Friday, February 03, 2023
Thursday, February 02, 2023
Monmouth Poll Shows Biden Job Rating Still Improving
These charts are from the newest Monmouth University Poll -- done between January 26th and 30th of a nationwide sample of 805 adults, with a 5.7 point margin of error.
The Economy Is Doing Well But Few People Know That
Is the American economy in good or bad shape? Here's part of what Nobel Prize-winning economist Paul Krugman has to say:
Imagine that your picture of the U.S. economy came entirely from headlines and cable news chyrons. Would you know that real gross domestic product has risen 6.7 percent under President Biden, that America gained 4.5 million jobs in 2022 and that inflation over the past six months, which was indeed very high last winter, was less than 2 percent at an annual rate?
This isn’t a hypothetical question. Most people don’t read long-form, data-driven essays on the economic outlook. Their sense of the economy is more likely to be shaped by snippets they read or hear.
And there is a yawning gulf between public perceptions and economic reality. Recent economic data has been positive all around. Yet a plurality of adults believes that we’re in a recession. In an AP-NORC survey, three-quarters of Americans described the economy as “poor,” with only 25 percent saying it was “good.”
You might be tempted to say, never mind the data, people know what’s happening to the economy from personal experience. But there’s a big disconnect on that front, too.
Even with 75 percent of the public saying the economy is poor, a majority of Americans rate their own financial situation positively. On average, people seem to be saying that they’re doing reasonably well but that very bad things are happening to somebody else.
This “I’m OK, you aren’t” syndrome was especially clear in a Federal Reserve survey carried out in late 2021; we won’t have the 2022 results until later this year, but I expect them to look similar. According to the 2021 survey, 78 percent of households said they were doing “at least OK” financially, a record high; only 24 percent said the national economy was “good or excellent,” a record low. Assessments of local economies, for which people have some personal knowledge, were in between.
Now, this isn’t the first time I’ve written about the disconnect between economic perceptions and reality. In the past, however, I got a lot of pushback from people insisting that the public was in deep shock over the resurgence of inflation after years of more or less stable prices.
At this point, however, that’s becoming a harder position to sustain. Since last summer prices of some goods, notably of eggs, have soared, but other prices, notably of gasoline, have plunged. As I said, the overall inflation rate in the second half of 2022 was around 2 percent, which has been normal for the past few decades, while the unemployment rate in December, at 3.5 percent, was at a 50-year low. Oh, and inflation-adjusted wages, which fell in the face of supply-chain problems and the Ukraine shock, have been rising again.
So what explains the public’s sour view of what is objectively a pretty good economy?
Partisanship is clearly part of the story. One striking aspect of that AP-NORC survey was that Democrats and Republicans weren’t that different in their assessments of their personal financial situation; majorities of both groups rated their condition as good. But 90 percent of Republicans said the national economy was poor. A longer view, from the Michigan Survey of Consumers, finds Republicans rating the current economy worse than they did in June 1980, when unemployment was above 7 percent and inflation was 14 percent.
What about media coverage? Some of my colleagues get upset about any suggestion that economic reporting has had a negativity bias that affects public perceptions. Yet there’s actually hard evidence to that effect. The Michigan Survey asks respondents about what news they’ve heard about specific business conditions; all through 2022 — as the economy added 4.5 million jobs — more people reported hearing negative than positive news about employment.
All of which raises an obviously important political question: Will Americans even notice an improving economy?
Wednesday, February 01, 2023
Santos Is Very Unpopular In His Congressional District
The charts above reflect the results of the Newsday / Siena College Poll -- done between January 23rd and 26th of 653 registered voters in New York District 3 (the House district represented by George Santos). The poll's margin of error is 4.4 points.
The Real Untold Story About Our National Debt
The dire warnings of fiscal hawks are once again darkening the skies of official Washington, demanding that the $31 trillion federal debt be reduced and government spending curtailed (thereby giving cover to Republican efforts to hold America hostage by refusing to raise the debt ceiling).
It’s always the same when Republicans take over a chamber of Congress or the presidency. Horrors! The debt is out of control! Federal spending must be cut!
Not only is the story false, but it leaves out the bigger and more important story behind today’s federal debt: the switch by America’s wealthy over the last half century from paying taxes to the government to lending the government money.
This back story needs to be told if Americans are to understand what’s really happened and what needs to be done about it. Republicans won’t tell it, so Democrats (starting with Joe Biden) must.
A half century ago, American’s wealthy financed the federal government mainly through their tax payments. Tax rates on the wealthy were high: Under Republican President Dwight Eisenhower, they were over 90 percent. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.
Since then — courtesy of Ronald Reagan, George W. Bush, and Donald Trump — the effective tax rate on wealthy Americans has plummeted. Even as they’ve accumulated unprecedented wealth, today’s rich are now paying a lower tax rate than middle-class Americans. (The 400 richest American families paid a tax rate of just 3.4 percent between 2014 and 2018, while the rest of us paid an average tax rate of 13.3 percent.)
One of the biggest reasons the federal debt has exploded is that tax cuts on wealthier Americans have reduced government revenue.
Meanwhile, America’s wealthy are financing America’s exploding debt by lending the federal government money, for which the government pays them interest.
As the federal debt continues to mount, those interest payments are ballooning — hitting a record $475 billion in the last fiscal next year (which ran through September). The Congressional Budget Office predicts that interest payments on the federal debt will reach 3.3 percent of the GDP by 2032 and 7.2 percent by 2052.
The biggest recipients of these interest payments are not foreigners but wealthy Americans who park their savings in treasury bonds held by mutual funds, hedge funds, pension funds, banks, insurance companies, personal trusts, and estates.
Hence the half-century switch: The wealthy used to pay higher taxes to the government. Now the government pays the wealthy interest on their loans to finance a swelling debt that’s been caused largely by lower taxes on the wealthy.
This means that a growing portion of your taxes are going to the wealthy in the form of interest payments, rather than paying for government services everyone needs.
So, the real problem isn’t America’s growing federal budget deficit. It’s the decline in tax revenue from America’s wealthy combined with growing interest payments to them.
Both are worsening America’s already horrific inequalities of income and wealth.
What should be done? Reduce the debt by raising taxes on the wealthy.
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