Tea Partying: When Protest Movements Defend the Interests of the Ultra-Rich

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This article originally appeared at The American Prospect.

(AP Images/J. Scott Applewhite)

Four years ago, the modern tea party seemed to emerge from nowhere, leaving journalists bewildered and the public with few reference points to understand seemingly spontaneous rallies by middle-class people seeking lower tax rates. A search for the phrase “tea party” in connection with “politics” in major newspapers yielded fewer than 100 mentions in 2008 — and when the words did appear linked together, they suggested studied formality and decorum. The next year, they appeared more than 1,500 times, often connected to “protest demonstration.”

But little was spontaneous about the new party. “Social movements that explicitly defend the interests of the rich and the almost-rich have been a recurring feature of American politics,” Isaac William Martin, a sociologist at the University of California, San Diego, reminds us in his new book, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent. “Such movements shook the American polity before the Obama era, before the Reagan era and before Barry Goldwater ran for president — before, even, the New Deal.”

With meticulous research, Martin shows how the modern tea party grew from decades of efforts by American oligarchs to de-tax themselves. They relied on cranks, rogues and a few scholars to polish the most effective ideological marketing pitches. Their goal was selling the notion that if the rich bear less of the burden of government, all of us will somehow end up better off. These pitches have worked best when some newly proposed government initiative — like President Barack Obama’s Affordable Care Act — arrives to pose the threat of major policy change. They have depended on diverting attention from obvious questions, such as just how does a smaller tax bill for the Koch brothers benefit us?

Spanning decades, the residue of relationships, movement-building skills and organizations from past enlistments of the affluent many to agitate for the interests of the super-elite few could be seen merely as an example of what Seymour Martin Lipset and Earl Raab called “cultural baggage” in their 1971 book The Politics of Unreason: Right-Wing Extremism in America, 1790-1970. Instead, Martin says, these movements bequeathed to us “not just a suitcase we drag along behind us” but “a toolkit” to remake American public policy. Martin also concurs with historian Richard Hofstadter, who pointed out a half-century ago how many practitioners of his famous theory — the paranoid style in American politics — found their roots in the arrival, in 1913, of the 16th Amendment. That amendment, ratified on the eve of World War I, resolved disputes over the meaning of the phrase “direct taxes shall be apportioned,” and in doing so ushered in the modern income tax.

By the 1920s, Martin writes, corporate boardrooms were rife with “rich men who were scared of progressive taxation, but did not know how to fight it.” Along came J.A. Arnold, a semi-con man who told them he knew what to do. Arnold grew up in central Illinois, near the birthplace of rabble-rousing William Jennings Bryan and a few years behind him. Populist movements fueled by abuses of railroads and their underwriters surrounded him in his youth. Arnold saw opportunity — not in fighting the railroads but in fighting the progressives. By age 34, he had discovered what Martin calls “a talent for flattering rich and powerful men.” Again and again, Arnold would “seek out a rich patron, turn the conversation to politics, profit.”

Arnold, allied with traditional bankers, fought the Texas land banks that helped small farmers prosper. Then he hit the big time, organizing “tax clubs” that, like the tea party, seemed to emerge from nowhere. In just 33 days, as 1924 became 1925, Texas tax clubs held an astonishing 216 gatherings. The clubs “were in the pure image of the Texas Farmers’ Union and the Farmers’ Alliance,” Martin writes. “The participants in the tax clubs, however, were not farmers: They were overwhelmingly bankers.” Indeed, all but 7 percent of conference chairs were bankers, the great majority of them bank presidents. Their pitch was that lowered taxes would encourage productive investments, an idea that resonates with today’s economic and tax debates. (Knowing this kind of backstory makes it less surprising when today’s Heritage Foundation professionals describe their employer as a leading advocate for the poor.)

Arnold found his greatest support in the Old South, where he had organized the Southern Tariff Association to promote tariffs over income taxes. Delta plantation owners and their economic peers “worried that federal spending threatened their political power” because broader economic opportunity would “endanger the willingness of the black poor to work for low wages.” Martin notes that Mississippi had been among the first states to ratify the 16th Amendment, because Mississippians had so little income to tax. But by 1940, the legislature voted to repeal it — even though fewer than 300 Mississippi residents owed enough income tax to expect any income tax cut.

Martin also shows how adept tax opponents have been at using sleight-of-hand arguments. Back in the 1920s, for example, the brothers Pierre and Irénée DuPont attacked the federal enforcement of Prohibition — “a particularly sore point to pious rich.” In the elite view, the federal government unfairly made up for its lost revenue with higher income taxes, “thereby letting the sinners off scot-free while shifting the costs of their sins onto the rich.” But one rich people’s organization found that its appeal met greater success after abandoning the narrow argument that legalizing and taxing liquor sales would ease the burden on the teetotaling wealthy. The new idea was that ending Prohibition would “provide additional revenue to state and federal governments in crisis.” Thus it was that in the early days of the Great Depression, ending Prohibition gained early favor with lawmakers “in states that were increasingly stressed to pay for basic public services.” Pennsylvania led the way in stopping the funding of enforcement. This kind of shift in rhetoric remains relevant today as congressional Republicans push a 25 percent cut in the IRS budget just as more states ponder legalizing — and taxing — the sale of marijuana.

In time, J.A. Arnold lost favor, partly because he prospered even as his movements faltered. But others came along eager to pick up the slack. Edward Aloysius Rumely, a onetime Progressive turned right-winger by Franklin Roosevelt’s 1936 effort to pack the Supreme Court, and a specialist in direct-mail publicity, “would do the most to transform the movement to untax the rich.” Among Rumely’s successors was Connecticut manufacturer Vivien Kellems — a veteran of the fight for women’s suffrage (the civil-disobedience techniques of which she brought into the anti-tax movement) and a standout in the man’s world of 1930s big business who grew much richer thanks to New Deal and World War II government contracts. Still, she compared IRS agents to Hitler’s enforcers. She insisted that small business was “marked for liquidation,” and in one jeremiad warned that “we are one step removed in this country from the Firing Squad and the Concentration camp.” In a 1948 Los Angeles speech, Kellems announced she would cease withholding income taxes from her employees’ checks. The gesture made her a hero to this day to the virulent, sometimes violent cliques that claim the paying of taxes is voluntary and the federal government is a criminal organization.

Martin also examines more sophisticated anti-tax advocates, like Robert Dresser, a New England textile heir, Harvard-educated lawyer and union opponent who led the way in what Martin calls “clever policy crafting,” an essential feature of rich people’s movements. Dresser’s work toward a constitutional amendment limiting the federal government’s power to tax helped make the once-fringe cause “increasingly palatable” to mainstream conservatives starting in the 1940s, almost four decades before Californians enacted Proposition 13.

In his dotage, at Stanford’s Hoover Institution, Dresser embraced John Bircher conspiracy theories. It’s but one thread in a taut fabric Martin weaves from many connections among Southern racists, anti-communist crazies, corporate welfare queens and rich people’s de-tax movements. Another thread is the little-known story of the young organizer Grover Norquist’s many trips in the early 1980s to Angola. He went there to learn tactics from the Marxist turned anti-communist revolutionary Jonas Savimbi, who had the support of many of the right-wingers around President Ronald Reagan; Norquist would soon put what he learned into practice as he transformed a new organization, Americans for Tax Reform, from a “short-term lobbying project” into the vehicle for a “war of attrition against the American welfare state.”

A recurring dream of the century-long effort Martin chronicles is getting the top tax rate down to 25 percent or even 15 percent. Reagan got tantalizingly close with the 28 percent top rate in the 1986 Tax Reform Act, enacted with bipartisan support. George W. Bush won the number that matters most — long-term capital gains and dividend rates down to 15 percent — from 2003 to 2012. More than 30 percent of America’s capital gains now flow to the fewer than 8,300 households with annual incomes of $10 million or more, while the nearly two-thirds of U.S. households making less than $50,000 collect just 3 percent.

Martin’s title is an homage to Frances Fox Piven and Richard Cloward’s seminal 1978 book Poor People’s Movements: Why They Succeed, How They Fail. Piven and Cloward showed that the poor get heard when they stop being docile. Or, as Frederick Douglass put it, “Power concedes nothing without a demand.” Mass demonstrations, strikes and even riots scare the oligarchs into paying attention.

The problem with disruption as a strategy is that the wealthy, having smart advisers and plenty of money, co-opt threatening movements. We can see this in the 1971 memo that Lewis Powell, later a Supreme Court justice, wrote for the U.S. Chamber of Commerce as it tried to understand and undercut the burgeoning consumer movement. Powell’s proposed strategies included creating subtly anti-consumer institutions modeled superficially on the work of consumer advocates like Ralph Nader, adding a patina of concern for public interest to obscure their agenda.

In the case of the modern tea party, we now know that a good chunk of the money to stage events came from the Koch brothers, inheritors of wealth who are no strangers to the benefits of government-granted corporate monopolies as well as to laws that let them avoid, defer, and even escape taxes. That the mainstream news gives so little attention to the Kochs’ behind-the-scenes manipulations is a tragedy. The tea party’s very name sows confusion: The original 1773 tea party opposed tax favors for the wealthy owners of the British East India Company. Contrast this with modern tea party demands that a congress and president — elected by the people — lack legitimacy and must reduce taxes, especially on business and owners of capital.

Rich people’s movements waxed and waned over much of the last century, going dormant only to reappear when roused by a new policy threat. They have yet to achieve many of their goals. But thanks to decades of well-funded organizing, favorable laws in Washington and state capitals that passed while few noticed, and now the dark-money opportunities of Citizens United, they are here to stay. Martin’s book is useful in understanding a forgotten history that preceded the seemingly sudden assaults on consumers, unions and workers by legislatures and governors in Michigan, North Carolina, North Dakota, Ohio, Texas, Wisconsin and other states where extremists are currently in power. While the actions are indeed abrupt, contemptuous and cruel, they grow from a neglected but by now lengthy tradition of lessons the rich and their advisers learned from failures past.

David Cay Johnston, a 2001 Pulitzer Prize winner, teaches at Syracuse University College of Law and writes columns for TaxAnalysts.com and CJR.org. The Fine Print, the third book in his series on hidden aspects of the economy, is now in paperback.
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  • DavidW

    I learned about the power of the “purse” in seventh grade social studies. I’ve learned as an adult that the power it grants can be immense. I’ve also realized that money is a social an cultural construct and only has the value we imbue it with. It exists only in our minds, its value. Our faith in money is so strong as to be as strong as the faith in god.

    There will be very little that can shake that faith, when money has no value. It would take a catastrophe of biblical proportions and until then what are we to do, play the game or give up?

    Life and community is too precious to do so. We shall lead and fight and cajole and teach.

    Cooperative enterprise can be a way to balance out economic democracy.

  • Mike Murphy

    The Tea Party and Grover Norquist are their mantra and Fox news is their idea of what is right

  • Anonymous

    Excellent article! You can see the tactics of the rich in play on the other side of the political divide too. The immigration policy crafted by the nouveaux rich corporate executives in crafting an immigration policy that used to replace US workers with workers from low cost labor centers for the purpose of reducing labor costs for the wealthy.

  • methinks

    back during the Reagan administration I remember being confused as to why the conservatives appeared to be actively persuing policies that dismantled the middle class. It didn’t make sense to me that they would bite off the hands that purchased their products or used their services. None of it was logical and all of the conservative policies appeared designed to collapse the backbone of the country. I didn’t understand it then and I still don’t.

  • methinks

    when I read the comments of the tea bats it’s always the same thing. faux news or Rush or Bill or Sean tell them what to think and they repeat what they are told word for word. they will then berate anyone who disagrees as being ignorant and not informed. Ha!

  • methinks

    what a bunch of drivel. It’s not money, it’s greed. Money is a useful tool but it isn’t the problem as you suggest. the problems lies with attitudes, the lack of empathy, and the lack of a soul. Just as ignorance breeds ignorance, privilege breeds the expectation of privilege.

  • Anonymous

    What the heck will the Left do with these little snotbags? They are completely useless currently, so I can’t imagine what value they will have then. I’m against capital punishment, so I guess we will have to pay to imprison them also.

  • Anonymous

    I think you are both right.

  • Anonymous

    Interesting read. My only quibble would have to be using PPACA (“Obamacare”) as an example of Left-leaning legislation. It is not, and is in fact, a HUGE gift to the wealthy class.

  • DavidW

    I think my comment is deeper than that. As a social construct, money is what we as people make it and greed can easily come into play, even if money is not “real.” I never suggested money as a problem, I suggested that money is a social construct.

    It has no intrinsic value in paper but what we “give” in our minds. It is not edible, but we can buy food with it. It does no work, but we make it work and it earns interest as a loan. It has value because we value it. Some lust for it.

    I make no judgement calls that money is bad in my comment. Imagine the greedy individual who finally comes to realize that society values what money can do, not the money itself.

  • methinks

    so your comment was thoughtful and deep, as in put it in a hole and bury it deep, philosophical musing do not and cannot explain or correct imperfections in our current system. It’s just drivel. many of the founding fathers and beyond, thought that wealth and income disparity would / could be the end of the republic. They also thought that progressive taxation was the remedy that would be most effective. During the era of 70 to 92% upper income taxes, there were no familial financial dynasties established and the middle class and the country as a whole prospered. there are ways of “balancing the equation” that do not involve revamping or rethinking our monetary system. It’s been tried and proven. How about giving the reality some thought?

  • methinks

    sure but philosophy and reality rarely coincide. I’ll take my reality any day.

  • DavidW

    Where do you get on that my comment advocated for a revamping or rethinking of our monetary system? Money in my reality is a faith as is the kind of faith people have in God.

    Faith that is such, when presented with another perspective; that faith is unshakable. How does anyone propose a change to that? Certainly not I.

    I open my piece on the faith of money and propose that we as people gather to mutually meet our economic, cultural, social and political needs by investing in and starting or maintaining cooperative enterprises; Credit Unions; Food Co-ops; Worker Co-op; and the like.

    Our political democracy has been usurped and until the unmotivated, poor, ignorant, poorly educated begin to express themselves this poor imitation of an economic democracy won’t rise up. In the meantime we can grow and expand current business sectors that are cooperative to take market share away from these corporate overlords, to compete for money and slow the level of “royalty” payments to the 1% that will help to balance out the economic landscape which should help to do the same with our political democracy.

    Our population has either been subjected to a divide and conquer scenario or done it to ourselves, which the rich will handily exploit. The truth in reality is not solely yours, is it? The truth is out there with a little bit of it in each of us, philosophical or not.

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  • DavidW

    But, this is the kind of thinking that falls into the Divide and Conquer tactics of the 1%. These people have been bamboozled and that isn’t their fault. We have to make inroads to get past the falsehoods they truly believe and not just show them the truth but not judge them for having fallen for the lies.