It’s an old story by now: Americans aren’t feeling too positive about the federal government. A new National Journal poll reports approval ratings that would be laughable if they weren’t so grim, like the fact that only nine percent of Americans feel okay with Congress’s job performance, while a paltry one percent thinks the economy is in excellent shape.
But the poll also revealed something else: Many Americans blame the government for their personal financial problems, including how often they get raises and how easily they can get a loan. When asked for their opinion on how “the federal budget situation” affects their personal financial lives, 62 percent of respondents characterized it as “negative” or “somewhat negative.” Among those who saw the budget situation as negative, the top two reasons cited were “higher taxes” and “fewer opportunities for jobs or pay increase.”
For a few of these questions, people's views of how government affects their personal lives aren't exactly accurate, but that almost makes the poll more interesting in terms of what it says about the economy. Here are a couple of examples:
POLL QUESTION: In your opinion, did President Obama’s economic policies run up a record federal deficit while failing to significantly improve the economy?
When asked this question, 52 percent of respondents said yes. Most economists would say this isn't as simple as a yes or no question, though. Whether or not the president “significantly improved” the economy is subjective, but during his time in office, the deficit has actually been cut in half. Here’s Glenn Kessler at the Washington Post in September:
On Feb. 23, 2009, President Obama made this statement at the opening of a “fiscal responsibility” summit:
”This administration has inherited a $1.3 trillion deficit—the largest in our nation’s history—and our investments to rescue our economy will add to that deficit in the short term. … And that’s why today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.”
The benchmark would be $1.3 trillion, and half of that would be $650 billion.
For the 2013 fiscal year, CBO in May projected that the deficit would shrink to $642 billion, which is obviously a huge drop. That means Obama would meet his pledge four years and eight months after he took office.
Even though the deficit has been cut in half over the last two years, it is true that the deficit reached record levels during the Obama administration, especially during the peak of the financial crisis. Most economists agree that this helped the economy, though—stimulus spending offered much-needed relief to an ailing private sector.
POLL QUESTION: Which do you believe is the most likely impact of a large federal budget deficit and debt on your personal financial situation?
This one is a little trickier to stress-test. First, the question combines the federal budget deficit and the federal debt, which are related but distinct. The deficit is one year's gap between spending and revenue. The debt reflects how much money the government has borrowed to pay for all these deficits.
One-third of people fear they’ll face higher taxes. Congress has raised taxes on income over $450,000 and through Obamacare. But there are no plans to raise taxes on the vast majority of Americans. Right now, Congressional Republicans aren’t budging on further tax increases proposed by Democrats, and this impasse has been on of the main causes of the last seven failed budget negotiations.
The 12 percent of people who feared cuts to government programs are probably aware that certain programs have already been cut: At the end of last month, spending on the federal food-stamp program, the Supplemental Nutrition Assistance Program, got reduced by $5 billion.
The 26 percent who thought the debt and deficit result in fewer jobs and pay increases are making a case that some macroeconomists might not agree with. It’s not only possible for the economy to grow while the deficit gets bigger; government spending during recessions is often the only source of growth. Right now, annual deficits are falling, but the economy is growing.
As for the 17 percent of people who anticipated facing either higher interest rates or difficulty getting loans because of America's debt burden, their predictions might not come true for a while. Right now, interest rates are very low, and market analysts expect them to stay that way.
These details actually make the poll results even more fascinating in terms of what they mean for economic recovery, though: They show how uncertain people are feeling about government. As Sheila Bair, the former chair of the Federal Deposit Insurance Corporation, put it at a summit on the poll hosted by The Atlantic and National Journal on Friday, "Legal certainty, political certainty: Those are traditional the strengths of the developed economy, including the U.S. But we're not really focusing on them or growing a real economy."
Perceptions are powerful, and whether people’s views are grounded in facts or not, they still affect people's financial choices. Overwhelming perceptions of gridlock, partisanship, and ineffective governing in Washington likely shape how people see their personal financial lives, whether it's rational or not. In turn, these views help people make important economic choices, like how much money to spend or whether it’s hopeless to keep looking for a job.
As much as government policies might tangibly affect everyday people, the overall impression of incompetence lawmakers have left on Americans is just as powerful—and just as dangerous for the economy.