A derogatory term, used mostly by the far left "fringe," to describe a group of American people who assemble peacefully to protest out of control government spending. The term "tea bagger" is used to mock these people because the group associates their cause with the original Boston Tea Party which was instrumental in starting the first American Revolution. The movement, which refer to themselves as "Tea Party Patriots," consists of Republicans, Democrats, and Independent voters who are taking a stance against not only out of control government spending, but against the "Europeanization" of America.
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Actually...the "Tea Party Patriots" started out calling themselves teabaggers. They claimed they were going to start a "new Boston Tea Party" to protest high taxes. Their form of demonstration was to send a teabag to the White House, and then decided that because they were "teabagging" the White House they would be "teabaggers." At one of their rallies, they liked to hold up a sign that said "teabag the liberal democrats before they teabag you." That's all cute and funny, but then the liberals at places like Daily Kos and Democratic Underground started pointing out the term "teabagging" has a sexual connotation. Next thing you know, they're "Tea Party Patriots" and the awful liberals are the ones who want to call them teabaggers.
The sickest part of the whole Tea Party (or teabagger, depending on your leanings) movement is thanks to the Obama tax plan, most of them pay lower taxes under Obama than they did under Bush.