrats want to take the nation. The movement faces significant challenges, especially the decision of several Tea Party-backed governors to accept Obamacare funding for new Medicaid spending. But with the public increasingly aware of Obama’s big government abuses, the Tea Party has the chance to bounce back–as it must.