Economic highs, taxpayer anxieties

If economic conditions are so good, why do voters feel so bad? That’s the nettlesome question hounding public-opinion analysts and political practitioners alike. And while the answer is complicated, congressional action on spending and the budget deficit could solve one side of this Rubik’s Cube, and help voters feel more positive about the country’s economic future.

The U.S. economy is witnessing an impressive run, combining strong growth, low interest rates and vigorous job creation. The economy has added more than 4.7 million jobs since August 2003, while also seeing strong productivity gains. Real after-tax income per person has increased nearly 8 percent since 2001, and real household net worth has reached an all-time high. All the while, inflation remains in check. Yet despite these striking numbers, most voters still express deep and enduring pessimism about the current state of the economy.

The American Survey has tested a question gauging economic pessimism versus optimism, finding the negative view outpaces the positive by more than a 2-to-1 margin (see chart 1). As good economic news has continued to mount, these numbers have remained unchanged for the past seven months.

While economists may argue over the impact of deficits on the economy, there’s no doubt runaway spending and red ink in Washington raise voters’ collective blood pressure. Public polls last year began showing signs of public anxiety about fiscal restraint as news reports of outlays for the war in Iraq, hurricanes and “bridges to nowhere” multiplied. Voters begin with skeptical instincts about what happens inside the Beltway, believing only special interests feed at the public trough and lawmakers irresponsibly spend taxpayer dollars. Then, media coverage about “pork,” spending and lobbyists reinforces these negative views.

So it makes sense that improving public attitudes about congressional performance on spending might translate into more positive views about the economy’s prospects. Testing this theory in the latest American Survey (national sample of 800 registered voters, margin of error +/- 3.5 percent, conducted Jan. 17-22), we found a vast majority rate deficit spending as the main culprit in holding back the economy.

We asked voters to rank, on a seven-point scale, agreement with the following statement: “The main reason the economy is not growing as fast as some say it should is that Congress is spending more money than it takes in.” Sixty-seven percent either agreed or strongly agreed with that statement (see chart 2).

Taking it the next step, are those who believe the economy is not growing fast enough because of the deficit also more pessimistic about overall economic conditions? That answer is yes here as well (see chart 3).

Many factors color voter perceptions of the economy. Our data and others’, such as the most recent Pew poll (Jan. 4-8), demonstrate partisanship now colors economic thinking — Republicans view the economy more favorably than do Democrats. Yet progress on the budget deficit and a demonstration of fiscal responsibility by Congress would also improve voter attitudes about the economy. Lawmakers should keep this key to better economic perception in mind as they contemplate the next round of congressional budgeting.