The Tea Party Recipe for Economic Recovery

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Whether you love them or hate them, it’s impossible to deny that the Tea Party is on the verge of becoming a major political force in the U.S.

This year, candidates backed by the Tea Party have beaten more mainstream politicians in primaries all across the country. In Alaska’s Senate primary last month, Tea Party favorite Joe Miller defeated Sen. Lisa Murkowski, the incumbent, for the Republican nomination. In Delaware, Tea Party-backed candidate Christine O’Donnell surprised many by winning the Republican nomination to fill the Senate seat previously held by Joe Biden. And earlier this year, Rand Paul defeated Republican establishment candidate Trey Grayson in Kentucky’s Senate primary, declaring his victory as a “tremendous mandate for the Tea Party.”

Now, with mid-term elections less than a month away, the question is whether Tea Party candidates will have the support to win congressional seats. Recent polls have shown that Tea Party-backed candidates are ahead right now in states like Colorado, and running neck and neck in Nevada. In fact, an analysis from the New York Times shows that of the 138 Tea Party candidates running for office, 33 have a decent chance at winning seats in the House of Representatives and 8 have a good shot at winning Senate seats.

Still, part of the struggle that these candidates face is to better define what they stand for and identify specific policies.

Shortly after the Tea Party movement began in February 2009, one Fox News poll found that 80% of Americans believed the Tea Party’s ideas were a “fruitless mix of racism [and] conspiracy theories.” Opinions have become more favorable since then but a USA Today poll from the summer found that many of those who identify with the movement don’t know exactly what it stands for. And last month, one poll from The New York Times and CBS found that nearly half of all voters are undecided on the Tea Party movement or feel they don’t know enough about it to make a judgment.

Members of the Tea Party explain this in part by noting that it’s a movement and not an official political party, with a long list of party policies.

“The Tea Party is a state of mind,” said Michael Patrick Leahy, co-founder of the National Tea Party Coalition and an influential voice in the movement. As a result, people who subscribe to the movement and candidates who are backed by it may have some varying beliefs, but according to Leahy, it all boils down to three major tenets. “We are committed to three core values: a constitutionally limited government, fiscal responsibility and free markets.”

Of course, those values are quite broadly defined, so it shouldn’t be too surprising that voters around the country would want to learn more about the actual policies behind them before casting their ballots.

MainStreet spoke with several Tea Party candidates running in Senate and House races, as well as other influential voices within the Tea Party in order to get a sense of what specific policies they have for creating jobs, helping small businesses and consumers, and strengthening the economy after the Great Recession. We also touched on some of the policies they disagreed with from the current administration, including the stimulus, bailouts and health care reform, and what they would do instead.

On Taxes

During the past few weeks, legislators have been wrapped up in a heated debate over whether or not to extend the Bush-era tax cuts for wealthy Americans. All of those we spoke with who associate with the Tea Party are in favor of extending tax cuts for the rich, but some want to go much, much further.

“I’d abolish the estate tax tomorrow, cut corporate taxes in half and phase out capital gains taxes, and then have a beer,” said Joe Walsh, the Republican nominee for Illinois’ 8th Congressional District. “I’m one of those knuckleheads who believes that every time we cut taxes, we increase government revenues.”

According to Walsh, if consumers and businesses are taxed less, then they are more likely to spend more freely and pump money into the economy.

Other candidates have taken this idea to the next level, and would like to restructure our entire income tax system as we know it.

“We prefer a 10% flat tax, obviously with an exclusion for the first portion of your income until the federal poverty level,” said John Ellinwood, director of communications for Jesse Kelly, a Republican running for Arizona’s 8th Congressional District. In this way, Kelly hopes to simplify the tax code and create a more favorable environment for the wealthy to spend and invest.

“Wealthy people are not stupid, they resent paying 40% of their income to the government,” Ellinwood said. “But they don’t resent paying 10%, so they’ll actually engage in more productive activities.”

On Government Spending and the Deficit

Our national debt now stands at more than $13 trillion and the national deficit is expected to top $1 trillion in 2010 for the second year in a row. While the Obama administration has proposed a spending freeze to help bring this number back down, some of the Tea Party candidates have other ideas in mind.

“I would be in favor of a hiring freeze for the federal government in non-defense areas, and freezing salaries of people in government,” said Dan Benishek, the Republican nominee for Michigan’s 1st Congressional District.

Benishek is also in favor of being more vigilant in “auditing” public agencies to see if they are wasting money.

In fact, of the candidates we spoke with, several advocated the idea of eliminating two agencies in particular.

“Something like the Department of Education, I don’t see the need for it. It hasn’t done anything to improve the public school system in this country,” said Walsh, the Illinois Congressional nominee.”And I would certainly have a discussion about the Department of Energy.”

On Helping Small Businesses

Congress struggled for months to pass a small business bill to help boost lending, but even now, small businesses still lack confidence in the future.

Scott Ashjian, who is running as a Tea Party candidate in the Nevada Senate race, has a few ideas beyond the recently passed measure to help small businesses.

“First, the banks are not lending. So force the bailed out banks to lend to older small business!” he said. “You then have the government back the loans to proven businesses. All you need to do is look at their past tax records to see who was successful and who was not.”

According to Ashjian, we should allow businesses to apply for loans based on the credit scores they had in 2006, prior to the recession, rather than what their credit scores are now after having been battered by the tough economy.

“It makes more sense to give money to proven business than to a new business based on a credit score.  Most new businesses fail in the first year,” Ashjian said.

On Health Care Reform

Each of the candidates and Tea Party members we spoke with emphasized the need to repeal the new health care legislation, referring to it as an unnecessary overreach for government.

“We need to repeal health care and then address individual issues like the affordability of insurance,” said Sal Russo, a chief strategist for the Tea Party who is often referred to as the movement’s Karl Rove. “Some say health care is vital, but hey, food is vital. Does anybody think we should go nationalize grocery stores? Of course not. It’s a free market that drives it, that’s why. And food is certainly more important than health care.”

While the candidates disagree with the size and scope of the policy, some do admit that changes were needed for our health care system.

Benishek, the Michigan Congressional nominee, notes that he could get behind providing “some sort of government support” for those without insurance who are suffering from pre-existing conditions, but did not elaborate on what such a system might look like, adding, “taking over the entire health care system doesn’t seem to me to be the most logical way to do that.”

On Social Security

“Is it fair for the younger generation to keep paying more and more into Social Security when anybody with an ounce of common sense knows that the system can’t sustain paying back to them what is currently promised,” asks Leahy, the co-founder of the National Tea Party coalition. The answer, he says, is obviously that it’s not.

Instead, Leahy advocates moving toward more “free market principles,” though offers few specifics on what this means.

One candidate, though, has come up with a slightly more specific plan. Ken Buck, a Republican candidate for the Senate in Colorado, would like to introduce something called Social Security Plus, which he has described as a tax-free account that young people can invest in as much as they like in order to save for retirement without having to rely on Social Security. Of course, it’s not yet clear how this is different from existing retirement savings plans like IRAs and 401(k)s.

On Bailouts

The bailouts of the auto and financial industries were quite controversial in the U.S., so it shouldn’t come as too much of a surprise to hear that Tea Party candidates are also against the government’s intervention in struggling businesses.

“I don’t think if the government had let the car companies go bankrupt, it would have stopped production. They would have reorganized in a more efficient manner,” said Benishek, the Michigan nominee, whose state was particularly impacted by the auto bailouts. “But I don’t really know the numbers on that. It just doesn’t seem right to spend all that money on bailouts when there are all these small businesses suffering all the time.”

However, when pressed, some candidates admitted there may be a time and reason for the government to bail out a troubled sector of the economy.

“In general, I would have opposed the bailouts because it interferes with the market and sends the wrong signal to players who take risks,” said Walsh, the Republican running in Illinois. He then added, “I acknowledge that there is a point when government needs to intervene. And who knows, when it happens again, there may be bailouts.”

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