Frugal Politics: How the Tea Party is Impoverishing America

You would think that reducing taxes and government waste would be a good thing but the Tea Party politicians are slowly dismantling the US economy and they seem to be completely unaware of the stupidity of their policies.  Let’s do a little bit of math here to illustrate the problem.

Say you have a country with 200 million people.  That country needs to maintain basic services like police, defense, and medical care.  Medical care includes public assistance programs for the neediest citizens, retirement programs, and programs for military veterans.  We’ll peg the costs for these basic services at $X Billion.

Now let’s say you have a country with 300 million people.  Allowing for inflation, your costs for the same basic services for those 300 million people should be about $X Billion times Inflation times 1.5.  That is just to cover the same basic services you were providing when there were 1/3 fewer people in the country.

The idea that government is too big does not make mathematical sense.  Government will always have to grow with the growth of the country’s population.  And our population has grown a lot over the past few decades.  Even if you could send all illegal immigrants back to their native countries you would only get rid of about 11 million people.  So our current population would still be over 300 million people.

Worse, getting rid of illegal immigrants would irreparably harm many of our largest states’ economies, including Texas where “undocumented workers” make up about 9% of the workforce (10% in California, the world’s 8th largest economy).

How does the Tea Party propose to pay for basic services that we all need while lowering taxes?  And that is just the simple equation.  They have spat in the face of reality on far more complicated issues, like trade with foreign nations.

The Tea Party Republicans in Congress succeeded in blocking renewed authority for the US Export Import Bank.  This is a bank of last resort for American companies that want to do business in other nations.  There are about 60 countries that use banks like this to build up their export industries (creating jobs in their own manufacturing and distribution industries).  Large American companies like Boeing and General Electric depend upon the US ExIm Bank for loans that they cannot get anywhere else.

Furthermore, the US ExIm Bank makes a profit (despite Tea Party claims that it is an example of corrupt government cronyism and corporate welfare), thus costing taxpayers nothing and contributing hundreds of millions of dollars to the US treasury every year.  But in 2015 the Tea Party Republicans in Congress shut down efforts to renew the ExIm Bank’s authority, thus costing thousands of American jobs that are being shifted overseas.  Economists estimate that without the ExIm Bank we’ll lose over 1 million domestic jobs, the exact kinds of jobs that the Tea Party says it wants to preserve and create (the ExIm Bank only attributes 165,000 jobs to its programs).

Remember that the ExIm Bank is a bank of last resort.  That means that even big companies like Boeing and General Electric cannot find loans from other banks to replace these loans.  And yet the Tea Party says all these companies have to do is get loans from other banks.  Just exactly how they are supposed to do that (without cutting jobs) is not clear.

As the Tea Party sends productive illegal immigrants away (removing them from our economy) it hopes that unemployed Americans will step up to the plate and fill those positions.  But, frankly, most American citizens will never try to take those jobs.  In fact, there are over 5 million unfilled jobs in the country right now, jobs that can only be filled if we re-educate our aging worker class and teach them new skills.

But the Tea Party wants to cut education spending, too, so all those unemployed workers who will not be taking jobs away from illegal immigrants are somehow supposed to pay for their own education to learn new skills.  The companies that need to hire those millions of workers are not willing to pay for the education.

Saving money makes great sense but when it comes to managing an economy things work counter-intuitively to that.  You have to spend money to make an economy grow.  That money you spend goes into someone’s paycheck which in turn is spent on services and consumable items that become gross revenue for business.  Those gross revenues are used to pay employees and to buy goods and services, which in turn are used to pay more employees and purchase more goods and services.

Take the money spent by the National Institutes of Health.  They estimate that for every $1 they spend they create $2.21 of economic growth.  That is how economies work.  You cannot apply household budgeting principles to national economics.  It works completely differently.  Food stamp critics argue that while every $100 spent on food stamps generates $200 in economic activity, that $100 has to be borrowed from private sector investors who could have put their money elsewhere.  And that is true, but those investors make money off the government loans (bonds) and meanwhile they are putting their money into the American economy, not some other country’s economy.

Supplemental Nutritional Assistance Program expenditures return 80% on every dollar spent on Americans who need help at home.  Without jobs these people need food to eat.  Waiting for private investors to fund new jobs is suicidal, especially since investors don’t care about saving or making jobs, they just want to make money.  And how do corporations entice investors to give them more money?  Most often by cutting jobs and putting more people on unemployment and food stamp assistance.

Government spending can certainly be wasteful.  No one wants to spend $20,000 on a High Impact Manual Delivery System (a hammer).  But we know that government spending creates jobs (not just on government payrolls but in the private sector) and those jobs in turn lead to household and business spending that creates more jobs.  The household budgeting policies that Tea Party advocates support work at home, not at the national level.

If you truly want to live the frugal lifestyle then do so as  matter of choice.  Don’t let these idiot activists force you to live that way because they blindly think that destroying the economy will make America great.