Home > Economic policy, World Events > Tea Party didn’t mind bailing out Wall Street, only Main Street

Tea Party didn’t mind bailing out Wall Street, only Main Street

October 19th, 2011

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.

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  1. Mulga Mumblebrain
    October 19th, 2011 at 05:57 | #1

    The T.E.A (Taxed Enough Already) Party was a Rightwing ‘Astro-turf’ enterprise from the beginning, with the infamous Koch Brothers putting millions into it. In what is, in my opinion at least, an even more than usually vicious and distorted diatribe in The Fundament today, Janet Albrechtsen slimes the OWS mob with trademark malice, and sings the praises of the Tea Party. And the sun is coming up, just as predictably. Naturally, being criticised by the likes of Albrechtsen amounts to an all-round commendation in intellectual and ethical terms. La Passionaria herself is in a good position to lecture those whose lives have been destroyed by bankster greed and malfeasance, having made a clever ‘market decision’ to marry a millionaire ‘merchant banker’. I just love her insight that the GFC was actually caused by ‘customer greed’. Priceless!

  2. Freelander
    October 19th, 2011 at 06:47 | #2

    The thirty years of rule changes resulting in the upward redistribution of income certainly wasn’t ‘class warfare’, rather that was simply ‘class justice’.

  3. Christopher Dobbie
    October 19th, 2011 at 07:33 | #3

    … will continue to grow, or fracture and fade away…

    This ain’t going nowhere but down, if you take a look at the posts in the tumblr you notice a common theme; student loans and of which bankruptcy doesn’t ex-sponge.

    And that’s not minimising the other great fear; getting sick.

    A whole swathe of the American population is being catabolised, how long it takes for revolution is the question.

  4. Tom
    October 19th, 2011 at 08:43 | #4

    @Christopher Dobbie

    The collapse of US is inevitable, but I believe there is one major problem with the coming revolution. The problem is that who will lead it, as I was pointed out by other bloggers that the American revolution itself is just a show by the people who used to run the country in the first.

  5. Andrew Gleeson
    October 19th, 2011 at 09:14 | #5

    John,

    Are you aware of the role of the Koch brothers in bank-rolling the tea party? See George Monbiot’s piece:

    http://www.monbiot.com/2011/08/01/how-the-billionaires-broke-the-system/

  6. Watching the deniers
    October 19th, 2011 at 10:01 | #6

    @ Occupy Wall Street movement. Good on ‘em.

  7. SamB
    October 19th, 2011 at 10:09 | #7

    John,

    Minor process issue …

    When you write “over the fold”, you really do need to put in some sort of market for where the “fold” is. Otherwise, you get a really confusing/repetitive post,

  8. Greego
    October 19th, 2011 at 11:45 | #8

    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.

    Incorrect. The first tea party protests were part of Ron Paul’s presidential campaign in 2007. You know, ‘end the fed’ and all that. But hey, whatever fits the narrative.

  9. TerjeP
    October 19th, 2011 at 20:31 | #9

    Even if you accept the date given by John Quiggin for the first Tea Party protests and accept that there was a four month delay between the bailout of banks and the Tea Party movement starting, there was still in fact a vastly longer delay between the bailout of the banks and the OWS movement starting so it is hardly a point of moral superiority. The left was too fascinated with their new president to complain about bank bailouts.

  10. Ikonoclast
    October 19th, 2011 at 21:21 | #10

    Never mind Main Street, what about Struggle Street?

    To my mind;

    Wall Street equals Finance and the 1%,
    Main Street equals productive business and distribution and the middle class (maybe 39%),
    Struggle Street equals the working poor and those on welfare or NVMOS* (maybe 60%).

    In Australia, Main Street is cosseted also but our progressive taxation and targeted welfare mean that so far things are not really ugly on Struggle St except perhaps for the lowest quintile (20%).

    * No Visible Means Of Support.

  11. sjk
    October 19th, 2011 at 21:35 | #11

    TerjeP, I suspect many on the left were willing to cut Obama some slack, given the previous 8 years of conservative (presidential) rule had gutted the American economy. Why rock the boat and risk putting those bozos back in charge? Unfortunately that strategy didn’t work out so well.

    Worse, it turns out Republicans don’t require the white house to wreck their economy, they proved they could do that with their 40 vote veto power in their Senate and hold of the House. I mean, debt limit hostage anyone? Opposing obvious remedies such as Obama’s jobs proposal?

    In that environment, why wouldn’t those on the left decide to change strategy and at least finger the guilty who are directly responsible for their misery?

  12. alfred venison
    October 19th, 2011 at 21:46 | #12

    dear Christopher Dobbie
    a “swathe of the American population is being catabolised.” interesting. would you say that the heat of their anger is increasing at a rate commensurate to the degree of their social atomisation?
    yours sincerely
    alfred venison

  13. silkworm
    October 21st, 2011 at 00:27 | #13

    I read some time ago that the Koch Brothers were involved in financing McCain’s campaign in the 2008 election, and that many of the people involved in his campaign were also involved in organizing the first tea party rallies in Feb 2009. One of the earliest organizers of these rallies was a Republican activist and banker called Eric Odom. Odom started the first Tea Party website on the same day that Rick Santelli made his rant on the floor of the Chicago Mercantile Exchange for CNBC.

    The first rallies were small, but they were quickly taken up by Glenn Beck and the rest of the Fox News team, and under Beck’s “leadership,” the Tea Party became largely an amalgamation of the libertarian right and the Christian right. The Christian right have always been an essential part of the Republican base. These are the people who, having have drunk the religious kool-aid, are easily manipulated by the financial elite.

  14. Freelander
    October 22nd, 2011 at 00:02 | #14

    The reaction to the Occupation in Melbourne was unnecessarily heavy-handed, but tolerating demonstrations has not been fashionable in the West now for many years.

  15. Mulga Mumblebrain
    October 22nd, 2011 at 07:37 | #15

    Freelander, what else did you expect from Baillieu? He pulled off a real coup by pretending to be a ‘liberal’, but once in power, and with such a tenuous hold on it, he has revealed his real features, that of a hard Right ideologue. His zealotry in attacking environmental progress and setting the clock back decades in regard to ecological matters represents the real ideology of the Right, totally antithetical to life and devoted above all to power and profit. Fatty O’Barrell in NSW is of the same ilk, although the heir apparent, Newman, in Queensland, has broken the mould by revealing his anti-environmental intentions (re Wild Rivers) before the election, rather than lying about them or misrepresenting them. Needless to say, Abbott, once ensconced will unleash a firestorm of anti-environmental revenge and rollback, egged on by zealots like Robb and Joyce.

  16. BilB
    October 22nd, 2011 at 15:24 | #16

    That is a total zero for you, Terje.

    The poor people didn’t complain, so that makes it all right??

    What about

    ….they hoped for better but through the obstinance of the Republican greed it has been impossible to deliver any better for the 99%, and so they have finally found their voice.

    The balcony champaigne is a “let them eat cake” moment in time. Let’s hope it leads to a suitably equivalent conclusion.

  17. Peter Kirsop
    October 23rd, 2011 at 21:08 | #17

    Don’t say the American Conservatives are Tea Party deregulationists who support the Wall St bailout. Most do not. Just like Sir Robert Menzies would never have supported deregulation or low taxes.
    As to the American Conservatives opposing deregulation see American Conservative here http://www.theamericanconservative.com/dreher/2011/10/13/liberal-democrats-who-love-wall-street/ and http://www.theamericanconservative.com/dreher/2011/10/21/denninger-against-tea-party-lies/
    As to Sir Robert on tax. the top marginal rate when he was PM was 662/3 % and as to opposing deregulation :
    In other words, the choice is not between an unrestricted capitalism and a universal socialism. We shall do much better if we keep the good elements of the capitalist system, while at the same time imposing upon capital the most stringent obligations to discharge its social and industrial duty.

    The old conservative doctrine that the function of the State was merely to keep the ring for the combatants has gone forever. The grim picture, dear to the heart of the Yarra Bank orator, of a capitalist system in which there is unrestrained and cruel competition, in which employees are sweated and workers treated like cattle, no doubt had some truth in it – and still has too much to satisfy humane minds. But we have learned a great deal about how to use private enterprise for our own social and national ends. Price control and Government regulation have been limiting factors. Arbitration courts and industrial laws have abolished sweating, except in one or two places where the award-evader has yet to be chased out of his burrow. National insurance, our unsuccessful attempt at which, just before the war, was most disappointing to many and caused my own resignation from a cabinet, must come again. As early as may be, and if possible during the war when employment is high, unemployment insurance should be introduced. After the war, the obligation of industry to maintain employment on a steadier basis must be increased to the limits of practicability; we must become better economists in our attack upon the problem of boom and depression; we must aim at a proper provision of food, clothing and shelter for our citizens. In these and many other ways the duty of each of us to his fellows and to the State must be defined and enforced. (Broadcast Talks “Has Capitalism Failed” here http://www.menziesvirtualmuseum.org.au/transcripts/ForgottenPeople/Forgotten21.html

    Menzies talks the language of duties, – true Burkean conservative , not the libertarian waffle of rights.

  18. Barry
    October 29th, 2011 at 00:51 | #18

    @Greego
    “Incorrect. The first tea party protests were part of Ron Paul’s presidential campaign in 2007. You know, ‘end the fed’ and all that. But hey, whatever fits the narrative.”

    I’m sorry, I missed the thousands of people gathered on the Mall in DC.

  19. Barry
    October 29th, 2011 at 00:57 | #19

    @TerjeP
    “…there was still in fact a vastly longer delay between the bailout of the banks and the OWS movement starting so it is hardly a point of moral superiority. The left was too fascinated with their new president to complain about bank bailouts.”

    The American people had elected a new administration. The people in OWS were waiting to see what would happen. Then they gave up on that, and started protesting.

    The Tea Party, on the other hand, started mass protests in April, 2009 – *after* their party had lost power, and long before it was possible to judge the new administration.

  20. Freelander
    October 29th, 2011 at 01:49 | #20

    Gee. The American people, actually, in the rest of the world we have a single word for ‘the American people’; we simply say Americans. But hey, why use one word when two or more will do the job not nearly so well.

    Anyway, Americans really got dudded when they voted for Mr “Yes We Can” Obama. And the fools in Sweden gave him a Nobel Peace Prize. There has been a history of mistakes with that prize but surely that has to be one of their worst ones. The US hasn’t had a half decent president since Nixon. And Obama was simply an improvement on his predecessor which wasn’t hard. But looks like if worthless Obama goes, the choice again will be dumb or dumber.

    No wonder the OWS people are out in the Street. Voting has long since not offerred an option for change in the US.

    Increasingly abroad, the US is a laughing stock. Made a mess of South America, but most of it is recovering. Made a mess of IndoChina but its recovering. Made a mess in Colombia still a mess, and now a mess in Mexico. Great ‘leadership’ in the middle east. Gave us the GFC. The Iraq and Afghanistan debacles. Gitmo. And a global ‘war’ with fundamentalist crazies. Thank you very much.

    Or at least their ruling class did. The average American citizen has got squat out of those, just a debt burden, and unemployment or nickel and dimed jobs competing with the third world while their ruling class just rakes the money in. And if or when the US becomes unlivable, that ruling class will just move elsewhere. Look out elsewhere!

    The tea party was, and is, to a great extent, astro turfed right down to their silly fancy dress. Hired straight out of the trailer park. With that sort of ‘grass roots’ they would hardly have turned on Wall Street. How convenient that they got various republican candidates to sign a pledge not to ‘increase’ taxes (that is to close the generous holes in the US tax code that let the wealthy get by paying as little tax as they desire). Crazy sort of ‘grass roots’ organisation with that objective.

  21. Freelander
    October 29th, 2011 at 01:52 | #21

    @Peter Kirsop

    “Menzies talks the language of duties, – true Burkean conservative , not the libertarian waffle of rights.”

    The rights libertarians believe in is property rights and not much more. They do talk the language of duty though. The duty of others to respect their property rights and ot respect their freedoms. Concerns about others ‘freedoms’ is another matter.

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