A fate worse than debt

To paraphrase Benjamin Franklin, a nation that chooses deficit reduction over its economic health will soon have neither.

A story that I’d missed a couple days ago was the results of new polls from the NYT and the WSJ, allegedly finding Americans to be apoplectic about the federal budget deficit and down, down, down on the $787 spending stimulus.  The poll results are described by Catherine Rampell of Economix, Paul Krugman on his blog, and Andrew Leonard on Salon.  Considering the disastrous effects of budget cutting during the Great Depression (first in 1932 under Hoover, then in 1937 under FDR), the results does not seem to bode well for future recovery efforts.  “A nation of Herbert Hoovers” was Salon‘s headline.

It’s easy to read these poll results and conclude that Americans want the economy placed on a starvation diet.  But is that the correct conclusion?  Rampell takes a closer look at the NYT poll and isn’t so sure.  She points out another question, which asks what America’s biggest problem is, and notes that only 2% say the budget deficit.  That puts it well behind the economy (38%), jobs (19%), and “health care” (7%).   An accompanying chart of Gallup poll results since the 1930s show that not since the mid-1990s has the budget deficit been seen as the nation’s top problem by more than 5% of the public.

I took a look at the NYT poll and article, and methinks the Times drastically overstated things.  A much-quoted paragraph from the article:

‘As Mr. Obama finishes his fifth month in office and assumes greater ownership of the problems he inherited, Americans are alarmed by the hundreds of billions of dollars that have been doled out to boost the economy. A majority said the government should instead focus on reducing the federal deficit.’

Number of poll questions that asked directly about the actual stimulus package: 0.

How the Times reporters managed to divine a general opinion, let alone “alarm,” about the stimulus spending is a mystery.  The one question about the deficit, aside from the “biggest problem” question, asked the following:

‘Which comes closer to your view?  The federal government should spend money to stimulate the national economy, even if it means increasing the budget deficit, OR the federal government should NOT spend money to stimulate the national economy and should instead focus on reducing the budget deficit.’

52% said reduce the deficit, 41% said spend the money, 7% didn’t know.

52% is a majority, to be sure, but it’s a narrow one.  Assuming that a slight majority of poll respondents equates to “Americans” in general is just plain ign’ant.  By the same threshold, the authors could have reported that “Americans” have a favorable view of the Democratic Party, support Roe v. Wade, and are married and white.  “Blanket generalizations are always false.”

The one other poll question that related even indirectly to the stimulus package was this one:

‘So far, do you think Barack Obama’s policies have made the economy better, made the economy worse or haven’t his policies had any effect on the economy yet?’

32% said better, 15% said worse, 48% said no effect yet, 4% didn’t know.

Clearly a plurality of respondents, at least those who are aware of the stimulus, do not seem to think it has had much impact yet, which is correct.  By the bill’s own timetable, the project approval deadlines were in May, and the spigot won’t really start flowing till this month.  If in fact “Americans are alarmed” about the stimulus spending, I’d think more than 15% would have said Obama’s policies have made the economy worse, at least in the long term.

A notable irony of the NYT poll is that the Republican Party, whose Congressional representatives opposed the stimulus package almost unanimously and who have worked relentlessly to blame Obama for the deficit, scored their lowest favorability rating, 28%, of the past 25 years.   (An item in the WSJ poll may shed some light on this:  Asked who they blame the most for the deficit, only 6% of respondents said Obama, whereas 46% said the Bush Administration.  Republicans might take comfort in the fact that three times as many people — 21% to 7% — blame Congressional Democrats instead of Congressional Republicans for the deficit, but that probably comes from the Democrats’ holding the majority.)

The WSJ poll, not surprisingly, was more focused and specific on the economy.  One question was specifically about the stimulus bill, and found a virtual dead heat, with 37% calling it a good idea, 39% a bad idea, and 24% with no opinion or unsure.  That’s virtually the same as in April, and a bit less supportive than in March (44%-36%-20%), which could reflect some frustration over the slow pace of funds disbursement.  Another question asked if Obama and Congress should worry more about deficit reduction or boosting the economy, and did find a solid majority (58%-35%) in favor of deficit reduction “even though it may mean it will take longer for the economy to recover.”  Taking those two questions together, it looks to me like the median respondent is not that opinionated about the stimulus bill but thinks the government has done enough on that front.  Also, the majority sentiment for deficit reduction is not out of line with Obama’s stated preference for serious deficit reduction once the recession is over. Considering that I’ve heard literally no talk of canceling the stimulus or expanding it, these results may have zero policy implications.

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2 Responses to “A fate worse than debt”

  1. democommie Says:

    My biggest problem is that the congress is, as usual, sitting on their goddamned hands while the market and the banks keep sucking up money that is doing very little to make the economy more viable. Please correct me if I’m wrong, but I think that the Fed and the SecTreasury are both feeding us shit and telling us it’s chocolate.

  2. Automatic destabilizers « Blogging Through the Wreckage Says:

    […] It’s one thing to be against a stimulus package because the country’s debt level is too high.  It’s not my position, but it’s the position of reasonable, otherwise Keynesian-minded economists like Willem Buiter and Jeffrey Sachs.  But traditionally a big thing that mitigates recessions is the “automatic stabilizers” of decreased tax collections (lower incomes mean lower taxes) and more people receiving unemployment and welfare benefits (which substitute for  their lost work income).  To cut off one of the most important automatic stabilizers is not only callous but sheer idiocy.  Yes, the national debt is a problem, but there are fates worse than debt. […]

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