Saturday, July 04, 2009

Freedom Rallies: What are they about?

Freedom rallies, also known as tea parties by some, have been proliferate these past few months. What are they all about?

One of the first criticisms that comes to mind is 'where were all of these protesters under Bush'? No one was happy about the expansion of medicare and entitlement spending under Bush, and who can deny that the 1st round of lump sum tax cuts were poorly structured- although the the later cut in marginal taxes did work well- nor were very many of the tea party protesters likely very happy about the tariffs that came and went under Bush. Bush was not successful in reforming social security, and he should have vetoed the job and opportunity crushing minimum wage increases- if only to take a symbolic stance against poorly designed policies. For many of the protesters, I assume that president Bush left a lot to be desired. We too often forget the outrage over Bush starting the bailouts.

Unfortunately, I think many of them came to accept this brand of 'compassionate conservatism' or 'bipartisanship' to be a reality under the two party system. Electing John McCain would have meant more of these bipartisan ('maverick' as he called it) policies - like McCain- Feingold, cap and trade, and taxing our healthcare benefits. Sarah Palin was popular only because she was truly a Washington outsider, and seemed to bring balance to the ticket as someone willing to stand up to business as usual in DC. Unfortunately (or maybe fortunately) for her, McCain lost.

I think these parties represent a referendum on all parties, they are sending the message to everyone that many Americans are tired of bailouts, and hearing that the financial crisis is the result of deregulation under Bush ( even though they have not cited a single act of deregulation by congress since Gramm-Leach-Bliley in the 90's) or that it is a crisis of capitalism (basically our own fault).The participants are outraged to be punished for it with higher taxes, bigger government, inflation, and unprecedented deficits.

I think many of the participants are tired of having their intelligence insulted in this manner. They are looking for leadership- from whatever party- that is willing to look at the facts, and provide a solution as the result of carefully weighing and considering all of the evidence. They are sick of the big government ideology and bipartisanship that has brought us to where we are today.

I think the last straw may have been with the passage of the $787 billion stimulus package. We were told that it was necessary, as we faced the greatest financial crisis since the great depression. It may have been more accepted if those favoring this massive increase in spending could have offered some reasoning as to why this would work today, even though similar policies failed us during the great depression under Roosevelt and Hoover. This was passed despite numerous warnings from some of the worlds best and most prominent economists, including Cole & Ohanion, Prescott, Barro, Becker, Rizzo, Mankiw, Sargent, and almost 200 more. When the Michael Jordans and Tiger Woods of the field are stating that the stimulus package flies in the face of over 60 years of macroeconomic research, the supporters of the policy, or the media,or someone needs to be discussing this as a debatable idea. It is the burden of the supporters and the media to explain why this will work, and while all of the other evidence is flawed. I don't recall any of the supporters of the legislation having a discussion like this- I don't remember seeing or hearing mention of any of these economists' research being discussed or debated on the news in relation to the stimulus. In short, I think the protesters probably feel like they have been lied to to a great extent about the stimulus and current budget deficits, or greatly insulted by the arrogance of its supporters. Not only are they likely upset with the republicans and democrats that have supported these policies, but they are also growing more and more impatient with a national media that has failed to ask tough questions.

To add insult to injury, evidence indicates that the projections of how much better off we would be under passage of the stimulus have turned out to be wrong. Unemployment has surpassed what it was projected to have been without passing a $787 billion stimulus package.

Source here.

The excuse seems to be 'we didn't know how bad it really was.' This excuse might be acceptable, were it not for the big I told you so coming from the hundreds of economists listed above. And the original projections did account for the lag we would expect from fiscal policy, so the excuse of 'giving it more time' isn't really much more acceptable.

Given what we have experienced through the bailouts and the stimulus package, many of the participants in the freedom rallies are even more skeptical of the policies to come such as national healthcare and cap and trade.

Those participating in the freedom rallies across the country this past independence day weekend have a lot grievances on their plate, and a lot of questions they want answered. Will they get answers, or will they be arrogantly dismissed as fringe radicals, closed minded, anti-progressive sore losers? Will they be answered by an offer to have a serious discussion? Will they be offered evidence, or cowboy style ideological shots from the hip?

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