Credit Scarred

GOVERNMENT’S ROLE

That’s true when they look to Washington, too. The survey detected ambivalence about whether Washington should prioritize job creation or deficit reduction, but it found mostly skepticism that more government spending—and debt—can really invigorate the economy.

The poll saw substantial consensus on the cause of the federal debt. Nearly half of those polled identified the cost of the wars in Afghanistan and Iraq as the biggest factor in the growing federal debt. Almost identical percentages—about one-sixth in each case—fingered the economic agendas of Presidents Obama and George W. Bush. About one in nine picked the economic slowdown itself. Only a little over one in 20 identified the growing costs of Medicare and Social Security as the baby boomers retire.

Several questions asked Americans how Washington should respond to that mounting debt. Three show the same moralistic streak that respondents displayed on personal debt, but a fourth demonstrates the cross-pressures that qualify the seemingly irresistible public demand to blot the red ink.

The results make clear that Obama and Democrats face an uphill climb to sell the argument, made famous by the British economist John Maynard Keynes during the Depression, that when private demand slackens, government must step in to replace it by increasing spending and running deficits. Just 38 percent of respondents agreed that “government spending is critical during an economic downturn … because government has the unique ability to stimulate the economy through public investment.” A solid 56 percent majority instead agreed that “government spending when the government is already running a deficit is the wrong approach during an economic downturn because it is only a temporary solution that increases long-term debt.”

Even when informed that the federal government in the past has shouldered greater debt levels as a percentage of the gross domestic product, just 30 percent agreed that “the current economic situation merits additional spending … to stimulate economic growth.” Fully 65 percent said that government’s focus should be “on reducing debt and cutting government spending.”

In reaching these conclusions, the poll suggests, most Americans were analogizing from their own experience. Sixty percent agreed that “the federal government should manage its budget like American families run their household budgets,” limiting the debt they accumulate to high-priority needs like mortgages or student loans; only 36 percent said that the analogy didn’t apply because “the government has the unique ability, resources, and responsibility to stimulate economic activity.”

These questions sharply divided Democrats and Republicans, with independents sorting in between but leaning closer toward the GOP in opting for deficit reduction over spending to help the economy. Steven Clare, a Republican from Neenah, Wis., who runs a bulk-food store, succinctly expressed the majority view. “In my household, if I’m doing great, I’ll spend more,” he says. “But if things are tighter, I spend less. I’m a little more conscious of my needs versus my wants. I feel like government has no accountability to anyone, and they spend a lot on wants.”

For all the force in this consensus around deficit reduction, one final question illuminates its limits. The poll asked respondents to balance job creation against deficit reduction—and alluded to some of the costs of the latter.

Asked to choose among three options for economic policy, a 40 percent plurality picked a Democratic-leaning alternative under which government would increase “spending on infrastructure, education, scientific research, and programs like unemployment insurance for those out of work even if it means increasing taxes … so that we stop adding to our national debt.” Another 32 percent picked a Republican-leaning option of reducing taxes, regulation, and spending, “even if it means that the deficit will increase temporarily.” Only 20 percent said that “government should focus on reducing the federal budget deficit” even if “means raising taxes and reducing spending on programs like Medicare and education.”

All of which suggests that although Americans have soured on the idea of trying to combat the slowdown by increasing federal spending, they remain uneasy about a possible deal to reduce the national debt. That may be one reason why just 28 percent are confident that Washington will find ways to reduce the deficit. Americans may be nearly united in preferring more thrift in their own lives, but they remain doubtful that Washington will follow their example—and are divided over exactly how it should.

Scott Bland contributed

This article appears in the Oct. 15, 2011, edition of National Journal.

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