Tea Party didn’t mind bailing out Wall Street, only Main Street
My Fin column from last week is over the fold. It’s mainly about the Occupy Wall Street protests, but in this post I want to stress a misleading comparison with the Tea Party. It’s often suggested that the Tea Party arose in response to the bailout of Wall Street, and until I checked, I had somewhat accepted this claim, even if it was obvious that the protest served the interest of its supposed targets.
In reality, though, there is no truth at all to this claim. To quote from the article
The first Tea Party protests were held in February 2009, shortly after the inauguration of President Obama, and four months after the Bush Administration bailed out the banks. The event that did most to drive the Tea Party protests was a rant delivered by journalist Rick Santelli from the floor of the Chicago Mercantile Exchange. To the cheers of traders, Santelli denounced bailouts, but not the bailout of the financial sector. His ire was directed against attempts to help struggling homeowners refinance mortgages taken out during the real estate bubble.
I used to see the Tea Party as having had some genuine elements, but co-opted by Wall Street and the Repubs. Now, it’s clear that Repub activists ran the show from day one. Some individual participants may have been sucked in by anti-bailout rhetoric but the organizers were on the side of the 1 per cent all along.
Top one per cent should tremble
Over the last few weeks, the US political scene has been upended by the sudden emergence of mass protests, modelled on those that set off the ‘Arab Spring’ earlier this year. As in Tunisia and Tahrir Square, the bulk of the protestors are young people facing a grim economic outlook. Many are recent college graduates burdened by debt from student loans, and unable to find work, or at least, unable to find a job that would give them a chance of repaying their loans.
As the name implies, the Occupy Wall Street movement started with a small protest in New York City a few weeks ago. It has now grown and spread to dozens of cities all across the country. Initially scornful media reports have given way to serious coverage.
Although the protestors have deliberately avoided the kind of organization that would allow them to formulate a political program, the core of their position is implicit in their key slogan ‘We are the 99 per cent’.
The central argument, amply supported by the data, is that the great majority of the benefits of economic growth in the US have gone to those in the top 1 per cent of the income distribution. The share of total US income accruing to this group was approaching 25 per cent before the global financial crisis, and is almost certainly higher now.
Perhaps their most striking output has been a website http://wearethe99percent.tumblr.com/, where hundreds of people hold up handwritten statements describing their economic position. The themes of financial disaster arising from unemployment, health care emergencies and student loan debt are repeated over and over with a striking impact.
The focus on Wall Street represents the second part of the indictment. The huge growth in incomes for the top 1 per cent is due primarily to the rise of the financial sector. Having crashed the economy, and received a massive bailout from the government, Wall Street is more prosperous than ever. Meanwhile the rest of the country suffers from continued high unemployment and declining household incomes.
As if to confirm this analysis, a viral video showed some Wall Street bankers watching the protest from an upper balcony of their building. Living up, or down, to their stereotypical image, they had opened a bottle of champagne to better enjoy their mockery of the protestors.
The Occupy Wall Street movement invites comparison with the Tea Party Movement. The Tea Partiers also claimed to be motivated by anger against both the Democratic and Republican parties over the bailout of Wall Street.
But the timing of the Tea Party tells a very different story. The first Tea Party protests were held in February 2009, shortly after the inauguration of President Obama, and four months after the Bush Administration bailed out the banks.
The event that did most to drive the Tea Party protests was a rant delivered by journalist Rick Santelli from the floor of the Chicago Mercantile Exchange. To the cheers of traders, Santelli denounced bailouts, but not the bailout of the financial sector. His ire was directed against attempts to help struggling homeowners refinance mortgages taken out during the real estate bubble.
Unlike the Tea Party, the Wall Street protestors are calling for more regulation of financial markets, and higher taxes on those who make their money there. In other respects, though, the two movements have important similarities. In particular, as with the Tea Party, the impact of the protests can’t be measured by the extent to which policies advocated by the movement are adopted by US lawmakers.
The crucial effect, rather, is in shifting what is known in US politics as the Overton window. This is the range of ideas that is considered as allowable for public discussion. Until now, any serious discussion of income redistribution has been ruled off-limits by the automatic Republican response of ‘class war’.
Suddenly, however, a great many Americans have realised that a class war has been going on for years, and that they have been on the losing side. While the Tea Party is now among the most unpopular groups in the country, opinion polls show the reaction to Occupy Wall Street has been more favorable than otherwise. In particular, a majority of Democrats support the movement.
It remains to be seen whether the movement will continue to grow, or fracture and fade away as commonly happens with upsurges of popular feeling. But anger at the steadily growing wealth and power of the top 1 per cent has found its voice. Whatever happens to the protests, that anger is unlikely to dissipate.