OK, Just One Quick Political Thing

Anyone else sick of hearing about these "tea party" activists? Do they even know what they're fighting about?

I just heard a report on them on the radio. They talked a lot about fighting for freedom and protecting the Constitution, which is kind of like taking a strong stand in favor of cute puppies and against puppy-eating Nazis. They said the Constitution was being violated, but didn't say what part, and how. (It's probably the 3rd Amendment, about quartering of soldiers. Lord knows I'm tired of Navy Seals dropping by my St. Paul condo and demanding room and board.)

There were a precious few substantive things mentioned, in fact. They hated the stimulus package, the health insurance bill, and especially the bank bailouts. Let's focus on the bank bailouts, because that's the one that's most universally despised.

A history lesson is in order. In 1929, the stock market crashed. Bummer! But not something that hasn't happened many times before or since. The crash in 1987 was actually bigger. The one in 2001 was no picnic either. And these kinds of stock market crashes often bring about recessions. So that's no good.

But here comes the truly bad part: In 1930, banks started to fail. The Hoover administration took a hard line, saying screw 'em, they deserve to fail because they're dumb. Bad move. When banks started failing, people started panicking, and took their money out of perfectly healthy banks, in what's called a "run" on the banks. Then those banks didn't have enough capital to operate, and they started failing. Think of George Bailey at the Bedford Falls Savings and Loan. He stopped one of these kinds of bank runs by saying "Well, it's because Bob's money is paying for Fred's business right now!" and then stammering adorably. That's how banks work -- they use one person's money to pay for another person's loan. If all the Bobs take out their money, then the bank can't loan the Freds anything any more, and his business goes under, and no new Fred-based businesses get funded, and the bank doesn't even have enough deposits to operate, and everyone loses.

It's this kind of chain reaction that pushed a recession into a depression. This is exactly what would have happened if the government let the banks fail in 2009. Think about it -- the stock market is mostly gravy. You put your extra money in the stock market, plus your retirement, which is very important but not crucial to your survival (there's always Social Security). But banks are the average person's financial lifeblood. That's where your checking is, your savings, your mortgage, your loans -- if that all went away you'd be really screwed.

Then there's also the fact that this is one of the two major tasks of the Federal Reserve. It is a reserve of cash to prop up banks and other major institutions that are on the verge of collapse. (The other major task is the interest rate fiddling-with that you hear so much about.) It was created to do this exact thing after the Great Depression hit. There are those who object to the very existence of the Federal Reserve, which is insanely dangerous but at least logically consistent -- if you're against the bank bailouts, you should be against the Federal Reserve, because bailouts are half of its job.

So anyway, when Obama says that we had to bail out the banks to avoid a depression, he's right. And c'mon -- you think Mr. Liberal Obama would really bail out the banks because he loves them or has buddies there or something? Bush would have bailed out the oil companies if gas went under $2 a gallon.

And while we're at it, where was all this anti-big-government rage during the Bush administration? Bush presided over the largest expansion of government since LBJ. He turned the budget surplus into a major deficit. Granted, Obama has made the deficit much larger, but it was out of necessity -- when no one else is spending, the government has to step in and be the spender of last resort. If he didn't, we'd be in a depression right now.

Plus, we are getting most of the money back from the banks now. And the banks definitely should be punished for not making loans and paying out these huge bonuses. I'd be in favor of a punitive tax on all bonuses coming from institutions that still owe bailout money. Think of it like the wage garnishment you undergo when you owe money to the IRS. I'm also in favor of bringing back regulation that would prevent banks from getting too big to fail and would disallow the kinds of wild speculation that got them into trouble. I'm not happy with the banks either. But I am happy that the Obama administration did the smart thing and not the popular thing. I am very much in favor of the bank bailouts.

Oh, one last thing. Did you know that the Boston Tea Party was actually a rebellion not against taxes, but against a reduction of a tax? It was an explicitly pro-tax demonstration. See, there was a tax on tea coming in from Great Britain. At the time, we were part of Britain. Britain decided to reduce that tax, which meant that British tea became cheaper. This gave it an edge over the tea that people like John Hancock were smuggling in from Holland. (I read about it in a great book called "I Love Paul Revere, Whether He Rode Or Not," by Richard Shenkman.) So basically, the Boston Tea Party was a revolt over cheaper goods competing more favorably with illegally smuggled goods. It's like if our government reduced the taxes on pharmaceutical companies, who then cuts costs on drugs, which those caused all those guys with the Web sites promising CHEAP VIAGARA!!! to react by knocking over pharmacies and throwing all their drugs into sewer gratings.

OK, it's not entirely like that -- it's more symbolic of rebelling against a perceived oppressive government. Considering that the government is not imposing any onerous anything right now, but instead rescuing failed institutions and providing incentives for job creation and etc., it seems very misplaced. But I just feel like in so many ways, the Tea Party is a collection of confused people who are pissed off about losing their jobs and/or seeing their friends lose their jobs and are doing what comes naturally -- blaming the government. You can be pissed off at banks but you can't really do much about it the way you can start a political campaign, so they're going with the campaign, whether it really makes sense or not.

And I guess it's hard to blame them, on some level. I wish they could direct that rage against something that is actually at fault, but I understand the frustration with an economic system that has left the middle-class behind for so long, and is now just dumping them out entirely. I believe that liberal economic policies -- supporting unions, taxing the rich more heavily, instituting a nationalized health insurance system -- can actually correct the top-heaviness of this economy, support the middle class and get more average people to work. But it will take time, and by the time it happens, these tea party folks might vote out the very people who stand a chance of actually fighting for their interests instead of those of the rich. Sigh. If only people knew stuff.