Tuesday, February 22, 2011

The American people: a confused and contradictory lot

Following a big election win, the GOP is claiming a big mandate from “the American people” to dramatically cut back government spending. The continuing resolution (which would keep the government from shutting down on March 4) that the House has been working on will cut many tens of billions of dollars from a wide range of domestic programs that are subject to the annual appropriations budget. Although most of these cuts are not expected to survive in the Senate, the House bill shows that the country is facing an inevitable showdown over spending priorities. The House will continue to do everything it can to cut back as much as possible, while Senate Democrats and President Obama are more inclined to offer a more gradual version of spending cuts that will attempt to preserve funding for their priorities. (The President’s proposed budget for the new fiscal year, which begins on October 1, would preserve funding for health reform implementation, while the House GOP’s continuing resolution would defund most of it.)

But as long as the GOP is unwilling to consider tax increases, and Democrats are unwilling to put Medicare, Medicaid and Social Security on the table, neither party is going to be able to enact a credible plan to dig the country out of its growing debt burden. The Wall Street Journal reports that a bipartisan group of Senators is working on a plan, based on President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, which would include “a tax code overhaul; discretionary spending cuts; changes to Medicare, Medicaid and other entitlements; and changes to Social Security.”

The effort to reduce government spending may run into a big obstacle, though: the American people themselves. The GOP, naturally, believes that its huge gains in the mid-term elections and the rise of the Tea Party show that “the American people” are four-square behind the effort to slash spending. In that sense, they are very much like President Obama and the Democrats were after their huge win in the 2008 elections: they felt that the same “American people” gave them a mandate to reform health care and increase spending on a whole range of priorities. The Democrats later found that the mandate from the American people, especially on health reform, was a lot softer than they expected, with polls today showing that the public remains pretty much evenly divided between wanting to repeal the health reform law or keep or expand it.

The reality is that the American people are a confused and contradictory lot. They are all for cutting government spending - as long as it doesn’t reduce spending on the programs that they care about, which is just about everything. Just like they were all for health care reform, as long as they don’t have to pay any more for it or make major changes in how they get coverage.

Don’t take my word for it. A new public opinion survey from the well-respected Pew Research Center finds how conflicted the public is about cuts in government spending:

“Across a range of federal programs, Americans are no longer calling for increased spending, as they have for many years” the researchers report. “For the most part, however, there is not a great deal of support for cutting spending, though in a few cases support for reductions has grown noticeably. The survey also shows that the public is reluctant to cut spending -- or raise taxes -- to balance state budgets.”

Here’s more from the survey:

Only one in five Americans cited the deficit as their top economic concern. Even Republicans are split: about as many Republicans cite the job situation (39%) as the budget deficit (36%) as their chief economic concern.

And this: “the public’s taste for cuts in federal government spending on specific programs remains limited. More want to see spending increased than decreased on 15 of 18 issues tested. The only area where a plurality favors decreased spending is on economic assistance to needy people around the world; even here, just under half (45%) support spending cuts, while 21% say spending should be increased and 29% want to keep spending the same. In two other areas – military defense and assistance for the unemployed – the numbers favoring cutbacks are roughly equal to the numbers favoring increases.”

The public’s lack of appetite for cuts includes government spending on health care. 71% of Americans want the government to keep spending the same amount or more on health care, and only 24% want to decrease it. 83% want the government to increase spending on Medicare or keep it the same; only 12% want to reduce it.

The challenge, as I see it, is that neither the Republicans nor the Democrats have the mandate from the American people that they think they have. The GOP’s tea-party base wants to eviscerate much of what the federal government does, but that is not where the American people are, or even most Republicans. The Democrats may think that the public is on their side, but the Pew Research also shows that the public’s appetite for more spending is waning. “For 12 of the 13 issues where 2009 trends are available, either support for increased spending has fallen or support for spending cuts has grown (or both)” according to the Pew Center.

Public opinion notwithstanding, no serious economist disagrees that the United States needs to get a handle on its deficit spending and debt. The only real debate is how quickly, and what combination and degree of spending cuts (and in what areas) and tax increases (and to whom) will get us there. But until the Democrats or Republicans—or better yet, both parties together—are able to persuade “the American people” that things have to change, meaning that some will have to pay more to government and some will have to get less from it, the American people will remain a confused and contradictory lot. And politicians from both parties who claim a mandate to grow or shrink government will do so at their own peril.

Today’s questions: What do you make of the public’s seemingly conflicting views on increasing or reducing government spending? And what does this mean for the chances of getting bipartisan agreement (the only way it can happen) on deficit reduction?


Steve Lucas said...

Even Gov. Moon Beam understands that it is time to balance the budget. We all must grow up sometime. California, with one of the world’s biggest economies, now has to pay for past borrowing to support social programs. This will require cuts in programs as well as government salaries and pensions.

The existing health care statute, and proposed budget, has raised taxes without the full knowledge of the public.

Like California, we have to deal with our competitive position in the world and providing an unrealistic group of entitlements to the public.

Steve Lucas

ryanjo said...

Americans only appear confused when asked leading questions by political think tanks. In the voting booth they voted for "change" on 2008, and when they didn't get it, they voted in the Republicans and Tea Party in 2010.

I don't know where the conclusions in this blog post come from. The table in the Pew Report shows that in the past 2 years, the number of Americans wanting a decrease in spending increased in every category. And the largest change by far is the number wanting decreases in healthcare spending. So much for the future of the ACA (as has been stated by commenters on this blog many times). We have our own polls; people voice opinions to their doctors every day. The ACP, and this country's leaders, needs to listen instead of calling them "confused and contradictory".

Harrison said...

Our economy needs jobs. If our governments have to spend in order to stimulate job growth, then that would be a good thing. That would probably be a worthwhile investment.

When our banking system was in danger of collapse there was no push or argument made that we needed deficit reduction. Nobody said that we shouldn't spend a billions of dollars to bail out the banking industry and the investment banks. Citi and Bank of America have not been able to pay us back. AIG has not paid us back.

But when the administration bailed out GM and saved thousands of jobs nationwide, there was an uproar in the media about the 20 billion dollars that were needed -- all of which has been paid back.

Now we still need investments from the government to get people working but suddenly we interpret public opinion to be in favor of budget deficit reduction.

The headlines are being dominated by politicians who have won by inspiring fear and anger.

The health care debate is caught up in that too.

I'm pretty sure we will find our way out of it and again start being constructive, but it is gonna take time.
I think that the deficit crisis is overblown.
I think that it is important that we think through plans for controlling spending, and matching government revenues with expenditures, but that can mean taxes and spending reductions done in a sane way.
Health care is a big part of that. The ACA may not be the answer but it is a step toward a more constructive discussion if we allow it to be.


doc777 said...

It is not surprising that there are conflicting thoughts regarding the current economic woes this country is going through. It is simple human nature to reflexively think that the other guy should do with less. However, when explained in detail, most understand that the country is in deep trouble and accept that shared sacrifice is needed. Most agree that safety net programs are necessary to help those who have fallen on hard times, but the frustration many express is that these safety net programs have been expanded to a point that they can no longer be considered a safety net. Instead they have become a way of life for many individuals, and a very comfortable way of life at that.

I strongly disagree that new taxes need to be part of the equation, at least not initially. The government does not create wealth. It takes wealth. Then it spends this money on bloated inefficient programs. Can someone name even one government program that makes money? Even the U.S. Postal Service is running in the red. Other than our military, there is not one department or program that I can think of that does a better job than its private sector equivalent could do, and even the military is a bloated pig that needs to be put on a diet.

Most government agencies have had a greater than 20% increase in their budgets since 2008 levels, and some have increased by nearly 100% when stimulus dollars are included. The ARRA infused $800 billion into the economy yet we have not seen any returns on that investment. Sure the stock market is doing better, but that is simply because the private sector made the necessary cuts in their costs to avoid bankruptcy. However, unemployment remains high and growth is lagging far behind predicted. The bad news is that things are likely to get worse before they get better. One time stimulus dollars are now gone and states are being forced to lay off thousands of government employees to keep from going bankrupt. It’s time for the Keynesians to admit they don’t have a clue. Instead, they want to double down on the same failed strategy. As Ronald Reagan said, “Government is not the solution to our problem. Government is the problem.”

As for Medicare, it’s understandable that our elderly think it is unreasonable to make further cuts in that program. After all, they already were asked (actually forced) to give up $500 billion to fund a whole new entitlement program. And now the same organizations that supported that pillaging, use the elderly as pawns to attempt to fix the $250 billion SGR mess. If that does not make one feel all warm and fuzzy inside, maybe knowing that the 1 month SGR fix for December 2010 was funded by a 20% cut in reimbursement for certain outpatient physical therapy services, will. Further, the current 1 year fix uses more funny money from future ACA saving. What a pathetic mess.