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Tea Party Tory

Before the Tea Party philosophy is ever even tested in America, it will have succeeded, or it will have failed, in Great Britain. For in David Cameron the Brits have a prime minister who can fairly be described as a Tea Party Tory. Casting aside the guidance of Lord Keynes — government-induced deficits are the […]

Before the Tea Party philosophy is ever even tested in America, it will have succeeded, or it will have failed, in Great Britain.

For in David Cameron the Brits have a prime minister who can fairly be described as a Tea Party Tory. Casting aside the guidance of Lord Keynes — government-induced deficits are the right remedy for recessions — Cameron has bet his own and his party’s future on the new austerity. He is making Maggie Thatcher look like Tip O’Neill.

Two headlines Thursday testify that the Tories have seized the Tea Party banner. First was the headline in The Washington Times, “Tea Party Urges Drastic Cutting,” that carried a caveat subhead, “Economists Question If Move Is Wise at This Time.”

Second was the Financial Times banner, “UK Unveils Dramatic Austerity Cutbacks.” The FT story begins, “The U.K.’s conservative-led coalition has announced the most drastic budget cuts in living memory. …

“The sweeping cuts in entitlements and spending far exceed anything contemplated in the U.S., where Barack Obama … has proposed only a three-year freeze on discretionary spending and Congress is still debating whether to extend tax cuts for the wealthy.”

The Tory budget cuts defense 8 percent and military personnel by 7,000. Translated here, that would mean a cut of $60 billion and about 100,000 soldiers, sailors, airmen and Marines.

By 2015, some 490,000 public-sector employees, 8 percent of the total, will lose their jobs. The rest will have their wages frozen for two years and face a 3-percent-of-salary hike in compulsory contributions to their pension program. The retirement age will rise from 65 to 66.

France is in the 10th day of demonstrations, strikes and riots over President Sarkozy’s plan to raise the retirement age to 62.

If Cameron’s plans take effect and his projections prove correct, Britain’s deficit will fall from 10 percent of gross domestic product to 2 percent.

Writes the FT, “The UK cuts … over four years are the equivalent of 4.5 percent of projected 2014-2015 gross domestic product. Similar cuts in the U.S. would require a cut in public spending of about $650 billion.”

Nothing like that is being discussed here, and even if Republicans capture the House, cuts of that magnitude appear out of the question. The correlation of forces would not permit it.

Consider what seems the best possible outcome, Nov. 2, for the Tea Party. Republicans capture the House by winning 50 seats and come within a vote or two of capturing the Senate.

Should that happen, Democrats, shorn of their centrist wing in the massacre, will be in no mood to cooperate in cutting Social Security, Medicare, Medicare, unemployment insurance, food stamps or the earned income tax credit, the party’s legacy to the nation.

They will vote against serious cuts with as great a unanimity as Republicans voted against Obamacare. And if the GOP House votes the cuts, Senate Democrats will restore them. And if President Obama thinks they are too severe, he will veto the budget, his veto will stand, and he will run against “Boehner’s House” in 2012.

And Obama would do so with conviction. For neither he nor Fed chair Ben Bernanke agree with Cameron that Carthusian austerity is the way to go. They are Keynesians who think that is Hooverism.

Both believe the $1.4 and $1.3 trillion deficits they just ran up prevented the Great Recession from becoming a Great Depression.

Recall. Obama endorsed George W. Bush’s TARP bailout of the banks. He enacted a $789 billion stimulus bill, pushing the deficit to 10 percent of GDP. Bernanke doubled the money supply. He has now embraced “quantitative easing.” He is going to print billions to buy bonds and inject the money directly into the economy.

Quantitative easing is another bailout of the banks, only this time through the Fed back door.

Hence, the Tea Party faces almost certain disappointment, if not disillusionment.

Why? Because many in the Republican establishment also do not believe austerity is the way to go in a recession. Second, while most Republicans may favor deep cuts, they know that if they vote to cut Social Security, Medicare and unemployment insurance, but do not get those cuts, they will get the pain but not the benefit and be held accountable, just as Democrats were held accountable for cap-and-trade, which they voted for but did not get through the Senate.

Republicans will come out of this election with a tricky hand to play. They will have the appearance of power, but not the actuality. They will vote for cuts that will not be agreed to by the Senate or accepted by the president.

If the economy is in the ditch in 2012, they will seem ineffectual. If the economy is improving, Obama and Bernanke will claim credit.

By then, however, we will know the fate of the Tea Party Tory who will at least have seen his policy prescriptions put to the test.

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