The grim weight of the economic slowdown is deepening the public's divisions over government's role in promoting prosperity and the distrust of financial institutions and major companies, according to a new Allstate/National Journal Heartland Monitor poll. Rudi Diezmann has made his living with computers for so long that the first one he worked on ran on punch cards and "filled a cabinet the size of a large freezer," as he recently recalled. He found the fledging industry compelling enough that he dropped out of college in 1968 to sign on. "I discovered computers in my early 20s," he says, "and I never looked back." Over the next four decades, Diezmann rose to senior positions at many of the companies driving the information revolution: Honeywell, Adobe, Oracle, Cisco, and Apple (twice -- the second time managing a team of more than 100 employees in Tokyo). In 2006, he joined a San Francisco-based start-up as a vice president, directing a team of engineers who were developing software for an online poker service. His house in San Jose was once valued at more than $1 million.
The grim weight of the economic slowdown is deepening the public's divisions over government's role in promoting prosperity and the distrust of financial institutions and major companies, according to a new Allstate/National Journal Heartland Monitor poll.
Rudi Diezmann has made his living with computers for so long that the first one he worked on ran on punch cards and "filled a cabinet the size of a large freezer," as he recently recalled. He found the fledging industry compelling enough that he dropped out of college in 1968 to sign on. "I discovered computers in my early 20s," he says, "and I never looked back."
Over the next four decades, Diezmann rose to senior positions at many of the companies driving the information revolution: Honeywell, Adobe, Oracle, Cisco, and Apple (twice -- the second time managing a team of more than 100 employees in Tokyo). In 2006, he joined a San Francisco-based start-up as a vice president, directing a team of engineers who were developing software for an online poker service. His house in San Jose was once valued at more than $1 million.
Then came the Great Recession.
Squeezed by the slowdown, the company laid Diezmann off last October. And now, at age 62, he finds himself unemployed for the first time in his adult life. "I don't spend money," he says. "I'm in major retrenchment. I'm going to lose my home in another three months or so if something doesn't come through. I've started looking for anything, which is sort of tough because once you make the decision to move down [to a lower-paying job], you can never come back."
Diezmann's struggles encapsulate one of the most striking findings in the latest Allstate/National Journal Heartland Monitor poll. Government figures show that the unemployment rate is higher for racial minorities than for whites and higher for those without a college degree than for those with advanced education. Still, the survey demonstrates that the downturn has struck with unusually broad reach across American society.
In response to the poll, a head-turning 70 percent of Americans said that a relative or close friend has lost his or her job at some point since the economic slowdown began in 2007. Strikingly, Diezmann and others who responded to the poll from the upper rungs of the income ladder are as likely to say they know someone who has lost a job as are those on the lower steps; whites are as likely to have friends or relatives who have been displaced as are minorities.
That widespread sense of vulnerability carries obvious political risks for congressional Democrats and President Obama. Though Obama's ratings for handling the economy did not fall precipitously in the poll, they continued to erode steadily, as they have since last summer. Combined with a spike in anxiety over the country's direction, Obama's slipping grades increase the odds that Republicans will make major gains in November's midterm elections, even though the survey found registered voters divided about evenly when asked which party they intend to support for Congress.
But like earlier Heartland Monitor polls, the survey found all the ingredients for political turmoil that could continue long past November, whatever the outcome. The grim weight of the extended slowdown, the poll suggests, is deepening the public's divisions over government's role in promoting prosperity and the widespread distrust of financial institutions and major companies. The survey also captures the emergence of attitudes that don't fit easily into the platform of either political party: a prickly "America First" streak anxious about the outsourcing of jobs to foreign countries and a censorious conviction that Americans summoned hard times on themselves through irresponsibility at all levels. Indeed, the belief that average Americans must manage their finances more responsibly as the economic storm lingers is one of the most powerful chords in the poll.
"I don't see this as the new normal, but it's not going to get all the way better either," said Tara St. Clair, a homemaker in Eagle, Wis., who responded to the survey. "We were living well beyond our means."
The diffuse sense that the downturn represents "a kind of divine retribution for profligacy," and the pull toward economic nationalism represent two of several respects in which the attitudes expressed in the new poll distantly echo arguments heard in American politics during the Depression, notes Robert Reich, who was Labor secretary in the Clinton administration and now teaches public policy at the University of California (Berkeley). One difference, though, is that while President Roosevelt mustered trust in government to respond to the Great Depression, this crisis has battered Americans' faith in all institutions, including Washington. The result, Reich forecasts, could be a period of sustained social and political turbulence. "If the economy continues to generate few jobs and no growth and stagnant wages," he says, "isolationism and anti-establishment fervor is going to grow."
The latest Allstate/National Journal Heartland Monitor poll is the sixth in a series exploring the ways that Americans are navigating the changing economy. The poll, conducted by Ed Reilly and Brent McGoldrick of FD, a communications strategy consulting firm, surveyed 1,201 adults from August 27 through 30. It has a margin of error of +/- 2.8 percentage points. This survey focused on how Americans define economic success for themselves and for the nation, and on what they believe are the most important steps that government, business, and individuals can take to restore prosperity.
The poll found little change in Americans' day-to-day living situation since July 2009. In a Heartland Monitor poll released that month, 27 percent of those surveyed said they can "live comfortably and save an adequate amount for retirement or other needs." In the latest poll, that number rose to 30 percent, a change within the margin of error. Similarly, the share of adults who said they can get by but don't have enough money to save dropped slightly from 50 percent last summer to 45 percent now. This time, 22 percent of those polled said they found it hard to make ends meet each month, the same response as last July. That number rose to 28 percent among adults without a college degree, compared with only 12 percent of those with advanced education.
The bigger change was respondents' waning faith that better days are approaching. In the Heartland Monitor survey released in April, 70 percent of adults said they expected the economy to improve over the next year. In the new poll, that optimism dropped sharply to 55 percent, with only 8 percent expecting significant improvement. In April, only about one-fourth expected the economy to deteriorate further; now, two-fifths believe that the downturn will deepen. Diezmann, for instance, has felt the temperature drop on a website he has used to track available executive positions: He found 18 openings to look at in February and 25 in March. Last week, "they sent me an e-mail saying they'd found no jobs at all for me," he says. "That brief uptick seems to have gone away."
Not surprisingly against that backdrop, the survey found Americans emphasizing back-to-basics prudence in their personal financial planning. When asked to rank their short-term financial goals, respondents predominantly emphasized steps to balance their books: making ends meet, living debt-free, saving money each month, and learning how to better manage their personal finances. (The only less immediate priority that ranked near the top was working in a personally rewarding career.) Follow-up interviews with respondents underscored the extent to which many Americans have now reduced their economic ambition to just staying above water. Ronda Holmes of Portsmouth, Va., has a steady job as a cafeteria worker in the public schools, but layoffs in the community have left her feeling acutely vulnerable. "Right now, with everything going on," she says, "I guess your main goal is to get by and survive."
The poll also asked respondents to identify the long-term goals that they consider the milestones of financial success. On that front, too, Americans are focused on the basics: living comfortably in retirement; having enough money to fund education for themselves or a family member; providing their family with a more comfortable life than they had when they were younger. Owning a business or working long-term for a single employer ranked much lower.
Despite all of the housing market's travails, paying off a mortgage and owning a home also continued to rank high among the public's long-term goals. "There's a sense of accomplishment and pride and ownership -- it's something that's yours," said Elmyra Jackson, a homemaker in Anniston, Ala., when asked why she considered paying off a mortgage a top goal. "That means a lot to me, because it meant a lot to my dad."
With joblessness so prevalent, the survey found that Americans see the unemployment rate, far more than any other indicator, as the most important measure of the economy. When asked which gauge offered the single best indicator of the economy's overall health, more respondents picked the unemployment rate (43 percent) than the trend in incomes for average families (25 percent); the gross domestic product (17 percent); the performance of the stock market (7 percent); or the profitability of major companies (4 percent).
Likewise, when asked what would be the most telling sign that the economy is recovering, more respondents identified a decline in unemployment (34 percent) than chose increased consumer spending (15 percent); more businesses expanding their operations (15 percent); a stabilization of housing prices (11 percent); a decline in business bankruptcies (9 percent); or a consistent increase in the stock market (7 percent) or corporate profits (4 percent).
All of these results suggest that whatever happens with other key indicators, most Americans are not likely to feel much better about the economy until unemployment begins a steady decline -- a prospect that still appears remote based on the August employment figures. "Increasing profits for companies is deceiving," said Ray LaFever, a nuclear reactor operator in Waterford, Conn., who responded to the survey. "The unemployment rate going down is the most important thing. If you put people to work, they'll pay more taxes, take more ownership in their community, and buy more. One thing feeds into another. [But] we are just dead in the water right now."
Americans are not only united in viewing unemployment as the critical measure of recovery, they also substantially agree on what business and individuals should do to promote a revival. But they remain closely, and deeply, divided over the best strategy for government to pursue.
On the central question of government's role in the economy, Americans are split into three comparably sized camps, just as they were in the two Heartland Monitor polls earlier this year. Thirty-five percent of those polled agreed with the Ronald Reagan-like sentiment that "in the current economic environment, government is not the solution to our economic problems; government is the problem." Another 28 percent took the liberal position that "government must play an active role in regulating the marketplace and ensuring that the economy benefits people like me." The remaining decisive 33 percent said they "would like to see government play an active role in the economy" but are unsure that they "can trust government to do this effectively."
On this fundamental choice, the electorate fissures into familiar but telling camps. Nearly two-fifths of whites, compared with just one-sixth of African-Americans, embrace the Reaganite position. (Alone among whites, college-educated women are notably less enthusiastic about that view.) Blacks are twice as likely as whites to embrace the liberal position. Hispanics fall between those two poles, dividing closely between the Reaganite, liberal, and "it depends" camps. Twice as many independents pick the conservative (41 percent) as liberal position (20 percent). But nearly another two-fifths of independents say they are open in theory to government activism -- although they aren't convinced it can deliver what it promises.
All of these results show that neither party enjoys a natural or stable majority for its preferred view of government's role; the balance can tip depending on whether Americans view government intervention as successful. And today, the balance is tilting toward those who believe that the government's massive economic intervention under Obama has been mostly unsuccessful.
Turning to the role of employers, the survey captured a complex set of attitudes. Trust in business remains frayed: A majority of those polled said they had less faith than a year ago in national banks, investment banks, and major corporations to make decisions in the interest of average Americans. But other questions found more-nuanced attitudes. Just one-fourth said that U.S. businesses should hire more American workers now even if that means reducing benefits for existing workers or increasing prices for consumers; nearly seven in 10 said that employers should hire only if "it makes sense for their business to do so."
At the same time, respondents gave employers' motivations mostly positive reviews: 34 percent said that employers prioritize the interests of their employees when making hiring decisions, compared with 24 percent who said that businesses focus most on delivering value to customers, and 21 percent who said that their principal goal was to benefit shareholders. Just 16 percent said that employers aim mostly to maximize profits "in order to give their executives bonuses." Eric Blake, a software developer in Loveland, Colo., spoke for many when he said, "The only way the economy will get turned around is if there are businesses that are profitable."
What are the most important steps businesses can take to promote recovery? Just 42 percent said that spending more on research into new products would contribute significantly; 52 percent believed that spending more to train workers would be very important. Those polled put more faith in increasing investment in equipment and technology (55 percent); working with local and national government officials to develop new strategies for growth (58 percent); and, above all, shifting more operations from foreign countries to the U.S. (66 percent). Repatriating jobs and increasing training ranked Nos. 1 and 2 when the poll asked respondents to identify their top priority for business.
When queried about how ordinary Americans can contribute to recovery, the poll's participants showed a powerful tilt toward ledger-balancing -- another back-to-basics impulse that could have very different implications for the nation than for individual families. When asked what would contribute significantly to recovery, about four-fifths of those surveyed said that Americans should reduce their debts and learn more about how to better manage their money; nearly three-fourths said that saving more would be a very important step. Nearly another three-fourths said that workers could boost recovery by improving their skills. By contrast, only about one-third said that "spending more money to stimulate the economy" would provide a major boost. When asked to identify what should be the top priority for individuals, far more respondents picked reducing debt than any other option.
While policy makers have long exhorted Americans to save more, this instinct toward thrift, if acted upon, could complicate recovery if it means that consumer demand, which has already retrenched in the slowdown, remains sluggish. Alan Viard, a resident scholar at the conservative American Enterprise Institute, acknowledged that risk but says that, on balance, "from a long-term perspective, an increased desire to save really is good news."
Reich, though, argues that the balance sheet is more complex. "From the standpoint of the individual and family, it makes a lot of sense to batten down the hatches, to spend less and save more," he says. "From the standpoint of the national economy, everything I've just said is completely irrational. What's smart for individuals and families to do can be exactly the wrong strategy for the nation as a whole." Although it may be appropriate for families to maintain a tighter grip on their wallets, he contends, then "government policies have got to be countercyclical with a vengeance now." And that means more stimulus -- a strategy that has been largely taken off the table in Washington but retains some support among the public, according to the poll.
When the Heartland Monitor survey asked how the government should balance the potentially competing demands of jump-starting growth and managing the vast federal deficit, respondents showed a clear tilt toward reviving the economy. Presented that choice, only 20 percent said that Washington should focus on reducing the deficit, even if it means raising taxes and retrenching programs such as Medicare. The rest picked options that would increase the deficit, with conservative means for reinvigorating growth slightly besting the liberal preferences: 39 percent of those polled said that Washington should reduce taxes, spending, and regulation even if it means increasing the deficit; 33 percent said that the government should increase spending on infrastructure, education, and the social safety net even if that produces higher deficits.
Whites were much more likely to prefer tax cuts and spending reductions than Hispanics or African-Americans, who leaned more toward a government investment agenda. Once again, college-educated white women were much less supportive than other whites of the conservative small-government option.
One tax cut did find majority support: 52 percent of those polled said they would back tax incentives for business to hire more workers, even if it meant increasing the deficit; just 42 percent said they would oppose such cuts. Intriguingly, a much higher share of Democrats (62 percent) than Republicans (42 percent) said they would support such a move. "What they should do is give tax incentives to small businesses, not just throw money around," said LaFever, who voted for Obama in 2008 but considers himself a political independent. "We should be helping the existing companies get bigger."
Bolstering small business also topped the list of responses to a question about structural changes in the economy that might accelerate recovery. Asked to rank a series of options, four-fifths of those polled said that making it easier for small businesses to start and expand their operations would be very important to recovery -- more than any other option. Other top priorities included helping workers get more education and training (74 percent); revitalizing manufacturing (65 percent); and promoting high-tech jobs in fields such as energy and biotechnology (also 65 percent). A smaller percentage (46 percent) identified narrowing the income gap in America as a significant contributor to recovery; enthusiasm for that idea, not surprisingly, dropped as income rose.
Another option that ranked near the top captured a current of thought that crackled through the entire survey. Seventy percent of those polled said that reducing the number of jobs that are outsourced to foreign countries would be very important in promoting recovery; only bolstering small business and improving skills ranked higher. Although most economists do not consider outsourcing a major drag on job growth, when the survey asked respondents to list the single largest structural change that could quicken recovery, reducing outsourcing tied with increasing skills.
Across a variety of other questions, the poll revealed a similar tug toward economic nationalism and anxiety about globalism, though not necessarily a full-scale retreat from it. On the question of what individuals could do to promote recovery, 68 percent cited "making a greater effort to purchase products made in America" as a very important step. That was almost identical to the proportion (66 percent) that identified shifting more jobs from overseas to the U.S. as a major priority for businesses.
In follow-up interviews, several respondents were impassioned in their concern over the flow of jobs abroad. Tara St. Clair, the Wisconsin homemaker, said that her husband's employer once outsourced his entire department's responsibilities to the Philippines. "These things shouldn't be allowed to happen," she said. "A company has the right to make cuts and save money, but there has to be some kind of regulation about how you have to do business in this country. If you want to sell things here and have an office here, you should have to employ people here. There has to be some kind of line."
Blake, the Colorado software developer, has a similar view on outsourcing; he said he would impose tariffs on foreign goods to the point "where they would be a hell of a lot more expensive and we'd be forced to buy American and put Americans back to work and American companies back in control." Despite the anxiety about outsourcing, however, only a minority of respondents would follow him down that road. In the question about structural changes, 36 percent said they believe that restricting imports from foreign countries would significantly contribute to recovery. Many more (61 percent) said that opening more foreign markets for U.S. products was a high priority for recovery. "Getting involved in the global economy is a good thing for us because that's where the growth is, at least for the bigger corporations," said John Woodley, a high school teacher in Essex, Vt.
These crosscurrents suggest a profound ambivalence about globalization: a desire to benefit from its advantages (cheap foreign products and growing middle-class markets in other countries) while minimizing its costs (the shift of jobs to foreign countries that helps create those middle-class consumers). When asked directly how the U.S. should orient itself toward the global economy, 23 percent of those polled picked an "open" position of encouraging free trade, expanded immigration, and foreign investment; 36 percent picked an economic nationalist position of resisting all three; and 32 percent preferred a planned economy strategy of targeting government tax breaks, research dollars, and training assistance at priority industries. Intriguingly, the industrial policy approach generated the most support among two groups that don't usually agree on much: African-Americans and college-educated white men.
That pull toward planning hasn't been much of a factor in the national political debate since the 1980s, and yet the survey suggests that such an appeal could find a substantial audience. It is one of several strains of sentiment in this survey that don't have a comfortable home in either party. Another is the America First current of economic nationalism evident on many questions. One-fifth of those polled picked the more protectionist or nationalist positions on at least four of the poll's five questions that touched on those issues. That group, which Brent McGoldrick labels "pessimistic patriots," tends to be more white and less educated than the country overall, more female than male, and more likely to live in Midwestern and border states that have been hit hard by deindustrialization. Pessimistic and distrustful of institutions, they are "ripe for a populist appeal from a third-party candidate," McGoldrick says.
This survey suggests that another attitude is also beginning to coalesce: The sense that no segment of American society is responding to the nation's mounting challenges with a sufficient sense of urgency and accountability. That view ripples through the strong belief that the best thing individuals can do to promote recovery is to reduce their debts and better balance their spending and income.
Other polls have consistently found that most Americans believe that political leaders of both parties are focused more on scoring points against the other side than on solving problems. This survey shows that Americans don't absolve even themselves from that dynamic: Two-thirds believe that the country is more divided than united in the signals that it sends to national leaders about the policies they should pursue.
LaFever, the Connecticut nuclear power plant employee, may have come closest to capturing the frustration that links these views in his passionate plea for the United States to refocus its priorities and roll up its sleeves. "Enough flamboyancy, enough hoopla," he said. "Pay the national debt down; enough with the wars; we should be creating jobs here. I'm not worried for myself, but I'm worried for the next generation of kids. And I like Obama, but there's no meat on the bone.... Show me something. The Republicans are just against what the Democrats are for. I really am fed up with both parties."
All signs indicate that Republicans could capture one or both chambers of Congress in November, in part because Democrats control Congress and the White House at a moment when so many Americans are dissatisfied with the country's direction. But the craving for responsibility flickering through this latest Heartland Monitor survey suggests that dissatisfaction will only deepen if divided government devolves into debilitating confrontation. And if that happens, more Americans will likely join LaFever in disdaining both parties, with results that could be as volatile as they are unpredictable.
Reporters Lindsey Boerma, Cameron Joseph, Naureen Kahn, Rebecca Kaplan, and Clifford Marks contributed to this report. contributed to this article.