Fear of Mexicans and Millionaires, or Immigrants and Billionaires Will Stop Defining American Politics

The 2018 and 2020 elections represent a return to normal politics.

After the Great Recession, we had Occupy Wall Street and the Tea Party. Occupy became the Sanders supporters. The Tea Party became the Trump supporters. They got all the press attention and assumed that they had all the voters. They didn't. They don't.

The average American is not afraid of Mexicans or millionaires, or immigrants and billionaires, and know that there isn't a single example of a prosperous economy that wasn't created by and didn't create both. (Show me an economy without any rich people or without any immigrants and I'll show you a really lousy economy.)

So in 2018 we did - and in 2020 we will - hear from the majority of Americans who are happy to have rich people (on top of everything else they do, they can help with all the taxes we have pay) and immigrants (they can help us to increase supply and demand, helping natives to start and work in businesses and buying the many products and services these businesses generate).

Obama - Tea Party Founder

It's easy to dismiss the Tea Party. For one thing, they seem fond of a 18th century lifestyle that preceded the age of big corporations, big government, and life expectancies that extended much beyond one's thirties. But while they seemingly lack intellectual appeal, they do resonate emotionally with a chunk of voters. Enough voters, in fact, to cost Obama the 2012 election.

In the decade of the 00s, bankers made billions and then cost us trillions. As CEO of Goldman Sachs, Hank Paulson made $37 million in 2005 alone. He left banking with a net worth of $700 million when he became the US Treasury Secretary. Not only did he engineer a bailout of trillions for the banking industry (including billions for Goldman Sachs) but included in the bailout legislation clauses protecting bankers from any liability for the financial meltdown of 2008.

The financial meltdown cost millions to lose jobs and homes and wiped out retirement accounts for millions more. No one has gone to jail for this bank robbery. Countrywide CEO Mozilo did have to pay $67.5 million in fines and settlement fees, which sounds like a lot until you realize that he made $470 million in just the six years leading up to the bursting of the bubble. Not only did Mozilo escape jail time or financial hardship, but even the ratings agencies that assured bond holders that packaged subprime bonds deserved AA and AAA ratings were allowed to continue to do business without any penalties for their egregious failures to warn investors.

What Obama should have done is appoint someone as savvy as Elliot Spitzer to investigate the players in the drama leading up to the costliest financial collapse in history and found people to penalize and even imprison. Not only would this have bolstered his support among his base, it would have won over so many of the independent voters whose outrage at Wall Street led them to join forces with the Tea Party. By failing to address the injustice of systemic abuse of American taxpayers, Obama fed the emotional energy that the Tea Party has tapped.

And to prosecute would not just salve the anger of Americans. Prosecution would have helped to curtail bad behavior by bankers, letting them know that while the American government could not afford to let the financial system collapse, it certainly could afford to prosecute and jail a number of bank executives. As much as trillion dollar bailouts, prosecution would have helped to strengthen the banking system by making bad behavior costly.

Obama's apparent disdain for the emotional cost of the 2008 crisis may cost him re-election. And may even give him a place in history as the co-founder of the Tea Party.

The Tea Party - A Time Machine to the late 1800s

Put simply, the tea party stands for a reversal of the gains of the last century. If wanting to slow or stop social change makes one a conservative, then the tea party is made up of reactionaries. They actually want to reverse social change.

During the last century, popular opinion in the US changed in terms of attitudes towards consumer credit and consumption in general, government intervention into the economy, management of the economy and organizations, and government programs that lessened capitalism’s tendency to extremes – extreme wealth and extreme poverty.

It is worth remembering that life was worse when the absence of a welfare state made poverty a death sentence. And it is not true that when the stakes were higher - when people died for want rather than were merely destitute - that unemployment or poverty were lower. 

We've tried the world that the tea party promises. You can read it about it in history books that document life 100+ years ago. You can experience it by going to foreign countries where poverty is widespread and where the social safety net and regulations are largely nonexistent. 

Next time you are reading about the tea party or talking with a friend who admires them, ask how what they're proposing - from doing away with unions and the Federal Reserve and banking regulations to privatizing education and eradicating welfare - is any different than the world we had in, say, 1890. And then ask them to list all the ways in which life was better 100 years ago when their policies ruled. It could make for an interesting conversation. 

Policy (not political) Reasons The Republicans Will Win So Big Today

One of the reasons that Obama's democrats will lose so many seats in today's election is unavoidable. Obama's recovery from the Great Recession is in the road building phase of recovery. By that I mean when traffic is bad and the crews come in to widen lanes, the initial approach simply worsens things. The construction crews make traffic even worse before their work makes things better. Obama is trying to stimulate the economy and while that has done little to (visibly) reduce unemployment, it has quite visibly raised the deficit. Given his approach, it seemed unavoidable that he'd lose seats in this election.

But I don't think that he had to lose so many seats. Part of the problem, I think, is that when he bailed out the banks, no one paid for that. Some banks did engage in unsafe practices. The system did need to be protected from collapse. (The equilibrium point for a cash only economy is considerably lower than current levels of GDP.) Obama (as Bush before him) had no choice but to rescue banks to keep the financial system working. He did have a choice about how to do it.

I'm not sure the best policy on this. I would propose that the net worth of executives in rescued banks be taxed at 80%. Or that bonuses that can be positive in good years can be negative in bad. Or any of a number of things that would have made the little guy who was not rescued feel as though the rich guys who were had not been subsidized by their taxes. Obama never quite seemed to appreciate the visceral reaction people had to the bank rescue. Bush got this and - while it was a complete non sequitur - he gave the people a war after 9-11. Obama did not even try to sate Americans' desire for some kind of retribution and now, the Tea Party has made him the one who pays.