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Polls And The Public: What To Do When The Public Is Wrong

There’s been a fair amount of consistency in national polls in recent months. Americans like higher taxes for the wealthy, dislike radical changes to Medicare, and don’t want the debt ceiling to be raised.

Despite Obama administration warnings that failing to do so would devastate the economy, a clear majority of Americans say they oppose raising the debt limit, a new CBS News/New York Times poll shows.

Just 27 percent of Americans support raising the debt limit, while 63 percent oppose raising it.

Eighty-three percent of Republicans oppose raising the limit, along with 64 percent of independents and 48 percent of Democrats. Support for raising the debt limit is just 36 percent among Democrats, and only 14 percent among Republicans.

Seven in ten who oppose raising the debt limit stand by that position even if it means that interest rates will go up.

These results were published yesterday, but they’re practically the same as related polling data in other surveys dating back quite a while.

Here’s the uncomfortable truth: policymakers simply must ignore them. The public has no meaningful understanding of what the debt ceiling is, what happens if interest rates go up, or the global economic consequences of a potential default. It’s quite likely Americans perceive the question as a poll on whether or not they want a higher debt.

This is one of those classic dynamics in which responsible policymakers realize that they know more about the subject matter than the public at large, so they have to do the right thing, even if the uninformed find it distasteful — knowing that the disaster that would follow would be far more unpopular.

Put it this way: what if the poll had asked, “Would you rather raise the debt ceiling or risk a global economic catastrophe and massive cuts to Social Security and Medicare?” The results, I suspect, might have turned out differently.

Or maybe not. Either way, it doesn’t matter. The public is wrong, and Americans need sensible leaders to do the right thing, even if they’re confused about what that is.

Now, I can hear some of you talking to your monitor. “Oh yeah, smart guy?” you’re saying. “The polls also show Americans hate the Republican budget plan. If the public’s confusion on the debt limit should be ignored, maybe the public’s attitudes on eliminating Medicare and gutting Medicaid should be disregarded, too.”

Nice try, but no. Here’s the thing: folks know what Medicare and Medicaid are. They have family members who benefit from these programs, or they benefit from the programs themselves. It’s not an abstraction — these are pillars of modern American life, and institutions millions of come to rely on as part of a safety net.

The point is, polls only have value if the electorate understands what they’re being asked. The debt ceiling is a phrase the public has barely heard, and doesn’t understand at all. That doesn’t apply to Medicare in the slightest.

By: Steve Benen, Washington Monthly, Political Animal, April 22, 2011

April 22, 2011 Posted by | Debt Ceiling, Democrats, Economy, Elections, GOP, Independents, Lawmakers, Medicaid, Medicare, Politics, President Obama, Public, Public Opinion, Republicans, Social Security, Voters | , , , , , , , , | Leave a comment

Standard And Poor’s Attempt To Influence The Political Debate

In what appears to be an attempt to influence the political debate in Washington over federal government deficits, Standards & Poor’s rating firm downgraded U.S. debt to negative from stable. Yes, the raters who blessed virtually every toxic waste subprime security they saw with AAA ratings now see problems with sovereign government debt.

The best thing to do is to ignore the raters — as markets usually do when sovereign debt gets downgraded — but this time stock indexes fell, probably because of the uncertain prospects concerning government budgeting. After all, we barely avoided a government shutdown earlier this month, and with S&P. joining the fray who knows whether the government will continue to pay its bills?

Mind you, this has nothing to do with economics, government solvency or involuntary default. A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.
Similarly Chairman Alan Greenspan said that Social Security can never go broke because government can meet all its obligations by “creating money.”

Instead, sovereign government spending is constrained by budgeting procedure and by Congressionally imposed debt limits. In other words, by self-imposed constraints rather than by market constraints.

Government needs to be concerned about pressures on inflation and the exchange rate should its spending become excessive. And it should avoid “crowding out” private initiative by moving too many resources to our public sector. However, with high unemployment and idle plant and equipment, no one can reasonably argue that these dangers are imminent.

Strangely enough, the ratings agencies recognized long ago that sovereign currency-issuing governments do not really face solvency constraints. A decade ago Moody’s downgraded Japan to Aaa3, generating a sharp reaction from the government. The raters back-tracked and said they were not rating ability to pay, but rather the prospects for inflation and currency depreciation. After 10 more years of running deficits, Japan’s debt-to-gross-domestic-product ratio is 200 percent, it borrows at nearly zero interest rates, it makes every payment that comes due, its yen remains strong and deflation reigns.

While I certainly hope we do not repeat Japan’s economic experience of the past two decades, I think the impact of downgrades by raters of U.S. sovereign debt will have a similar impact here: zip.

By: L. Randall Wray, The New York Times, April 18, 2011

April 19, 2011 Posted by | Bankruptcy, Banks, Congress, Debt Ceiling, Debt Crisis, Deficits, Economic Recovery, Economy, Federal Budget, Financial Institutions, Financial Reform, Government, Government Shut Down, Ideology, Politics, Social Security, Standard and Poor's | , , , , , , , , , , , | Leave a comment

Standard And Poor’s Is The Broker Who Lost All Your Money: There Is No Real Risk Of Default

What does Standard & Poor’s action lowering the U.S. outlook to “negative” mean? What are the likely ramifications of the U.S. deficit and debt? I do not want to conflate two completely different issues, so let’s take each in turn.

First, I have stopped paying any attention to anything that S&P says or does. Its performance over the past decade has revealed it to be incompetent and corrupt – it sold its AAA ratings to the highest bidder. It is the broker who lost all your money, the girlfriend who cheated on you, the partner who stole from you. Since the portfolios we run never rely on its judgment or analysis, we simply do not care what it says about credit ratings.

But big bond managers like Bill Gross of Pimco do matter – he invests hundreds of billions of dollars. We pay close attention when smart managers like him announce they are out of the Treasury market, which he did last month.

Many people misunderstand the U.S. deficit. First, it is stimulative to both the economy and the markets. Look at what happened under Reagan and Obama and most of Bush II – the economy recovered from recession and the markets rose along with the deficit.

Second, Social Security is fine. Sure, the retirement age will go higher, there will be means testing, and the income cutoff for contributions ($106,000) will likely double. But it will remain solvent. Medicare is much trickier, as the United States pays two times what most countries pay for health care but gets lesser care.

The current debate about deficits looks like more politics. Look at the voting records of those posturing about the debt. The “deficit peacocks” voted for new entitlements (the prescription drug benefit — Medicare Part D), went along with a trillion-dollar war of choice in Iraq, and supported (for the first time in U.S. history) a major tax cut during wartime. I find it hard to take their deficit noise as a bona fide fiscal concern.

After Standard & Poor’s missed the greatest collapse in history – indeed, they helped create it by rating junk mortgage backed securities Triple AAA – they are now over-compensating. As I mentioned on The Big Picture, there is an old Wall Street joke about analysts: “You don’t need them in a Bull Market, and you don’t want them in a Bear Market.” That especially seems apt with regard to S&P.

The deficit has been with us for a long time. Since investors are continuing to lend money to Uncle Sam at exceedingly low rates, there does not appear to be any real fear of a default. That is what matters most to bond buyers — and it’s why I never care what S&P thinks on this.

By: Barry Ritholtz, The New York Times, April 18, 2011

April 19, 2011 Posted by | Congress, Consumers, Debt Ceiling, Debt Crisis, Economic Recovery, Economy, Federal Budget, Financial Institutions, Financial Reform, Government, Government Shut Down, Lawmakers, Medicare, Politics, Social Security, Standard and Poor's, Wall Street | , , , , , , , , , , | Leave a comment

The Selfish Budget Or The Selfless Budget

It was refreshing to hear all those unambiguous declarations from President Obama on Wednesday. “I will not” let Medicare become a voucher program or deprive families with disabled children of needed benefits. “We will” reform government health-care programs without disavowing the social compact. “I refuse” to sign another renewal of the Bush tax cuts for millionaires. Republicans “want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. . . . And it’s not going to happen as long as I’m president.”

Okay, there weren’t any lines with the simple heat of “Mr. Gorbachev, tear down this wall” or the terse power of “Make my day.” But Obama’s budget manifesto represented a significant warming of his usually cool rhetoric. He said he wanted to find common ground but instead devoted much of the speech to drawing lines in the sand.

And thank goodness. If ever there were a time when lines desperately needed to be drawn, it’s now.

Before we get carried away with praise, let’s remember that even as he gets in touch with his Old Testament side, Obama is playing defense. Republicans have already forced him to accept budget cuts that he abhors, and it’s a given that more slashing and burning will follow. Obama noted the questionableness of choking off government spending at a time when the economy is struggling for altitude. Yet he proposes doing just that — which means his GOP opponents are setting the agenda.

Let’s also remember that those tax cuts for the rich were as unjust, outrageous and totally unacceptable last fall as they are today. Which many commentators noted (ahem). Before someone caved to Republican demands and signed legislation extending the millionaires’ tax break for two more years. That someone being Obama.

The president glossed over this inconvenient history. What he managed to do admirably, however, was distinguish between his vision of America and the one sketched by Rep. Paul Ryan (R-Wis.) on behalf of House Republicans. It was, as Obama’s critics charge, a political speech — and rightly so. The questions at the heart of the battle over spending and entitlements are, after all, fundamentally political.

It’s not just a matter of drawing a graph in which the line called “expenditures” meets the line called “revenue.” The question is how this intersection is made to occur. Ryan’s plan and Obama’s plan both reduce the deficit by about $4 trillion over the next decade, but they do so in starkly different ways.

Perhaps the clearest example of the difference is how the two plans would handle Medicare and Medicaid, the chief drivers of the deficit. Obama wants to maintain both programs as entitlements. He believes, as I do, that we have a collective interest in ensuring that the elderly and the poor receive the health care they need and deserve. He sees this as a matter not just of compassion but of common sense: We’ve already fallen behind other industrialized democracies in major health indicators, including life expectancy, and we certainly won’t “win the future” by becoming an unhealthier nation.

Republicans apparently believe it’s enough to ensure that state-of-the-art medical care is available to those who can afford to pay for it. Under Ryan’s plan, Medicare and Medicaid could no longer be described as true federal entitlements. This is no exaggeration, because under neither program would adequate health care be guaranteed. Seniors and the poor would, increasingly, have to fend for themselves.

The Republican plan would turn Medicare into a voucher program that subsidizes the purchase of private health insurance. So what if an individual’s insurance premiums are not covered by the voucher? So what if health costs, and premiums, continue to skyrocket? The free market will surely take care of all that, somehow or other.

On Medicaid, Republicans want to shift the burden to the states, giving them block grants and essentially telling them to take care of the indigent however they choose. Some states would be diligent in providing adequate medical care. Some would not.

Is this the kind of America we want? How selfish are we, really? How selfless? To what extent does this churchgoing nation take the biblical instruction to “love thy neighbor” seriously?

These are the kinds of basic choices we face. There are two plans on the table now. Only one of them — Obama’s — appeals to the better angels of our nature.

By: Eugene Robinson, Opinion Writer, The Washington Post, April 14, 2011

April 16, 2011 Posted by | Affordable Care Act, Congress, Conservatives, Deficits, Democrats, Economy, Federal Budget, GOP, Governors, Health Reform, Lawmakers, Medicaid, Medicare, Politics, President Obama, Rep Paul Ryan, Republicans, Social Security, States, Wealthy | , , , , , , , | Leave a comment

A Vision Of Optimism And Equal Opportunity: What It Means To Be A Democrat

I’m glad I waited for President Obama’s heralded budget speech Wednesday before criticizing it (such a novel idea); there was much to praise in it and little to challenge. The best news: Obama laid out the kind of sweeping “story” of American democracy, and the bold vision of how we grow together, that I thought was too much to ask for even yesterday. He even talked about the scariest fact of American inequality: The dangerous hold the top 1 percent of Americans has on wealth, income and (he didn’t say this) politics. He pushed back on the cruel GOP deficit plan, made his toughest case yet for tax hikes on the richest, and stayed away from the worst ideas floated by his own deficit commission. The devil will be in the deficit-cutting details, and frankly, there weren’t a whole lot of them in the speech. But the president came out fighting with firmness, and with a rhetoric of social justice and equality, that I haven’t seen enough of these last two years.

Obama acknowledged our American history as “rugged individualists, a self-reliant people with a healthy skepticism of too much government.” But he quickly identified “another thread running throughout our history”:

A belief that we are all connected; and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican president, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves. And so we’ve built a strong military to keep us secure, and public schools and universities to educate our citizens. We’ve laid down railroads and highways to facilitate travel and commerce. We’ve supported the work of scientists and researchers whose discoveries have saved lives, unleashed repeated technological revolutions, and led to countless new jobs and entire industries. Each of us has benefited from these investments, and we are a more prosperous country as a result.

Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. “There but for the grace of God go I,” we say to ourselves, and so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, and those with disabilities. We are a better country because of these commitments. I’ll go further – we would not be a great country without those commitments.

So far, so good. It got even better when Obama took direct aim at Paul Ryan’s cruel and ludicrous budget plan. He laid out its many cuts, and concluded:

These are the kind of cuts that tell us we can’t afford the America we believe in. And they paint a vision of our future that’s deeply pessimistic. It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them. Go to China and you’ll see businesses opening research labs and solar facilities. South Korean children are outpacing our kids in math and science. Brazil is investing billions in new infrastructure and can run half their cars not on high-priced gasoline, but biofuels. And yet, we are presented with a vision that says the United States of America – the greatest nation on Earth – can’t afford any of this.

Then he attacked the Gilded Age social inequality and tax cuts that have helped create our troubles:

Think about it. In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes? They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.

Indulge me here, because this is how Democrats should be talking, and rarely do:

The America I know is generous and compassionate; a land of opportunity and optimism. We take responsibility for ourselves and each other; for the country we want and the future we share. We are the nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the GI bill and saved millions of seniors from poverty with Social Security and Medicare. We have led the world in scientific research and technological breakthroughs that have transformed millions of lives.

This is who we are. This is the America I know. We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t.

That’s the president I voted for.

On the meat of the president’s plan to cut the deficit: He deserves credit for rejecting Medicare vouchers, for turning aside specific talk about Social Security (even though it has nothing to do with the federal deficit, the privatizers and Obama’s friends on his deficit commission wanted it thrown on the table in a grand bargain that can only be bad news for Democrats and working people; Obama seemed not to be willing to do that); for promising that reforms and innovations already part of the Affordable Care Act will bring down the costs of Medicare and Medicaid; and for saying we need bigger defense cuts than so far proposed.

(Small point: I liked the way Obama trashed Ryan without mentioning him — you don’t fight down — but I wish he’d been a tiny bit more confrontational on exactly what Ryan’s “Medicare vouchers” would do; if seniors could afford insurance at all, which is debatable, they’d certainly be at the mercy of privatized “death panels” refusing care over its costs. I say that because I’m sure some GOP prevaricator will bring back the “death panel” lie now that Obama has committed to curbing costs in Medicare. I hope I’m wrong.)

My quibbles? I’m still concerned that Obama has agreed to freeze the 12 percent of the budget that goes to “discretionary spending.” And I’m assuming that freeze includes the cuts made this week. I don’t like his promise of $3 in spending cuts for every dollar raised in revenue via tax hikes. In a statement, AFL-CIO president Richard Trumka praised the speech but added: “President Obama does not yet have the balance right between spending cuts and new revenue.” I also never like it when Obama undermines himself by saying things like:

I don’t expect the details in any final agreement to look exactly like the approach I laid out today. I’m eager to hear other ideas from all ends of the political spectrum.

I know, I know, he thinks it makes him sound reasonable to independents; I worry he sounds weak to Republicans. If Obama thinks the plan he laid out is as far to the left as Ryan’s plan is to the right, and that the answer is to meet in the glorious middle, we’re all in trouble.

But for today, I’ll take him at his word. After the speech, pundits called it the opening salvo of the Obama 2012 reelection campaign, as though there was something wrong with that. If these are the founding principles of the president’s 2012 campaign, Democrats and the country will be better off than we’ve been in a while. 

By: Joan Walsh, Editor at Large, Salon, April 13, 2011

April 14, 2011 Posted by | Class Warfare, Congress, Conservatives, Democracy, Democrats, Economic Recovery, Economy, Elections, Federal Budget, GOP, Government, Ideologues, Ideology, Income Gap, Independents, Jobs, Medicaid, Medicare, Middle Class, Politics, President Obama, Republicans, Social Security, Voters, Wealthy | , , , , , , , | Leave a comment