By maintaining a quixotic filibuster against a Senate jobless bill, Senator Jim Bunning lit the fire of Democratic and Republican hyperbole against him.
From Democratic Senate Majority leader Harry Reid to Republican Senator Olympia Snowe, they all asked him to relent and simultaneously criticized his one-man party of no.
The Democrats seized on the filibuster as an example of Republican obstructionism and a strategy of block and delay. Under tremendous pressure from both sides, Bunning relented and the Senate passed a bill extending jobless benefits through April 5th.
This situation underscores exactly how difficult it will be for anyone in D.C. to address the massive federal budget deficit and massive increase in US debt. All Bunning was doing was asking the Senate and Congress to follow their own rules of pay-go or finding a way to pay for something before their spent on it. Pay-go was just enacted and now it was just overrode.
Bunning is not an isolated political voice. Yes, he is retiring and this allowed him the leeway to address a very unpopular fiscal stance. But he wouldn't have stood up unless there was support. Think two words that begin with the letter T: Texas and Tea. In the Republican Texas primary for governor, incumbent Rick Perry fought off big name Sen. Kay Bailey Hutchinson with a strong anti-Washington stance. "This election was about hard-working Texans sending a simple, compelling message to Washington: quit spending all the money, stop trying to take over our lives and our businesses," Perry said according to Reuters.
The Tea Party in the United States has been influential in the Brown victory in Massachusetts and with Perry's primary victory in Texas. According the Tea Party Patriot's web site, they believe in three things: fiscal responsibility, constitutionally limited government, and free markets. According to a the US Tea party's web site, the goals are even simpler: taxes are too high and the tax code is too complicated. According to Tea Party Nation's web site, they "....believe in Limited Government, Free Speech, the 2nd Amendment, our Military, Secure Borders and our Country!"
It's difficult to ascertain which group officially speaks for the movement or whether any of these are the official group. I'm not promoting the groups here, but merely showing that they are uniformly for limited government.
As an investor, you may be wondering why this is salient to you? The father of modern economics supported a limited role for government. Mark Skousen writes in "The Making of Modern Economics", Adam Smith believed that, "Government should limit its activities to administer justice, enforcing private property rights, and defending the nation against aggression." The point is that the farther a government gets away from this limited role, the more that government strays from the ideal path that will ensure the fastest path towards the creation of "universal opulence" or wealth for workers.
Currently, fiscal duress due to government expansion is the over-riding theme of the financial markets and will be for years to come. Can governments pay for the massive global stimulus that they ponied up for arresting the global recession? For Japan, it's been the theme for two decades. For Greece, it's a theme with intense focus and has brought difficult decisions to cut spending and public pay. With Bunning/Brown/Perry, the US is now joining the debate.
How this issue is handled will decide whether the country can more closely follow Adam Smith's prescription for growth and wealth creation or move farther away from it.
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Andrew B. BuschDirector, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and reach him hereand you can follow him on Twitter at http://twitter.com/abusch.
