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Jim Worth Headshot

The Rancid Taste of Tea

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The Tea Party held the country hostage -- and won!

Despite the posturing on both sides of the aisle over what they each achieved in the budget deal, neither party can claim victory. They both lost!

But there was one major loser -- the American People.

The destructive 11th hour deal struck between the president and intransigent Republicans -- intransigence fueled by an uncompromising Tea Party faction who were able to hold raising the debt limit hostage to achieve huge spending cuts -- hurts a lot of people.

Were there any winners?

Pundits and analysts, cable hosts and guests debated that question for hours after the House passed the bill, expecting that the Senate would do likewise on Tuesday.

The Senate passed it on Tuesday and the president signed it into law that afternoon.

Most agreed that the winner, at least in the short-term, was the Tea Party. Some determined the economy was a winner because the deal averted a government default on our debt obligations and a downgrade from the rating agencies.

But the market, on Tuesday, didn't act like the economy was the winner. The Dow declined 265 points to 11,866 and the S&P fell by nearly 33 points, it's seventh losing day in a row, to a level of 1,254 points. And on Thursday, with weakness reported from Europe and initial jobless claims still at 400,000 the Dow fell another 512 points and S&P another 60 points.

Was avoiding the default worth the damage this deal will inflict on the market, the economy, and our most vulnerable citizens?

The obvious answer is clearly -- no! Preventing a downgrade of the good faith and credit of the United States was a good thing, of course, but what of the rest?

Austerity, imposed on the government by way of drastic spending cuts, will thrust our delicate and declining economy back into a deep recession.

When we should be stimulating this economy, this deal strangles it. Methodically extracting money from the low end of the economic scale will further reduce demand -- lack of which is our greatest inhibitor.

Despite Republican rhetoric -- especially from the Tea Party -- the stimulus package the president and Democratic Congress passed saved this country from another Great Depression; without it the nation would be in 'real' pain. Though it didn't accomplish as much as the president and the economic team hoped, it did save all our asses -- red and blue.

The private sector has not been able to -- or has been reluctant to -- pick up where the stimulus ended, which has left the economy stagnant.

Continual decline in demand causes greater unemployment which, as a result of this deal, will grow to over 10% by the end of the year -- all thanks to the Republicans and their Tea Party masters. The fact that there is no extension of unemployment benefits after the current extension expires will further erode the economy next year. And if Mitch McConnell and the Republicans fail to see the necessity of allowing taxes on the upper two brackets to expire, 2013 will be even worse than 2012.

There are no provisions in the deal to create jobs, no increase in revenues, and nothing to stimulate growth. In fact, it appears, it will do the opposite. Without growth, austerity measures are even more destructive in a fragile economy as evidenced by the withdrawal of stimulative programs in 1937 which pushed the economy back into depression.

As the economy declines, slides back into recession, slows the world economy, and extracts more money from American taxpayers, Republicans and Democrats will be left holding rancid tea bags, wondering -- what the hell happened?

The Tea Party demanded ransom for the good faith and credit of the United States. Paying ransom rarely produces a positive outcome and it will not in this situation.

The ransom paid to make this rotten deal will only leave the rancid taste of tea.