Media Confusion: Why the Protest? Not High Taxes, but Government Expansion

The media is still having trouble understanding the Tea Party movement and what it is protesting, even though its roots are clear.

On Feb. 19, 2009 during CNBC’s “Squawk Box,” Rick Santelli [1] made his famous rant heard around the world, calling for a so-called tea party-style revolt. And that helped fuel the growth of a Tea Party movement that has resulted in more than 600 protests this April 15, 2010.

Santelli’s call for protest wasn’t about high taxes. Instead, it was a cry against the Obama administration’s plan for a taxpayer-funded mortgage bailout. The very beginning of the tea parties was about bailouts and the growth of government.

But the Associated Press still seemed to miss the point about worries over an overspending government in an April 15 article by Calvin Woodward [2] about the Tea Party rallies. In that report, Woodward defended Obama’s tax policies.

“Lost in the rhetoric was that taxes have gone down under Obama,” Woodward wrote. “Congress has cut individuals' federal taxes for this year by about $173 billion, leaving Americans with a lighter load despite nearly $29 billion in increases by states. Obama plans to increase taxes on the wealthy to help pay for his health care overhaul and other programs.”

Although taxes haven’t increased, yet – projections have them going up [3] with the increases in entitlement spending. And as CNBC’s Rick Santelli explained on an April 15 mid-day special report “Taxing America” hosted by CNBC’s Bill Griffeth, the growth of federal government is the real source of frustration.

“No, but I think it's the other side of the coin and I think your great special here underscores – you're spending time with your experts talking about the taxation side and how to potentially modify that,” Santelli said. “The Tea Party crowd seems to want to spend more time talking about spending, and hence the size of the government and the size of the programs, and what type of return we're getting for our money. So, I think that's the other side of the coin. Spending has to be paired up with anything that is associated with getting in taxpayers' pockets. And I think that's the key.”

Griffeth asked Santelli what he would do about the current deficit, which seems to be generating a lot of the frustration of Tea Partiers. According to the CNBC CME Group floor reporter, it’s going to take some “tough” decisions. Those will require leadership and “may have to” require higher taxes eventually, but other things need to be done first.

“No, you know what, before I would do anything on taxes, the first thing I think we need is a balanced budget amendment,” Santelli said. “And, we need to tackle things like pay-go where you can't skirt the issue. If you want to spend you have to come up with a way to pay for it. And I think some of the programs on the books are going to warrant more taxes because we can't grow our way out.”

He explained that often policy experts think economic growth can help the government find its way out debt and deficits. However, the more unfunded liabilities – the tougher it will be for the economy to grow.

“But as one guest said, it is the growing out that is truly the jewel when you are running in the red,” Santelli continued. “And many of the current programs to find more money are just going to put us that much farther behind the 8-ball. And under-funded pensions is a big key because you're going to have to renegotiate a lot of these programs, and that is going to be super difficult.

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