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  In the days leading up to the final House vote, many friends and fellow travelers in the free market movement—businessmen, Republicans, and alleged limited-government conservatives—all went out of their way to scold us for our philosophical intransigence. It was as ironic as it was frustrating to hear “free marketeers” lecture us on the importance of the bailout. Many of these same people worked for organizations that for years made their living by holding politicians’ feet to the fire to make them take the “tough” vote for freedom. Yet when Congress was poised to vote on perhaps the most significant expansion of government power we may see in our lifetimes, some chose the easier path, the path of appeasement.

  What good are principles if you can ignore them or alter them or bend them just a little to accommodate a difficult decision? Sometimes the principle of the matter demands that you stand up when no one else seems to want to do it. In times of crisis, when the details are in dispute or even unknown, values, principles, and an unbending understanding of markets matter more, not less. Principles matter most under the most challenging of times, and principles matter most particularly when they are unpopular or inconvenient.

  SETTLING ACCOUNTS

  UNFORTUNATELY, WE ARE ONLY beginning to understand how much was lost due to the Wall Street bailout. This massive intervention into the economy has fueled a big-government mentality that has continued through to the new Obama administration, which has proposed trillion-dollar budget deficits as far as the eye can see, massive “stimulus” spending packages, and a major intrusion into the health care market. The government remains a major shareholder of General Motors, and more recently appointed two members to the board of AIG, a private company.

  Whatever one might have thought of the proposed use of extraordinary and unchecked executive authority, the actual implementation of the Troubled Asset Relief Program by both the Bush and Obama administrations is now giving every advocate of limited government permanent indigestion. Americans for Prosperity, which initially supported the TARP, has since removed any evidence of that position from its Web site and now rails against government bailouts along with the majority of Americans.

  TEA TIME

  WHEN TREASURY SECRETARY PAULSON first announced the White House bailout plan on September 22, 2008, Matt Kibbe was quoted in Politico predicting that the “grassroots reaction is visceral25 and going to be big.” The prediction turned out to more right than we could have hoped or planned for at the time.

  But when we first opposed the TARP legislation, we had the terrible feeling of lonely martyrs fighting for an antiquated ideology of dead men—an ideology that had been conveniently embraced during good times but was now to be replaced with a pragmatic modus operandi of doing something, no matter what that “something” happened to be. Being a lonely martyr is a bad strategy—the last possible strategy—and it comes with an awfully dark feeling to know you are going to lose a fight you can’t possibly afford to lose. But we marched on with the company of the few allies willing to step in front of the Treasury’s runaway freight train.

  Despite our hopes that grassroots citizens could rise up and stop this policy malfeasance, the speed with which Treasury Secretary Hank Paulson, Representative Barney Frank, and Speaker of the House Nancy Pelosi hoped to ram the bailout through Congress left us pessimistic that opponents had time to mount an effective opposition.

  But then our phones started lighting up with calls from outraged activists across the country. Delay was our immediate goal, as it would allow for more transparency and clarity about the proposed actions contained in the evolving—and murky—legislation. The Treasury Department and the Democratic leadership in Congress were moving quickly, before grassroots opposition could potentially kill the bailout.

  At FreedomWorks, our online team worked overtime to build a new grassroots protest site at NoWallStreetBailout.com to channel taxpayer anger back to politicians inside the Beltway. In just a few days, the Web site’s petition gathered more than sixty thousand activists—a ready and willing Internet army set to mobilize against the Paulson bailout. Our full network of hundreds of thousands of activists had kicked into gear as well. Hundreds of volunteer team leaders across the country set up meetings with their local congresspeople and senators and started phone trees with their local grassroots networks.

  Inside the Beltway, we were working with our allies on the Hill to come up with constructive alternatives and amendments, but we needed more time. The political process is at best a blunt instrument for use in healing an ailing economy, and it is typically true that good public policy will be ignored until absolutely every other option is taken off the table. Our goal was to kill the bad idea first—an indiscriminate bailout that rewarded risky, sometimes dishonest, and immoral behavior—to force government to prudently address the real threats faced by capital markets, the banking industry, and the entire economy.

  A few stalwart fiscal conservatives in Congress also bravely stepped up and stood against the plan to socialize major Wall Street investment banks, led by Rep. Mike Pence of Indiana. Pence had come out against the plan early, arguing that “economic freedom means the freedom to succeed26 and the freedom to fail. The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts this basic truth of our free market economy.” At the time he stood nearly alone among his colleagues, and he took tremendous heat for his principled stand, but he was quickly joined by other principled members including Jeb Hensarling, Marsha Blackburn, Jeff Flake, and Tom Price in the House; and Jim DeMint and Jim Bunning in the Senate.

  The Friday before the first House vote, the Wall Street Journal reported that “lawmakers say they have received hundreds of calls27 and e-mails in recent days, almost uniformly against the idea of giving the government the power to buy billions of dollars in distressed assets to keep the financial system afloat.” Before the first vote in the House on Monday, FreedomWorks staff had delivered tens of thousands of petitions to congressional offices. Members reported that phones were ringing off the hook, and opposition was virtually unanimous.

  All of this was encouraging, but as involved as we were, we had no idea just how big, and how visceral, opposition to the bailout actually was in America. Grassroots activism was beginning to take on a life of its own. People were getting up off the couch, pushing away from the dinner table. It was time to stop yelling at the TV. It was time to do something.

  On the Monday morning before the first House vote, Dick Armey delivered a long, thoughtful letter to each House member. It read, in part:

  The difficult question each of you faces today is simply this: Do you believe that the political process, having produced many of the perverse incentives that resulted in our economy’s current predicament, can solve these underlying distortions by essentially doing more of the same? I believe the answer to this question is unequivocally NO.

  As an elected official who took the oath of office swearing to defend and uphold the Constitution, should you today feel a greater allegiance to a president, or a political party? I believe that answer is, emphatically, NO.

  This is a big vote, one likely to be studied and second-guessed for decades to come. With an understanding of the intense political pressures each of you face in this tough election year, I ask you to oppose this bailout. . . .

  As a public choice professor, I used to begin class each semester28 with Armey’s Axiom number one: “The market is rational and the government is dumb.” Those quick to call for more regulation forget the power of markets and refuse to acknowledge government culpability in the current mess. Time and again, governments the world over have attempted to outsmart the market and the current legislation is no exception. And time after time, markets respond, toppling the best-laid government plans as they move to correctly price the underlying assets in exchange.

  This letter was being passed around the House floor several hours before the vote by members of the Republican Study Committee, a conserva
tive caucus of about a hundred Republicans then chaired by Jeb Hensarling.

  THE FAT LADY SINGS

  ON SEPTEMBER 29, WE gathered at FreedomWorks’ headquarters to watch the final deliberations on the House floor. The staff crowded into an office, watching C-SPAN on a small television. With the sound off, we followed the ticker of yeas and nays on the screen. We were tired and resigned. The fight was over and we considered the vote a formality, a fait accompli.

  But the vote tracker began to tell an important and surprisingly different story. We started to yell and clap and cheer for the nays as opposition to the bill grew. It kept growing. Turning up the sound and seeing the final tally, we were as surprised as anyone that the House bill failed.

  Against all of our expectations, at 2:07 P.M., the first legislation was defeated 228–205, with 133 Republicans voting against their president. FreedomWorks had been doing everything we could to stir up opposition to the bailout bill, but our splash of cold water had been consumed by a grassroots tsunami that crested over the floor of the U.S. House of Representatives.

  In retrospect, September 29 is clearly the day the Tea Party movement was reborn in America. You can almost hear Samuel Adams calling us into action: “If ye love wealth better than liberty29, the tranquility of servitude, than the animated contest of freedom, go from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that you were our countrymen!”

  There was a massive wave of spontaneous grassroots outrage that rose up against the government’s proposed actions, temporarily taking back the people’s house from the political elite. While FreedomWorks, our tiny coalition of like-minded organizations, and a handful of true blue legislators toiled away, surrounded on all sides by the Beltway establishment, the citizens of America—for a few days at least—took their country back. The New York Times reported: “Americans’ anger is in full bloom30, jumping off the screen in capital letters and exclamation points, in the e-mail in-boxes of elected representatives in the nation’s capital.” We were told by our allies who work in Congress that constituent communications were 100 to 1 against the Paulson Plan. It was a shining, if all too brief, moment where grassroots America and the cause of liberty beat the Beltway establishment. While the bill would ultimately pass, it had stirred the passion of the grassroots freedom movement.

  A few days after that glorious House vote, in what we now know was a harbinger for things to come during the health care debate, the Senate quickly porked up the bill to buy the additional votes needed to pass it and send it back to the House to be rubber-stamped. These “emergency” provisions included Section 503 of the act that, according to the official Library of Congress summary, “Exempts from the excise tax31 on bows and arrows certain shafts consisting of all natural wood that, after assembly, measure 5/16 of an inch or less in diameter and that are not suitable for use with bows that would otherwise be subject to such tax (having a peak draw weight of 30 pounds or more).”

  The Democrats, the liberal apparatchiks at the Center for American Progress, the SEIU, and the Obama administration’s partisan advocates in the media all love to ask the same question of the Tea Partiers: “Where were you when the Bush administration was violating the principles of fiscal responsibility, accountability, and limited government?”

  The answer for many is, “On September 29, 2008, I stopped yelling at the TV, got up off the couch, picked up a mouse and the phone, and decided it was time to take America back from Washington.”

  As the Washington political establishment was about to discover, these newly minted citizen activists were just getting started. As the economy faltered and the government grew, this nascent group of activists began to forge the modern-day Tea Party movement.

  Chapter 4

  What We Stand For

  ALTHOUGH TEA PARTY ACTIVISTS come from a variety of backgrounds, they are united in a core set of beliefs. That is the inherent strength of the movement. When you have principle to guide your activism, you do not need an organizational hierarchy.

  You’ll notice this is a short chapter, and that is intentional. It just doesn’t take a lot of words to say that we just want to be free. Free to lead our lives as we please, so long as we do not infringe on the same freedom of others. We are endowed with certain unalienable rights and delegate only some of our power to the government to protect those rights. Defenders of limited government understand that the U.S. Constitution lists the specific powers it delegates. If it’s not mentioned, we retain that power. This is why the original U.S. Constitution was only four pages. In a telling contrast, the recently proposed European Union Constitution was 100 times longer at 400 pages. That’s because it does take a lot of words for rulers to tell unfree people which rights they will be given and how they must lead their lives. That’s why Obama’s health care legislation was more than 2,000 pages long.

  Members of the Tea Party movement are focused on defending individual freedoms and economic liberty because one does not exist without the other. The overwhelming majority of activists are just responsible citizens trying to defend something they cherish: constitutionally limited government. This is a movement stirred into action not out of partisan bitterness but as a reaction to what they view as a government that has grown too large, spends too much money, and is interfering with their freedoms. When you speak with activists, no matter where you find them, four recurring themes inevitably become clear.

  1. THE CONSTITUTION IS THE BLUEPRINT FOR GOOD GOVERNMENT

  FIRST AND FOREMOST, THE Tea Party movement is concerned with recovering constitutional principles in government. Our nation was conceived in liberty and dedicated to protecting the inalienable rights of life, liberty, and the pursuit of happiness of the individual, not of the collective or groups of special interests. The miracle of the Constitution is the simple genius of limited government and its singular devotion to protecting individual liberty.

  Our Founding Fathers designed a constitutional system based on private property and the rule of law to protect the individual from an overbearing federal government. An American’s freedom is based on individual rights endowed by our Creator, secured by the Constitution. Among these are economic liberties that allow us to provide for families and pursue our own happiness. For more than two hundred years, American citizens have used their personal and economic liberties to pursue their dreams and provide for their families. Along the way we built a prosperous nation. American wealth was not an accident but a direct result of our freedoms.

  Advocates of big government do not understand this. They take our freedom and prosperity for granted. In recent years we have watched as private property has been taken from families by the government and given to developers through the abuse of eminent domain. Under the health care legislation passed in 2010, the government mandated that all individuals must buy government-approved health insurance, whether they want it or not. The government should be concerned with protecting my liberty, not my liver.

  The founders designed a government that was to do only that which was both right and necessary; the rest was to be left up to the states and individuals. It is simply the best organizational chart for running a society ever created. However, this division of labor only works if people mind their own business. The problem is that politicians and bureaucrats often do not know their limitations and make it their business to mind yours.

  The Tea Party movement is asking to simply be left alone. The federal government should only exercise those powers we the people have delegated to it through our Constitution.

  2. IN A FREE SOCIETY, ACTIONS SHOULD HAVE CONSEQUENCES

  THE SECOND MAJOR THEME running through the Tea Party movement is the call for personal responsibility. The founding documents built institutions that allowed for individuals to chase their dreams and be responsible for their own successes and failures. Tea Partiers value equality of opportunity, not equality of outcomes. Fo
r us, it is all about the rights of the individual over the collective.

  These free and voluntary transactions are at the heart of our society. But when we are protected from the carelessness of our own actions, we tend to act foolishly. That applies to both business and individuals.

  The Austrian economist Joseph Schumpeter noted1 that failure is an essential part of a functioning market economy. He described it as “creative destruction,” as resources are constantly rearranged to their highest value. Without failure, you cannot have innovation. Without innovation, our standard of living stagnates.

  For years, we have watched as people borrowed on credit cards and bought homes valued beyond their means. At the same time, businesses also borrowed and lived beyond their ability. Banks took disproportionately large risks and the big three automakers agreed to union demands for unrealistic employee benefits that they could not afford.

  When it came time to pay the piper in the recession, we watched bailout after bailout. The system broke down as individuals and businesses were shielded by government from the consequences of their actions.

  Those who had restrained themselves, saved, and budgeted were told their tax dollars would be used for the bailouts. And not just current tax dollars, but hundreds of billions of dollars in debt was taken out as well. Debt that will have to be paid out of future earnings.

  3. THE FEDERAL GOVERNMENT IS ADDICTED TO SPENDING

  THE THIRD THEME FOUND in virtually every Tea Party gathering is the conviction that the government is spending too much while unfairly expecting our children and grandchildren to pick up the tab.