March 14, 2006

Do Deficits Matter Anymore? Apparently Not to the Public

by Carroll Doherty

Budget season is about to get underway on Capitol Hill, with President Bush and members of Congress searching for ways to reduce the nation’s estimated $423 billion deficit. Measured against the size of the economy, that projected shortfall is not record-setting, but coming as it does after a four year period in which deficits added nearly $1.3 trillion to the public debt, its magnitude is of some concern to lawmakers. But there is considerably less urgency associated with this issue than in the 1990s, when runaway deficits dominated the political agenda. And in this regard lawmakers are only reflecting the sentiments of their constituents.

FigureMost Americans do regard deficit reduction as a worthwhile goal – 55% rated it as a “top priority” in Pew’s annual policy agenda survey in January. But the deficit simply does not have the same resonance that it did through much of the 1990s (before the budget was actually balanced, albeit briefly). At that time the budget deficit was then viewed as something of a national crisis; not only did significantly higher percentages rate reducing the deficit as a top policy priority (65% in 1994), but the deficit frequently ranked at or near the top of the public’s volunteered list of national problems. And in many ways, out-of-control deficits came to symbolize everything that was wrong at the time with Washington and the federal government.

In 1992, political maverick Ross Perot transformed the deficit into a pivotal issue in the presidential campaign – something never done before or since. In the final week of that campaign, fully 40% of voters said reducing the federal budget deficit should be the most important thing for the next president to accomplish – significantly more than the number who cited reducing unemployment (31%) or controlling health care costs (14%). And this was at a time when the unemployment rate stood at about 7%.

Shortly after President Clinton took office, as many Americans named the budget deficit as the nation’s most important problem as cited the economy or unemployment. But today, the budget deficit is barely an asterisk on the public’s list of most important national problems. In January, the war in Iraq was regarded as the biggest problem facing the nation (cited by 23%), followed by the economy (11%). Just 2% of Americans pointed to the budget deficit as the country’s most important problem, a number that has remained stable throughout Bush’s presidency.

Why has the budget deficit receded so far in the public’s consciousness? Several factors contribute to the lack of public alarm over the deficit:

Post-9/11 Demands. In fewer than five years, the nation has endured a devastating terrorist attack, a long and costly war, and one of the worst natural disasters in its history. In the face of such tragedies, the public has overwhelmingly supported massive new government spending for a variety of purposes, giving little consideration – if any – to its impact on the deficit. For instance, shortly after Hurricane Katrina devastated the Gulf Coast, 51% of Americans said their biggest concern about the government’s hurricane relief effort was that the aid would not go to those who needed it; just 6% were concerned it would add too much to the deficit.

Political Vacuum. During the mid-1990s, the Republican Party campaigned on reducing the budget deficit, while Democrats approached the issue somewhat defensively. Now, the tables have turned, at least to some extent. In Pew’s January survey, 62% of Democrats, and 56% of independents, rated reducing the budget deficit as a top priority for the president and Congress, compared with just 45% of Republicans. Even among Democrats, however, slicing the deficit is a second-tier objective, ranking behind improving education, protecting the environment, regulating HMO’s, and other policy goals. Among Democrats, reducing the deficit ranked 12th out of 22 policy goals listed. Among independents and Republicans it ranked even lower (13th for independents and 14th for Republicans).

FigureNo Mood for Sacrifice. Even when the deficit was viewed as a major national crisis, the public showed little appetite for budget austerity. However, in the aftermath of the Cold War, the public was willing to accept substantial reductions in the defense budget. Now, with the nation at war in Iraq and facing the threat of terrorism, that is no longer the case. In October none of three major options for trimming the budget deficit – cutting domestic spending, reducing defense spending, or raising taxes – drew majority support.

Kinder, Gentler View of Government. While the federal government is currently held in fairly low regard, there is nothing like the bitter anti-government sentiment that prevailed in the early and mid-1990s. In that heated atmosphere, Perot’s attacks on the budget deficit 1992, and the GOP’s in 1994, galvanized the public. In July 1994, 66% of Americans agreed with this statement — “Government is almost always wasteful and inefficient.” A decade later, that figure had dropped to 47%. Hostility toward the government among Republicans in particular, which reached a fever pitch in the mid-1990s, cooled considerably once the GOP gained control of the White House and Congress.

Leadership Lacking. Finally, no major contemporary political figure has seized on the deficit as a political issue, as Perot did in the 1990s. His brief, quirky political career is recalled for his devotion to just two issues – the budget deficit and trade deficit – which both have fallen in importance since he left politics. And absent the emergence of that type of political leadership, the deficit is unlikely to stir much in the way of public outrage.