Deficit-Attention Disorder

Care to hear a politician -- a Democratic congressional leader, in fact -- getting it wrong on the deficit? Listen to House Majority Leader Steny Hoyer addressing a Third Way event in Washington at the end of June:

This month, a Gallup poll asked Americans to name the greatest threats facing our country. Two answers tied for the top choice. One was terrorism. The other was debt.

This is a remarkable moment in political history -- a time when our creeping fiscal danger of our $9 trillion of publicly held debt troubles Americans as much as the prospect of the most brutal attacks on our country. More than ever, Americans understand the danger of debt: a stagnant economy, a hobbled government, and a weak national defense.

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Appearing on a Sunday-morning talk show on July 18, after Sen. Mitch McConnell attacked the Democrats for "an incredible spending spree," Hoyer sounded the same theme but claimed that Democrats are working to cut the deficit. Meanwhile, in early July, David Axelrod, senior political adviser in the White House, explained why he had been emphasizing the need for deficit reduction over additional stimulus spending. "It's my job to report what the public mood is," he told The New York Times.

But Hoyer, Axelrod, and other deficit hawks in the White House and on Capitol Hill have conjured up a nonexistent public -- and have also badly fumbled an important political opportunity. Along with many other poll-watchers and political scientists, we looked at several months of polling. Anyone who looks at the evidence will find what we found: There is very little to suggest that the public wants Washington to focus on the deficit or debt right now. A couple of polls do indicate that concern over the deficit is greater than concern over the economy and jobs. But the great majority of polls show that the public is far more worried about the economy's weakness than it is about America's large public debt.

Despite differences in question wording, these surveys show -- and have shown for many months, throughout the time that Washington has obsessed about the deficit -- that the public is concerned primarily with economic recovery and jobs. Curbing the deficit actually ranks low among its concerns.

The poll cited by Rep. Hoyer allowed people to name several different problems facing the nation. The public certainly understands, correctly, that the deficit counts among the problems that the country faces. But the polls that ask for priorities in the near future or ask what matters most at this moment could not be clearer: Do something, now, about joblessness and economic weakness.

In a CBS News/New York Times poll from April, 49 percent of the public said that "the economy/jobs" was the No. 1 problem. No other problem came close. Only 5 percent pointed to the deficit. A Fox News poll from May put the gap at 47 percent (economy/jobs) to 15 percent (deficit). A Pew/National Journal poll of early June found 41 percent saying that the job situation worried them most, with only 23 percent saying that about the deficit. A mid-June Gallup/USA Today poll found 60 percent to 38 percent in favor of more governmental stimulus of the economy. A mid-July CBS News poll found that 38 percent of the public thought that joblessness was the country's most important economic problem; only 10 percent said that about the deficit. A Bloomberg National Survey from the same period found that 41 percent saw unemployment as the top issue facing the country, while 26 percent cited the deficit.

Some argue that Americans would actually choose deficit reduction over further stimulus and a jobs program if they were better informed. Here exhibit A is the deliberative polling of AmericaSpeaks, which held a number of town meetings this summer. Advocates of deliberative democracy believe that such events provide a better gauge of public opinion than do standard polls. In this case, however, the very design of AmericaSpeaks makes it almost irrelevant, since the premise of the polling was economic recovery. The instructional materials distributed to all participants stated explicitly that the purpose of the exercise was to cut the deficit -- using "spending cuts, tax increases, or some combination of the two -- that would take effect when the economy has recovered in the years to come." (Emphasis added.)

We trust the traditional polls, not only because they offer such a consistent message but also because they are reality-based. Most Americans do not feel the economy is doing well. Asked in June whether the economy were in a recession, 78 percent said it was. In mid-July a CBS News poll found that 75 percent thought that the economy would take at least two more years to recover.

 

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The public's concerns are entirely reasonable. The unemployment rate has been hovering between 9.5 percent and 10 percent this year, which is twice the rate from 2006-2007. It has been stubbornly persistent and considerably higher than the Council of Economic Advisers expected from its initial modeling of the impact of the 2009 stimulus package.

Perhaps Democratic deficit hawks think they are being politically savvy by addressing where they take public opinion to be. But among self-described Democrats and independents, the emphasis on recovery and jobs is overwhelming. In a February Quinnipiac poll, 80 percent of Democrats and 68 percent of independents said that reducing unemployment was more important than reducing the budget deficit. In the Fox News poll from May, the economy/jobs was the top priority for 55 percent of Democrats and 48 percent of independents. The deficit was named by just 8 percent and 16 percent, respectively. Other surveys have found similar results.

Democratic officials might argue that likely voters worry more about the deficit than does the general population as reflected in polls. Democrats have to stress the deficit if they want to win in November. To us this seems like a self-fulfilling prophesy: If you don't stress the issue that rank-and-file Democrats care most about, then of course many of them will stay home on Election Day. Given the poll data, the smarter move is to stress economic recovery and jobs, thus giving millions of Democrats a compelling reason to vote for their party.

This strategy would appeal to independents as well, whose numbers are growing. They have consistently worried above all about economic recovery, and most favored extending unemployment benefits. It's not hard to see why -- unemployment among independents has been higher than the national average.

Interestingly, many conservatives feel the same way about the nation's priorities. In a number of polls, self-described Republicans have been more likely to say that the economy/jobs is important than they are to say deficits are important. A CBS News/New York Times poll from April found that even among Tea Party supporters, focusing on the economy/jobs (44 percent) was far more important than focusing on the deficit or debt (10 percent).

 

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What explains the exceptional disconnect between elite and public opinion? A large part of the story is that Washington has -- responsibly enough -- programmed itself to have a discussion about deficits and debt. By executive order, President Barack Obama established the National Commission on Fiscal Responsibility and Reform in February. Several commission members are well-known deficit hawks. The commission's main goal is to suggest ways of balancing the budget (excluding interest on the debt) by 2015.

In March, fiscally conservative Blue Dog Democrats introduced a balanced-budget amendment. The very next day, congressional Republicans proposed a constitutional amendment that would limit government spending to 20 percent of gross domestic product.

The following month featured a high-profile Fiscal Summit in Washington, D.C., with Bill Clinton as the keynote speaker. Other participants included Alan Greenspan and Robert Rubin as well as representatives from think tanks and the media. The main sponsor of the summit was the Peter G. Peterson Foundation, whose overriding mission has been promoting fiscal austerity. Peterson himself has been one of the nation's most vocal deficit hawks for more than 20 years. According to the foundation's press release, the summit and the new national commission signaled "a new focus on the unsustainable U.S. debt and long-term deficits."

International pressure has also played a role. When President Obama attended the international G-20 summit in Toronto in late June, many delegates stressed fiscal austerity, pointing to Greece as an example of what can go wrong when countries run up large deficits and debts. So Obama endorsed a goal of cutting the nation's deficit in half by 2013.

But Washington's good-government efforts at having a deficit conversation have perversely led to genuine misperception and groupthink. "A tide has turned on Capitol Hill. ... The hot issue in Washington has shifted from job creation to getting the federal deficit under control" -- so declared an op-ed in the Los Angeles Times early in the summer.

This mood swing is not only politically foolhardy for Democrats; it is extremely dangerous economically. Washington has shoved a film called The Roosevelt Recession into the DVD player and is about to push the "play" button.

In 1937, in the wake of his landslide re-election, Franklin D. Roosevelt was pleased by the extent of the economy's recovery. GDP grew 11 percent in 1934, 9 percent in 1935, and 13 percent in 1936. Small wonder that FDR won big. Emboldened by his victory, he gave way to his inner deficit hawk. He asked Congress to scale back public works and relief. Also, new Social Security taxes started to cut into wages. The deficit dropped by 2.5 percent of GDP. The Fed also abruptly doubled member banks' reserve requirements. At first, all seemed well. GDP growth continued into 1937.

But then in 1938, the GDP contracted by 3 percent. Unemployment climbed sharply. The Roosevelt Recession led to a huge electoral backlash in the 1938 elections: Democrats lost nearly one-quarter of their seats in the House and the Republican caucus nearly doubled in size, installing a far more conservative Congress that then set about hacking away at the New Deal.

We cannot be more emphatic -- paying close attention to the deficit right now is bad politics, bad economics, and flatly undemocratic. Americans across the ideological spectrum want the national government to help lower unemployment and pull the economy out of recession before focusing on the deficit. If Republicans in 2010 want to keep blocking unemployment benefits and stressing fiscal discipline, then Democrats should capitalize on their opponents' stupidity and hit them hard with it in the run-up to the elections. By the same token, if Democrats collaborate with Republicans and add fuel to the growing deficit scare in Washington, then they sharply increase their chances of defeat come November.

In the 2008 elections, when the public was far more concerned about the economy than about terrorism or the war in Iraq, the first plank in the Democratic Party's platform (after the preamble) was called Renewing the American Dream, and it offered many ideas for jump-starting the economy. National Security, on the other hand, was the first plank in the Republican platform; economic issues weren't addressed until page 23. It was, of course, Republicans who took a beating at the polls.

And frankly, that's what should happen in a democracy. When officials ignore the public's top priority, they deserve electoral backlash. We understand the importance of deficit reduction to the long-run health of the nation. In the short run, however, deficit reduction is both a needless distraction and very likely a genuinely harmful course of action.

H.L. Mencken once wrote that "democracy is the theory that holds that the common people know what they want, and deserve to get it good and hard." Americans do know what they want, and they certainly deserve to get it. They should not get hit with the politics of pain and austerity, and if they do, there is no telling what will happen to the Democratic Party -- and to the policy accomplishments of the 111th Congress.

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