Americans are getting increasingly nervous about the strain of Obama's projected trillion-dollar deficits. Yesterday's poll numbers from the New York Times and Wall Street Journal are crystal clear: With unemployment still climbing, 58 percent of the public wants Obama to focus on deficit-reduction even if it means a longer recession. We are all Herbert Hoover now?
As Atlantic Biz alum Conor Clarke pointed out, this kind of wallet-tightening is a little bizarre, and maybe even hypocritical. Americans overwhelmingly supported the nearly $800 billion stimulus plan in January, and according to some polls, the majority of the public still supports it. The message, in other words, is: Stop spending money...and keep that money flowing! We're spoon-feeding the government with one hand and tsk-tsking them with the other.
Paul Krugman goes a step further, saying that history is literally repeating itself. He points to a series of polls from the mid-1930s when the economy was fianlly recovering and Americans decided that Keynesianism had run its course and it was time for FDR to focus on deficit-reduction.
Gallup Poll [December, 1935]
Do you think it necessary at this time to balance the budget and start reducing the national debt?
Gallup Poll [May, 1936]
Are the acts of the present Administration helping or hindering recovery?
Gallup Poll (AIPO) [November, 1936]
DO YOU THINK IT NECESSARY FOR THE NEW ADMINISTRATION TO BALANCE THE BUDGET?65% YES
7 NO ANSWER
Why is that eerie? Because of what happened one year after the last poll. Unemployment in 1937 freakishly jumped from under 15 percent to 19 percent. The cause, most economists conclude, was tightened fiscal and monetary policy, at the behest of both FDR's advisers and constituents. Indeed, the Balance Budget Amendment was proposed, inauspiciously, in 1936.
Krugman's observation is not, I think, an ironclad argument against deficit-reduction. Trillion-dollar deficits as far as the eye can see are not sustainable, and I don't think you'll find anybody who disagrees. But the mid-30s polls provide an important historical gut-check to the instinct to pull back on the reins too quickly.