By Yasha Levine and Mark Ames

The Tea Party Revolution has struck the Texas gubernatorial race, with the insurgent Republican candidate, Debra Medina, gaining in the polls and threatening the leading candidates, incumbent Gov. Rick Perry and Sen. Kay Bailey Hutchison. Medina has positioned herself as a radical anti-government outsider who would cut Texas free from federal government programs and influence in favor of the free market. However, according to an investigation of Medina’s business records, her company, Prudentia Inc., benefited greatly over the past decade from federal government subsidies and lucrative municipal government contracts.

Our investigation shows that when you scratch the surface of Texas’ rising tea party star, you’ll find just another Bush-Republican, big-government hypocrite.

On Tuesday, Texas will hold a gubernatorial primary election that has come down to a three-way fight for the GOP nomination. Surprisingly, Medina, a rookie Republican candidate from the tiny rural town of Wharton who has positioned herself as the tea party alternative, is soaring beyond expectation. She has become a national celebrity, suddenly posing a threat to Gov. Perry and Sen. Hutchison. A tougher, rougher, stockier version of Sarah Palin, Medina surged in the polls after she slammed her mainstream Republican opponents in a televised debate, accusing both Perry and Hutchison of succumbing to “big-government solutions” and selling out their Republican ideals. But for all her derision, Medina has been milking taxpayers for years, including those in her own community who subsidize her business.

Medina, a 44-year-old registered nurse who presents herself as the proud owner of a small medical billing business, offered a small-government platform based on God and the free market. She would scrap Texas’ property taxes, criminalize abortions, expand home-schooling, eliminate guns laws and shrink government to the size of a walnut.

“If we get government off the backs of Texans, we’re not gonna have an economic crisis. We’re not gonna have an energy crisis. We’re not gonna have an immigration crisis,” she yelled to an audience of “Don’t Tread on Me” types during a stump speech at a Chevrolet dealership.

The crowd went wild for Medina. She had all the right credentials: ran a small business, grew up on a farm in rural Texas, paid her dues as Texas coordinator for Ron Paul’s 2008 presidential campaign, home-schooled her children, didn’t trust flu vaccines and always carried a loaded Springfield 9-millimeter in her purse — and made sure she was photographed doing it. But the biggest villain of all in Medina’s rhetoric is the United States federal government. In the Republican primary debate in January, Medina said that the federal government’s powers should be stripped down to nothing more than making treaties with other countries. She also has said that as governor of Texas she would make sure that her state’s laws overruled the federal government’s — under what’s called “nullification” — and that she would do her best to stop just short of full secession from the Union.

Tea-baggers are slurping it up, but they probably aren’t aware exactly what it is they’re slurping. Despite her impassioned rhetoric and principled anti-federal government stands, Debra Medina hasn’t stuck by her principles. What she hasn’t told her libertarian supporters is that her business success over the past decade has depended on the government subsidies and contracts that she denounces. The tea party candidate is the same sort of hypocrite as her Republican foes: preaching free-market ideals to the masses while profiting off taxpayer money.

According to data compiled by OMB Watch, Medina’s medical billing company, Prudentia Inc., was granted a $50,000 federal loan guarantee shortly after she incorporated it in 2002. The loan guarantee came courtesy of a program administered by the Small Business Administration, headquartered in Washington — a program that Republicans tried to kill twice in the past 15 years. Thanks to the federal government’s loan guarantees, Medina and people like her are able to secure loans for their fledgling small businesses that banks might otherwise be reluctant to grant, or would charge a higher rate of interest on.

How did Medina qualify? The federal record describes such loan guarantees as being “for small businesses which are unable to obtain financing in the private credit marketplace.” In the terms of Ayn Rand, this makes Medina one of the “moochers” who needed to soak the “producers” to fund her business, rather than (to use Medina’s words) “having the courage” to let the business sink or swim in the free market. Apparently Medina was not ready to face her beloved free market: She stood in judgment before the Invisible Hand, got an invisible thumbs down and beelined it straight to Uncle Sam for a loan guarantee.

And yet Medina does not want to share the welfare she gets with her fellow Texans, which seems kind of unfair. Here’s what she’s promising to offer the suckers: “Get the government off their back, let them get out there and get a job, and we don’t have to worry about unemployment, that charity does not belong with the government,” she told one right-wing radio host.

But while Medina would get government off everyone else’s back, she has made a handsome profit piggybacking on the government twice over: first, with a federal loan guarantee, and, even worse, by using that government-subsidized business to soak the taxpayers of Wharton, Texas, her hometown, by obtaining lucrative city contracts.

In October 2002, just a few months after getting the federal loan guarantee, Medina was ready to start operating her business. And that meant heading straight to the Wharton City Council, where Medina lobbied the government to hand her a sweetheart deal to manage billing and collection for the city’s emergency medical services (EMS). Despite the fact that Medina’s company was brand new and therefore untested, the council voted unanimously to dump the previous company and bring Prudentia onboard, under generous terms. The city agreed to pay an 8.5 percent commission on whatever Prudentia collected (rising to 10 percent for collections over $500,000). According to Medina’s political campaign, Prudentia Inc. is a company that improves medical billing procedures. “Improves” for whom? Definitely for Medina.On average, Prudentia hauled in roughly $70,000 a year from 2002 through 2009, judging by city records and Medina’s claim that Prudentia collected about half of the outstanding medical bills owed to the EMS.

In 2009, Prudentia made $72,000 — a 9.3 percent commission — twice what private billing companies charged in some smaller but more affluent cities. In California, Berkeley paid only 4.5 percent and Manhattan Beach paid only 3.5 percent. On the other side of the U.S., Chelmsford, Mass., paid 4 percent.

But Prudentia’s exorbitant fees aren’t surprising in the Lone Star state, which has a nasty reputation for habitually overcharging Medicare, according to a recent article in The New Yorker. The medical professionals in Texas regularly overcharge Medicare, surpassing every other state.

Prudentia’s record of overcharging offers a window into how Lone Star State Medicare queens operate:

In 2003, just months after Prudential secured its first Wharton contract, Medina appeared before the City Council with a recommendation that the city increase its ambulance transportation fee from $8 to $8.48 per mile, the maximum per-mile charge that Medicare would reimburse. Her reasoning was simple: Wharton could pad its billing to Medicare. The council agreed, and voted unanimously to raise the rate to $8.50 per mile — two cents more per mile than what Medicare pays — increasing costs for everyone except Prudentia Inc., which took in 4 cents more in commission for every single EMS mile it billed. That meant more out-of-pocket cost for Wharton citizens misfortunate enough to require EMS care, and more bleeding of American taxpayers stuck with picking up the Medicare expenses.

Are you starting to get the picture of what this Tea Bag Revolution is going to look like in reality?

Celebrity libertarian Ron Paul, who in 2009 gushed about Medina and endorsed her bid for governor, thinks she’s upholding the small-government ideal: “As chairman of the Wharton County Republican Party, she has stood up to the big government establishment and fought to hold our party accountable to our platform and our conservative Texas values.” Further down in the endorsement text, Rep. Paul said, “Debra is a true success story and role model for Texans across our state.”

She’s certainly a model Bush Republican: Force all the suckers who vote for you to “compete” in the brutal free market, while laughing all the way to the federally funded bank. No wonder Medina is against health care reform: that would mean messing with her cash cow.

And that’s not all. Reports that Medina used campaign funds to buy clothes for herself further demonstrate her hypocrisy. She may have also misrepresented her ethnicity. According to voting registration records that we obtained, in 1991 Medina, born Debra Carolyn Parker (her last name comes from husband Noe), listed her race as “Hispanic.”

A year ago, on the eve of the first tea party protest, we were the first to debunk the movement as a fake grass-roots “astroturf” campaign, and expose its rich Republican sponsors, Freedomworks. Our article caused considerable controversy, as well as a coordinated smear campaign and a lawsuit threat against the article’s publisher, but finally Freedomworks admitted its role in setting up the campaign, and we were proved right. Ultimately, this astroturf movement evolved into a kind of “grass-roots” popular movement that is today as overestimated by the clueless media as it was underestimated last spring when it first began. What Medina’s candidacy proves is that the tea party movement has gone full circle, right back to what its rich sponsors paid it to be: talking the tough libertarian talk, while walking the same old corrupt big-government Republican walk.

POSTSCRIPT:

So far, we have not received comment from Medina’s campaign. After repeated attempts, we finally succeeded in sending these questions by e-mail to Medina’s campaign assistant, Gwen Walton:

1. Ms Medina says she is opposed to federal government “interference” in the free markets and health care in particular, saying, “Your government has to be courageous enough to say ‘That’s not our job, we can’t help you.’ ” However, our investigation shows that her business, Prudentia, has derived a substantial advantage from government assistance and contracts: federal assistance from a 2002 SBA loan guarantee to Prudentia, and local government assistance in the form of lucrative contracts handed to Ms Medina’s company shortly after receiving the federal loan. Our question is: How does she explain to her supporters that it’s fair for Ms. Medina to reap the benefits of government subsidized loans and contracts for her personal gain, but wrong for her Texan constituents to receive the same advantages?

2. Regarding Prudentia’s business, what portion of the company’s revenues come from contracts with the city of Wharton, and what portion of revenues does her company earn from “free market” clients: the “physicians, attorneys, insurance companies and ambulance services” she says are her clients?

3. According to records, Ms Medina registered to vote in 1991 in Texas, identifying her race as “Hispanic.” Exactly how “Hispanic” is Ms Medina? Who among her parents, grandparents, etc is “Hispanic”?

4. Has Ms Medina ever applied as a “Hispanic” for government contracts, government loans or student loans? Has Ms Medina ever used her gender or “Hispanic” race to gain competitive advantage in either business or student activities? What about the SBA loan—was her Prudentia loan granted based on a program favoring either Ms. Medina’s gender or “Hispanic” race?