Election Day memo: economics above politics

November 3, 2010

To:             Interested Parties
From:       Gretchen Hamel, Executive Director, Public Notice
Date:        November 3, 2010
Re:            Last night’s Election Outcome: ECONOMICS ABOVE POLITICS

According to the most recent count, the GOP has gained control of the House and gained seats in the Senate. A remarkable victory, yes, but it shouldn’t be viewed as the public holding one party in higher regard than the other. This election was about the state of the economy, jobs, and government overspending – not party devotion. You cannot deny this perspective when the House Budget Chairman, who sets the annual spending plan, lost his re-election bid.

The turbulence in the political environment over the last several election cycles shows voters are anxiously searching for elected officials — regardless of political affiliation — who understand the consequences of government overspending and will respond to economic uncertainty by governing and budgeting responsibly. They’re looking for leaders who will restore economic certainty and fiscal sanity.

An Issues Election:

Government spending and the debt have always been concerns for voters. Rarely, though, has this issue floated to the top the way it did this year. A week before the election, The New York Times wrote Election 2010 “turned heavily on the issue of the mounting federal debt…” The paper was right: Americans are more knowledgeable – and more concerned – about the explosion in government spending and debt than at any other time in recent history.

Why are they more concerned? Because voters understand that over the last ten years, increases in government spending (62 percent, adjusted for inflation) haven’t improved their or their children’s economic well-being. The driving forces behind this election are very personal to voters: the economy and jobs. Polls reflect this:

Newsweek: when asked to name the most important economic or fiscal issue facing the country, 41% of registered voters said the economy in general. Unemployment and federal spending/deficit tied for 24%, and taxes were fourth with 9%.

Associated Press: only 45% of likely voters think increasing government spending for things such as education, health care, and alternative energy research should be a higher priority than cutting spending; 50% think cutting spending should be a higher priority. Also, according to the Associated Press, 80% of adults are very worried the federal debt will harm their children’s and grandchildren’s financial futures.

Rasmussen: 70% of adults say the government doesn’t spend taxpayer money wisely and fairly. Only 16% believe the government is spending money wisely and fairly.

USA Today/Gallup: “Americans are having a crisis of confidence in their government.”  Only one-quarter of Americans are satisfied with the way government works; six in ten believe the government is simply too big.  More can be found here.

Bloomberg: 49% of adults think jobs and the economy are the top issues facing Congress. 27% say the budget deficit and government spending are the top issues, and only 10% say health care. Also according to Bloomberg, 55% of adults say the budget deficit is out of control and threatens the nation’s economic future. Only 38% say it is manageable.

Newsweek: 68% of adults say government spending and the budget deficit are one of the main reasons they are unsatisfied with the current direction of the country. Only “economic conditions in general,” at 75%, received a higher total.

A Win By Default:

The GOP should not take the outcome of Election 2010 as a vote of confidence for their ability to govern. The week before the election, Congressman John Boehner (R-OH) admitted neither party had yet tried cutting government spending. Polls show voters were aware of the GOP’s past overspending and, as a result, were skeptical of them:

Voters didn’t think Republicans would do a better job: According to a Pew poll released last week, 32% of registered voters said it would be better for the country if Republicans were in control; 32% said Democrats; and 30% said it makes no difference.

Voters didn’t trust Republicans more than Democrats: According to a Newsweek poll released last week, 41% of registered voters approved of Democrats in Congress, but only 31% approved of Republicans.  Voters were divided on which party they thought would better handle the economy and budget deficit.

Voters feared Republicans almost as much as Democrats: According to last week’s Politico/George Washington University poll, 43% of registered voters were most worried about Republicans taking control and going back to their old policies. Just slightly more (48%), were most worried about Democrats having control for two more years.  Also, only 24% said they intended their vote to be viewed as a vote in favor of Republicans taking control.

Voters didn’t think either party reflected their values: According to a Rasmussen poll released eight days before the election, a plurality (43%) of likely voters believed neither Democrats nor Republicans in Congress “are the party of the American people.”

Anecdotes from voters themselves also reflect this skepticism about Republicans:

William T. Jones, a voter in Missouri, explained his vote for Senator-elect Roy Blunt (R): “I don’t know if Blunt’s a leader, a take-charge kind of a guy, a guy who’s going to go in there and fight.  I think he’s more of a get along, compromise type … I’m not too excited…”

Trace Oliver from OH said he blamed both parties for what’s wrong in the country, but would vote for Republicans: “We need to throw out the House and Senate,” he says, replacing incumbents with “real people that want to quit being foolish and do the right thing.”

A Call To Restore Fiscal Sanity and the Economy:

The 2010 Election was about an electorate that was fed up with America’s economic weakness. The electorate feels Congress is bankrupting America, not just economically, but emotionally.

Voters very much believe the fiscal distress the country is experiencing would, at best, lead to a less prosperous future for their children and grandchildren, and at worst, lead to a permanent degradation of America’s financial well-being. Niall Ferguson, a Harvard historian and expert on financial history, recently wrote that debt can undo great powers. Ferguson said, “Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.”

Americans set a clear mandate for fiscal sanity last night. The question is, will the leaders elected Tuesday respond to the call?

Tags:, , , , , ,

3 Responses to Election Day memo: economics above politics

  1. Fred Strauss says:

    Concern about the federal debt is understandable. My own sense is that people are concerned about their own pocketbooks and whether they will have a job. Over the past two years or so the purpose of the large government spending by BOTH the former Bush administration and the Obama administration was to control the damage done by the bank and financial crisis. More recently, government spending has been attempted to stimulate the economic by buying goods and services that are not yet being bought in the private sector.

    There is nothing that new about this and it is a well known approach that is familiar to anyone who has formally or informally learned what is called macroeconomics.

    If there is insufficient demand by consumers or in the private sector to get businesses to hire additional employees, then balanced government budgets will not be that helpful to lower the unemployment rate. In short, without fiscal stimulus, regardless of which party is in office or which wing of either party is influential, we can expect continued economic stagnation and high unemployment.

  2. Fred Strauss says:

    Concern about the federal debt is understandable. My own sense is that people are concerned about their own pocketbooks and whether they will have a job. Over the past two years or so the purpose of the large government spending by BOTH the former Bush administration and the Obama administration was to control the damage done by the bank and financial crisis. More recently, government spending has been attempted to stimulate the economic by buying goods and services that are not yet being bought in the private sector.

    There is nothing that new about this and it is a well known approach that is familiar to anyone who has formally or informally learned what is called macroeconomics.

    If there is insufficient demand by consumers or in the private sector to get businesses to hire additional employees, then balanced government budgets will not be that helpful to lower the unemployment rate. In short, without fiscal stimulus, regardless of which party is in office or which wing of either party is influential, we can expect continued economic stagnation and high unemployment.

  3. Fred Strauss says:

    Concern about the federal debt is understandable. My own sense is that people are concerned about their own pocketbooks and whether they will have a job. Over the past two years or so the purpose of the large government spending by BOTH the former Bush administration and the Obama administration was to control the damage done by the bank and financial crisis. More recently, government spending has been attempted to stimulate the economic by buying goods and services that are not yet being bought in the private sector.

    There is nothing that new about this and it is a well known approach that is familiar to anyone who has formally or informally learned what is called macroeconomics.

    If there is insufficient demand by consumers or in the private sector to get businesses to hire additional employees, then balanced government budgets will not be that helpful to lower the unemployment rate. In short, without fiscal stimulus, regardless of which party is in office or which wing of either party is influential, we can expect continued economic stagnation and high unemployment.

Leave a Reply

Your email address will not be published. Required fields are marked *