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Spending Jitters Don't Change the Fundamentals

By Dan Froomkin
1:21 PM ET, 06/18/2009

According to the latest polls, the American public appears to be increasingly uncomfortable with all that money President Obama is spending -- and its effect on the deficit.

But economists say massive government spending was essential to prevent a much deeper recession -- and that the $787 billion stimulus package passed by Congress may not actually have been big enough. Furthermore, as David Leonhardt pointed out in a seminal New York Times story last week, stimulus spending only accounts for about seven percent of the enormous projected deficit over the next decade.

So when a majority of Americans say, as they do in both of today's major polls, that it's more important to reduce the deficit than stimulate the economy, this indicates two things to me. It suggests a political vulnerability for Obama -- one the GOP is already working hard to exploit. But it also suggests that the public is underinformed about some basic economic realities.

You could say that in turn suggests a second political vulnerability for Obama -- that he's failing in his role, as George W. Bush famously described it, of "explainer in chief." But it could also say something about the media coverage of important issues. Yes, the media routinely fawns over Obama, with over-the-top celebrity coverage that devotes countless stories to what he eats, where he takes his wife and his darling new puppy. But perhaps we're not doing a very good job of reporting on what he's doing and why he's doing it.

The good news for Obama is that the public overwhelmingly thinks the economy -- not the deficit -- is the most important problem facing the country -- by a 38 percent to 2 percent margin, according to the New York Times/CBS Poll. (Jobs and health care came in at 19 and 7 percent, respectively.)

And, overall, his approval rating remains very high. The New York Times finds him stable at 63 (down from all-time high of 68 in April; but consistent with his five-month average.) The Wall Street Journal/NBC poll pegs him at 56 percent approval, down from an all-time high of 61 percent in April.

The polls also find that Americans are growing more confident about the economy. They don't think Obama has taken on too many issues. When his health plan is described to them, they like it, by a 55 to 35 percent margin in the Wall Street Journal poll. In fact, they overwhelmingly support the "public plan" part of his proposal, widely considered its most controversial element.

The problem, then, is all the spending -- and the cumulative federal intervention in private industry. Asked this somewhat loaded question by the Wall Street Journal poll -- "Recently there has been some discussion about areas in which the federal government has taken a greater role, such as taking an ownership stake in General Motors, limiting levels of compensation that corporate executives can receive, and the role the government would play in a new health care system. How much does this concern you––a great deal, quite a bit, just some, or very little?" -- 49 percent said it concerned them a great deal and 20 percent said quite a bit.

Interestingly, Obama himself weighed in on the issue of public perceptions in an interview with the Wall Street Journal on Tuesday. Consider what he said:

I think that if you have an argument made frequently enough — whether it's true or not — it has some impact. I think this particular argument just doesn't bear much scrutiny — but it's a handy cliché. If you want to attack a Democratic President, how are you going to attack him? Well, you're going to talk about how he wants more government and he wants to socialize medicine and he's going to be oppressive towards business. I mean, that's pretty standard fare.

And I'm a little amused by the argument since those who make it seem to have a pretty short memory about where we were just a year ago under all their economic theories — or not even a year ago; six months ago — where we had a pretty good experiment in the approach that they thought we should take. And we — knock on wood — had just barely averted disaster....

And so now the real argument seems to boil down to not dealing with health care or energy. I mean, that's really what this comes down to. And the question I would have is how we can avoid dealing with a health care system that everyone acknowledges is massively inefficient and that is a huge drain on our economy, that leaves 46 million people uninsured and is guaranteed, if we do nothing, to bankrupt both federal and state budgets? Or, alternatively, how can we avoid dealing with a energy dependence that not only helps fund many of our enemies and unfriendly regimes, but is responsible for huge balance-of-payment deficits and a potentially disastrous rise in global temperatures?

Now, I suppose we could just stand pat and not do anything on either of those fronts. Again, that's been tried for four or five decades. And in both energy and health care, the problems have gotten worse, not better. So I think it's my obligation to try to solve these deep-rooted structural problems, because if we are able to solve them in an effective way, then we are creating the foundation for long-term prosperity and economic growth. If we don't, then try as we might, our competitive position in the world is going to continue to erode. And that's not a legacy that I'm interested in bequeathing to my children.

In Obama's view, the stimulus spending is not so much adding to the deficit problem as it is paving the way for a solution. In an interview with Bloomberg's Al Hunt on Tuesday, Obama said he was "confident" that he won't be faced with having to raise taxes on most Americans in order to lower the deficit. But, as he pointed out, "one of the biggest variables in this whole thing is economic growth....If we've got anemic growth, if we don't have a strategy for recovery without bubbles, which is essentially what we've had over the last couple of recovery cycles, then we're going to continue to have problems."

Jeff Zeleny and Dalia Sussman write alarmingly in the New York Times:

A substantial majority of Americans say President Obama has not developed a strategy to deal with the budget deficit, according to the latest New York Times/CBS News poll, which also found that support for his plans to overhaul health care, rescue the auto industry and close the prison at Guantánamo Bay, Cuba, falls well below his job approval ratings.

A distinct gulf exists between Mr. Obama's overall standing and how some of his key initiatives are viewed, with fewer than half of Americans saying they approve of how he has handled health care and the effort to save General Motors and Chrysler. A majority of people said his policies have had either no effect yet on improving the economy or had made it worse, underscoring how his political strength still rests on faith in his leadership rather than concrete results.

But Zeleny and Sussman are twisting some of the numbers here. Fewer than half of Americans approve of his handling of health care only because so many are undecided. In fact, a plurality -- 44 percent -- do approve, compared to 34 who disapprove.

And similarly, when it comes to whether his policies have made the economy better, a large plurality -- 48 percent -- say they haven't had any effect yet. Of those who do see an effect, 32 percent say it's been positive compared to 15 percent who say it's been negative.

Zeleny and Sussman do note, however:

But with a job approval rating of 63 percent, Mr. Obama has the backing of Democrats and independents alike, a standing that many presidents would envy and try to use to build support for their policies. His rating has fallen to 23 percent among Republicans, from 44 percent in February, a sign that bridging the partisan divide may remain an unaccomplished goal....

While Republicans have steadily increased their criticism of Mr. Obama, particularly on the budget deficit, the poll found that the Republican Party is viewed favorably by only 28 percent of those polled, the lowest rating ever in a New York Times/CBS News poll. In contrast, 57 percent said that they had a favorable view of the Democratic Party.

Chuck Todd began his report on the NBC Nightly News this way last night: "The honeymoon is coming to an end." Mark Murray writes for NBC News:

Obama remains a popular figure in the poll. But these numbers on the deficit and the government's intervention seem to mark a new period for the administration, as the public moves from welcoming his inauguration and first days in office to examining his initial actions as president.

Laura Meckler writes in the Wall Street Journal:

After a fairly smooth opening, President Barack Obama faces new concerns among the American public about the budget deficit and government intervention in the economy...

These rising doubts threaten to overshadow the president's personal popularity and his agenda, in what may be a new phase of the Obama presidency.

And in one more bit of poll news, Lydia Saad writes for Gallup that while the public's confidence in Obama to recommend the right thing for reforming health care (58 percent) is lower than it is in doctors (73), it's a lot higher than it is in pharmaceutical companies (40), insurance companies (35), and Republican leaders in Congress (34).

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