The Tea Party and Fiscal Insanity

Riots never seem to set in Britain these days. Just 5 days into the riots and the police are still trying desperately to put together a profile of the rioters, one that would allow them to pin the blame squarely at the feet of unruly mobsters.

The truth however may be far from the reality we see. As the picture slowly begins to emerge, we see not only mobsters but also a diverse range of educated people who’s livelihoods have been deprived of their due due to the stiff austerity measures that have been put in place as recently as last October to curb a runaway deficit.

What started off as an unrelated trickle of protests in autumn this year soon gathered force midstream and has now burst into a deluge downtown that has virtually shut down all major cities and prevented any semblance of normalcy from returning.

It is very tempting to compare the stark differences in the approaches taken to combat the crisis by the 2 colonial allies. On one hand, Britain has taken the neoclassical approach to cut spending by £80 Billion in order to prevent itself from going off the cliff. These cuts have in fact been quite painful and have been in areas that have hurt the middle class considerably such as tuition fees, armed forces, pension cuts, etc ..

A recent discussion on BBC on the riots were cautious enough to make a clear distinction between the 2011 riots this month versus the 2011 Budget Cuts Protests in March this year. However it would be rather difficult to look at the unfolding crisis in isolation and ignore the buildup to it.

The other superpower has to live with a tea-stained attire henceforth in government!! Much to the dislike of either party (Republicans or Democrats) the Tea party’s business of holding Congress hostage seems to have worked and they now have pretty much everyone else on the back-foot.

Before they go about celebrating their victory on how they pushed some element of fiscal sanity down Congressional throats, they should draw lessons from their other colonial cousin – Britain. A recent study by the Pew Group showed that the median wealth of Black families has dwindled to a large factor in America over time. Worse still, the middle class in America have seen the value of their homes fall and are still coming to terms with the new reality.

In such a volatile environment, Entitlement Cuts should be done with much caution and great deliberation. It will not be a surprise to find that the Political Middle has a consensus that both sides need to tilt inwards from their hard-line positions, whether it be making cuts to the entitlement programs or raising taxes on the super rich.

This is how politics is done and if extreme strands of eccentricity are forced on a nation in the name of fiscal sanity, then the likes of what you see in Britain (God forbid) may start to rear their ugly head in America. Then we may really have a situation on everyone’s hand.

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