The Tea Party: Economic Populists or Wall Street Toadies?

Who cares?

Progressives should.

The Tea Party is not a fake. It’s not just a creation of Fox News and Dick Armory’s Astroturfing operation. It’s a genuine expression of populist anger that is driving our politics from below. There’s a reason it is polling higher than either of two parties. There’s a reason it helped destroy the Democrats super-majority in the Senate by grabbing Ted Kennedy’s seat.

Commentators like David Brooks also are wrong to assume that populism is a movement of the less educated against the educated elites. Of course there are those in the Tea Party who discount the science of evolution and global warming, who think Obama is a foreign-born Muslim agent, and who are racist, sexist and anti-Semitic to boot. But to equate the entire notion of populism with retrograde ignorance is to fall into a dangerous stereotype. Populism is not about education: whether expressed by the left, right, or middle, it’s a revolt against concentrated power and economic injustice.

The financial crisis has made clear to millions of Americans that we now live in a billionaire bailout society where economic elites can gamble, lose, get bailed out and then refill their coffers with our money in preparation for the next round, while millions of the rest of us are thrown out of our jobs and homes. Frankly, we’d be stupid not to join a populist revolt against that kind system.

For the moment the Tea Party represents much of this anger. But its ideology rests on an enormous contradiction that could tear it apart. Teapartyites hate big government. They hate Wall Street. And they believe the two have teamed up to screw everyday Americans on Main Street. But if government doesn’t reign in Wall Street, what will? The markets? Even Alan Greenspan doesn’t buy that anymore.

There are echoes in this revolt that come all the back from Thomas Jefferson and the anti-Federalists who also feared big government and concentrated economic power. They were particularly incensed by Alexander Hamilton’s successful effort to establish both a large national debt and a national bank (publicly chartered, privately owned). Hamilton, our first Secretary of the Treasury, convinced George Washington that the new federal government should assume the revolutionary war debts amassed by the States. In fact, due to Hamilton’s machinations, the federal government redeemed these debts at face value, even though many of these bonds were nearly worthless and had been snapped up at deep discounts by speculators. As a result, Hamilton’s plan produced an enormous windfall for the rich. This didn’t bother Hamilton at all because he wanted to “bond” the wealthy to the new national government. (He also wasn’t bothered by the fact that poor farmers would service the debt through very unpopular excise tax on whiskey.) Hamilton believed that government debt was the glue to uniting a collection of disparate states into a strong union. (When Geithner and Paulson allowed AIG to use taxpayer money to pay Goldman Sachs at face value for billions in bad bets, they unwittingly were carrying out the tradition first established by Hamilton.)

The Tea Party certainly has inherited the anti-Federalist fear of big government. But it shows no signs of having the Jeffersonian backbone to attack concentrated economic power.

This weakness couldn’t be clearer as Wall Street awards itself $150 billion in bonuses for a job well done during the worst economic year since the Great Depression with 30 million unemployed or forced into part-time work. Instead of bonuses there would have been mass unemployment on Wall Street had the taxpayer not bailed out the banks to the tune of $6 to $12 trillion in taxpayer grants, loans and asset guarantees. There is no way to view that $150 billion in bonuses as anything other than welfare for Wall Street.

This should be the ultimate populist litmus test for the Tea Party. Do they have the nerve to defend the average taxpayer from Wall Street’s rapaciousness? Are they going to demand a windfall tax on these outrageous bonuses? Or are they going to oppose all taxes and let Wall Street waltz off with the loot?

Hey Tea Party, which side are you on?

Unfortunately, at the moment there is no national progressive populist movement to call the question. In Oregon, progressive populists bucked the anti-tax, anti-government tide to win two ballot measures for more progressive taxation. (See “Watch Out Tea Party: Progressive Anger is Alive and Kicking”

The next step should be a call for a national windfall profits tax on the $150 billion in Wall Street bonuses. Millions of Americans would understand that it’s our money and that we should get it back.

If the Tea Party fears taxes and big government more than it fears taking on Wall Street, then it will forfeit the mantle of populism. For no matter how much populist outrage it can express in the short run, the Tea Party will discredit itself if it shills for Wall Street.

But first progressive populism has to form into a national movement to take on the big banks. There are $150 billion good reasons to do so right now.

Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.