According to a new Bloomberg poll, six in ten Americans think most of the money spent to rescue banks will be lost forever. Six in ten think the economy shrunk over the past year. One in two think federal income taxes have gone up in the past two years.
Wrong. Wrong. And wrong.
In fact, most of the $245 billion TARP money spent on banks will be recovered, and the program expects to turn a small profit, according to the latest report (Treasury Sec. Tim Geithner: "The direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion.") The economy has been growing, steadily if slowly, since the summer of 2009. The Obama administration has cut taxes by more than $240 billion in the last two years, including rebate checks worth up to $800 for almost all families.
So why do two in three Americans not know this? Here are five potential culprits for American misconceptions about the economy:
1) Blame Democrats
Pollster Ann Selzer said: "The public view of the economy is at odds with the facts, and the blame has to go to the Democrats. It does not matter much if you make change, if you do not communicate change." This is a limited explanation. The idea that Democrats' communication determines the public's views on the economy assumes that everybody is sitting around listening to Democrats' press releases and speeches and sound bites. To be sure, some people are. But many Americans couldn't tell you the last time they listened meaningfully to a presidential address or gave a hoot about Harry Reid's views on Making Work Pay. It's important to communicate your achievements, but Democratic "messaging" alone isn't responsible for a nationwide 2-1 misconception of economic realities.
2) Blame the Conservatives
Public anger over the bank bailout, the rising deficit, and the apparent inability of government to turn around the economy created a power vacuum into which conservative anger rushed. The confluence of the Tea Parties, Fox News personalities, and Republican obstructionism has certainly contributed to the perception that government spending is out of control, that taxes are too damn high, and that the idea of America is caught in a downward spiral. It's reasonable to assume that a rabidly anti-bailout, anti-tax and anti-administration movement would sour Americans' negative feelings about, respectively, the bailout, taxes and the direction of the economy.
3) Blame the Media
The role of the media is to inform. So the media bears responsibility for this triumph of misinformation. But the problem with blaming "the media" is that "the media" isn't unified enough to blame. Some will ding Glenn Beck for comparing a tax-cutting administration to Nazi government takeover, and they will have a good case. Others can blame more conscientiously objective news outlets for failing to adequately communicate basic facts about the economy: Taxes were cut; the bank bailouts will turn a profit; the economy is growing. But at the same time, many news organization have done a good job of explaining those facts, over and over again.
4) Blame the Economy
Americans might be wrong, wrong, wrong, about the economy ... but does it really matter, considering how rotten the economy is? Economic production is still in a hole. Maybe effective tax rates have gone up on families who lost their home and their mortgage interest deduction. Maybe families lost a breadwinner and feel a harsher pinch from federal taxes. With one in six Americans broadly unemployed and home values crushed, perhaps it's silly to blame Americans for missing the statistical silver linings of a gloomy economy.
5) Blame People
Here's a simple culprit: us. The civic responsibility to know basic stuff about the economy ultimately falls on citizens. It might feel like the banks are still living with our tax money, or that taxes have increased or will soon, or that the economy hasn't grown in forever. But that doesn't make it right.
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