How Polls Have Demonized Federal Deficits – Part I

Recent polls suggest that a majority of Americans have bought the austerity argument that deficits are bad for the economy and need to be eliminated.  However, a closer look reveals this conclusion is unwarranted. It appears the poll questions are biased by not providing respondents with a legitimate option of how deficits could be eliminated through a stimulus program to create jobs.

Austerity options lead to austerity choices

The New York Times/CBS News poll from January of this year is representative of this bias.

It asks:  “Overall, what do you think is the best way to reduce the federal budget deficit — by cutting federal spending, by increasing taxes, or by a combination of both?”.  A majority, 61%, support the combination of cutting spending and increasing taxes, while 33% cite federal spending cuts.

Only 3% support tax increases, which is understandable given the poll was conducted after the Fiscal Cliff agreement that increased taxes on everyone.

While the question provides deficit reduction options that focus on austerity (spending cuts, tax increases), it offers a respondent no options for deficit reduction by way of a stimulus approach (e.g., job creation to rebuild a crumbling national infrastructure).  It is therefore not surprising that a question offering only austerity options will yield austerity conclusions.

The stimulus option

But it is a stimulus approach, persuasively argued by many economists including Nobel Prize winners Paul Krugman and Joseph Stiglitz, that offers the best chance of reviving an economy that has been struggling since 2008.

While for the general public the argument to reduce deficits by stimulus spending — and hence temporarily increasing deficits — seems counterintuitive, it is based on fairly solid empirical foundations and the insightful economic ideas of John Maynard Keynes.

These ideas were spawned by the Great Depression of 1929.

Keynes argued that during a recession/depression, investment opportunities dim and private capital recedes from the marketplace. This results in reduced employment which of course reduces consumer spending.  For governments this reduces tax revenues while at the same time increasing social safety net expenditures like unemployment insurance benefits, food stamps, and welfare assistance.

In a crisis like this, Keynes argued that the absence of private capital needs to be offset by public capital i.e., government stimulus spending.

Government stimulus is counterintuitive

This is counterintuitive since most ordinary folk responsible for the household budget would conclude that with less revenue, household spending should go down. A household needs to live within its budget.

That was in fact the “intuitive” reaction of government policy after the crash of 1929.

We know only too well how gravely this policy impoverished a huge swath of America for many years afterwards. Everything went into austerity mode until President Franklin Delano Roosevelt began to resuscitate the nation with his stimulative New Deal.  This included massive government infrastructure projects e.g., Hoover Dam, that created jobs, increased demand and brought back private capital into the economy.

The economic destruction caused by inappropriate austerity policies was so great, it wasn’t until the onset of World War II that the American economy finally established a solid footing.

Critics of stimulus have argued that President Obama has tried it and failed.

The inadequacy of the Obama stimulus

While it is true that an $800 billion stimulus package was passed by Congress in 2009, Paul Krugman has argued from the very beginning that the amount was insufficient given the massiveness of the 2008 meltdown.

To be fair, the program did save many government jobs that would otherwise have disappeared.  However the stimulus was insufficient to create enough new jobs.

The Great Recession of 2008 resulted in the loss of nearly 9 million jobs.  Since then the weakened economy has only managed to recover about 5 million jobs.  Nearly a quarter of the workforce reported being laid off as a result of the recession.  The unemployment rate still hovers around 8% and 23 million Americans are either unemployed or underemployed.  The economy can’t even manage to create a sufficient number of jobs to absorb the growth in population.

The austerity bias tars the debt ceiling question

The austerity bias in the New York Times/CBS News poll was not limited to the framing of the deficit reduction question. It was replicated in a follow-up question related to the debt ceiling.

The question found that 60% favored the option that the debt ceiling should be raised “but only with the condition that the government also cuts spending to offset it”.  Raising the debt ceiling without conditions was favored by 17% and not raising it under any conditions was favored by 18%.

However, since it’s feasible that deficits and the debt can be successfully attacked through a stimulus approach, the condition that it be limited to spending cuts is a false dichotomy.

An easy fix

The bias could readily be corrected simply by changing the austerity wording to something more neutral e.g., “the debt ceiling should be raised but only with the condition that the government do something to reduce the deficits”.  That “something” would and rightly should be left to the Congress and the President to figure out, but it leaves the door open for stimulus to be that something.

Why the New York Times poll bias with Krugman on board?

What is truly perplexing about this austerity bias in the New York Times poll is why the newspaper that commissioned it would not seek advice on framing these critical questions from Krugman, who writes for the same paper? This is one man who understands the consequential differences between austerity and stimulus. His blog has numerous references on their impact on deficits.

So what’s the explanation for the New York Times asking such biased questions on deficits?  As with many conundrums that confound America, the answer lies with its political leaders.

Part II of this article explains how this happens and the consequences of eliciting fake public opinion on the deficits.

This article was originally posted on March 8, 2013 in iPolitics under the title “How polls demonized deficits in the U.S.“.

About Oleh Iwanyshyn

Oleh Iwanyshyn has been involved professionally with surveys from the mid-70s when he started as a methodologist at the Institute for Behavioral Research at York University. Later, while at the Canadian Broadcasting Corporation his focus shifted to media and election surveys. He now runs his own survey research company, ViewStats Research, established in 1997 and specializing in online surveys. Public opinion surveys is an essential communication tool between a democratic society and its leaders. Unfortunately, surveys can be very easily manipulated. Revealing such manipulations and their consequences is the raison d'être of the poll stuff blog.
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