I don’t understand my fellow US citizens. Many commenters will note that they told me that I didn’t since I don’t live in the USA, but I didn’t when I lived there.
After the jump I try and fail to make sense of the latest NBC/WSJ poll.
The nickel summary is that I thought that Obama should propose stimulus based on tax cuts not spending increases, because spending won’t be increased, high spending is unpopular, and there is no point paying a political price for a proposal which congress will reject anyway. Then the people say they want more spending (and lower deficits).
OK so look at Q34 what should the jobs proposal include.
The second most popular option (after the Georgia like program of subsidize hiring of long term unemployed for 8 weeks) is infrastructure spending with a 47% saying its a good idea and only 26% saying its a bad idea. Continuing to cut the payroll tax rate gets 40 vs 20. Yes only 40 % of US adults think it is a good idea to cut their taxes !?!
Strange. But what is much stranger is comparing Q34 in which a huge majority support hiring subsidies and a plurality support all the other deficit increasing proposals and responses to Q28
Which of the following two statements comes closer to your point of view? (ROTATE STATEMENTS)
Statement A: The president and the Congress should worry more about boosting the economy even though it may mean larger budget deficits now and in the future.
Statement B: The president and the Congress should worry more about keeping the budget deficit down, even though it may mean it will take longer for the economy to recover.
Now the question does suggest that stimulus increases budget deficits — this is only true if the balanced budget multiplier is zero which no one but Robert Lucas asserts (one of the few ways to fail my intro macro course is to assert that one can stimulate with spending increases or tax cuts but not with spending increases financed by tax increases). It also adds “in the future,” which is true only if one assumes that spending is increased not just pulled forward (accelerating maintanance which will be needed sooner or later) or that there is no long lasting effect of unemployment on the unemployed (hysteresis). That’s an “or” but the first is a simple point and everyone believes in hysteresis (even if very few know what the word means). But on the other hand, the question asserts (correctly but controversially) that austerity will slow recovery.
Why do people hate deficits so much ? They do even if they are told that deficits are good for the economy (which they are only during the rare periods when the economy is in a liquidity trap). Why do they advocate focusing on the deficit and policies designed to increase the deficit ?
Before going on, there is no majority American. Most people gave consistent answers but enough flipped to change a solid majority for austerity into a plurality for every kind of stimulus under consideration. What might they be thinking ?
I think part of what is going on is that Government spending is unpopular in the abstract but popular in the concrete (and asphalt) . One way to reconcile the answers of those who flipped is that they want to cut foreign aid by 20% of the Federal budget and increase infrastructure spending by 5% of the Federal budget. It is hard to understand the policy proposals of people who don’t know what current policy is (foreign aid is about 0.7% of the budget).
Another is that they really really want to soak the rich — to stimulate without adding to the deficit by paying for it with higher taxes on the rich. Then if told this won’t happen (it won’t) they don’t want stimulus at all. I think the best policy would be to stimulate a lot and soak the rich, so I hope I have company (although I think that deficit financed stimulus is almost as good). But I doubt it.
Also the voters blame Republicans yet generic Republican is ahead of Obama and the Republicans are ahead on the generic congressional ballot. It is just weird.
But again, the penny summary is that I was totally wrong about the most politically effective jobs speech. Obama should call for infrastructure spending. He was right and I was wrong (he has more pollsters than I do).