Dysfunctional Government Has A Real World Impact
The real world impact of what's happening in Washington is becoming apparent.
The combined crises of the government shutdown and the impending debt ceiling fiasco are having a very serious impact on consumer confidence according to a new Gallup poll:
WASHINGTON, D.C. — Americans’ confidence in the economy has deteriorated more in the past week during the partial government shutdown than in any week since Lehman Brothers collapsed on Sept. 15, 2008, which triggered a global economic crisis. Gallup’s Economic Confidence Index tumbled 12 points to -34 last week, the second-largest weekly decline since Gallup began tracking economic confidence daily in January 2008.
Fiscal brinksmanship in Washington is related to many of the largest weekly drops in Americans’ confidence in the economy since 2008. Gallup’s Economic Confidence Index fell nine points in late February and early March 2013 as Congress and President Barack Obama failed to reach an agreement to avoid automatic federal spending cuts as part of sequestration. Economic confidence fell eight points during the week ending Feb. 20, 2011, as Congress and the president reached an agreement on the federal budget at the last minute, avoiding a government shutdown.
Americans’ confidence in the economy fell eight points during two separate weeks in July 2011, as leaders in Washington debated over whether to raise the debt limit or default on the nation’s debts. Standard & Poor’s subsequent downgrading of the U.S. credit rating and falling U.S. stock market prices also negatively affected Americans’ confidence in the economy. Similarly, economic confidence could continue to fall in the coming days and weeks as Congress and the president work to reach an agreement to raise the debt ceiling by the upcoming Oct. 17 deadline.
Looking at the three day average of this poll, you can see just where the drop off started right before we actually hit the shutdown date on October 1st:
Yes, consumer confidence was already somewhat negative for much of September, but it wasn’t until we hit the weekend right before the shutdown that things really started moving south. Many commentators will point out, not without some justification, that at least part of what’s being reflected here is a reaction to the media coverage of the shutdown and the debt ceiling showdown, which has been quite negative and some might say needlessly so. Whether that’s the case or not, though, doesn’t really seem to matter. Negative consumer sentiment is a reality regardless of why it turned so negative so quickly. Furthermore, as we’ve discussed here at OTB several times over the past week, there are very good reasons to be concerned about the negative economic impact of both the shutdown and breaching the debt ceiling so perhaps the poll respondents are just reflecting that reality.
What’s most illustrative, I think, is this chart of recent significant drops in consumer confidence:
Notice anything? All of the largest weekly declines in consumer confidence on this list have occurred in the last five years, either during the 2008 financial crisis and its aftermath that stretched into 2009, or during the numerous mostly manufactured crises that have occurred in Washington over the past several years, quite honestly mostly since Republicans won control of the House in 2010. To some degree, Consumers did tend to recover at least some of their confidence in the state of the economy as these various crises ran their course, but there’s been little doubt all along that these crises have been having real world economic effects. Most importantly, when consumer confidence is down they tend to spend less money, especially on items that aren’t considered necessities. The question, though, is how long we can continue having these governmental crises before the impact on economic confidence becomes more permanent.
One possible answer to that question can be found in another Gallup poll out this morning that shows that concerns over dysfunctional government have surpassed the economy as the biggest issue of concern to voters:
PRINCETON, NJ — Americans are now more likely to name dysfunctional government as the most important problem facing the country than to name any other specific problem. Thirty-three percent of Americans cite dissatisfaction with government and elected representatives as the nation’s top issue, the highest such percentage in Gallup’s trend dating back to 1939. Dysfunctional government now eclipses the economy (19%), unemployment (12%), the deficit (12%), and healthcare (12%) as the nation’s top problem.
Americans’ mentions of either the economy in general or jobs in particular as the nation’s top problem had already been declining in 2013. Both issues dropped further as top-of-mind concerns in the Oct. 3-6 survey, conducted in the midst of the U.S. government shutdown.
At the same time, the percentage of Americans who mention some aspect of government leadership as the nation’s top problem has doubled, 33% this month from 16% last month. This almost certainly reflects the current upheaval in Washington and party leaders’ inability to agree on a way to fund the government or avoid a possible government default. October is the first time since 2008 when an economic issue was not at the top of Americans’ list of most important problems.
Democrats (36%) and independents (33%) are somewhat more likely than Republicans (23%) to mention dysfunctional government as the most important problem facing the country, perhaps reflecting partisans’ differing views about the role and importance of government.
There’s really no need to go into the reasons why these numbers are where they are. You just need to open a newspaper or turn on cable news to see the reasons for that. What’s becoming worrisome is that this “dysfunction” has now become not the exception but the rule, at least when it comes to Washington, D.C. That’s not healthy for our political system and, as we’re learning, it’s not healthy for our economy either.
So, stand up and call for a House vote on the clean CR.
You say you support it, but you spend your day in coy support of “the game.”
To many Republicans this is a feature not a bug as long as Obama is in The White House!
“Dysfunctional Government Has A Real World Impact”
And here I thought from the title this was going to be about something like Head Start programs forced to close or vaccine programs shut down, or something which affected the 99%. Silly me.
Seven Habits of Highly Ineffective Political Parties
by David Frum
“Habit 1: Maximalist goals.”
That is why we don’t have a vote on the clean CR, and not because Boehner is sure there aren’t enough votes.
Doug finally admits that his favored party is deliberately sabotaging the country.
The first step to recovery is admitting that you have a problem.
Good on him.
Yeah but on the other side, I think one reason the Democrats don’t emphasize the fairness of the clean CR is that they feel they need to take a hard line in response to maximalist goals and the rest.
Probably most Republicans don’t even know what the clean CR is, other than “Obama’s side,” or “Obama’s first offer.”
If the press were doing their job, if the public knew what the clean CR really was, this would be over.
The national emergency which is “shutdown” would be over.
I think you missed this part:
In Tea Party America? That’s a little unexpected…
@john personna: From the article:
This is the part about how the Republicans view Obamacare that has always mystified me. It’s nothing new, people. Not only has the U. S. had a guaranteed coverage program for nearly 50 years–albeit one that only guarantees coverage for a portion of the population–pretty much every other constitutional republic in the world has one, too. And whatever one thinks of the form of government in Canada, it hardly qualifies as a totalitarian dictatorship.
President Obama should stop holding government hostage and give the Republicans the one-year delay of the Affordable Care Act/Obamacare for individuals and families just as businesses have gotten.
There are two schools of thought on government borrowing. One schools holds that the government can borrow as much money as it needs for as long as it wants and nothing bad will come of it. The other schools holds that government borrowing is unsustainable and will lead the country into financial ruin.
Right now the matter seems to be one of faith, but it seems to me that it is a factual matter, i.e., a matter of mathematical certainty.
@Mike: Dude, when someone is holding a gun to my wife’s head and threatening to blow her head off unless I sell him my house for $1, I’m not the one who’s carrying out the extortion.
And the third school that thinks shutting down the government, hitting the debt limit, and going into default is The Awesome.
Obama claimed that ““Our deficits are now falling at the fastest rate since the end of World War II. I want to repeat that. Our deficits are going down faster than anytime since before I was born.”
So DC Decoder decided to fact-check:
See, this is what’s really mad. We weathered the Great Recession. We went though tax fights. We went though spending fights, and sequester.
You and the House Republicans are now arguing that we can’t stand a little “steady as she goes” via the clean CR, because we are on the ropes.
But that’s false. Things are looking up. A little steady sailing is just what the doctor ordered.
I think you are responding to something I am not saying. I am not saying the Democrats should be pushing horror stories which affect the 99%. I am just noting that Doug’s definition of “real world impact” ignores pressing things which primarily affect the 99% in favor of a more nebulous and longer horizon thing which primarily affects the 1%.
(No sane person would think that a clean CR would be the last word on American governance. There will be many, many, budgets and tax bills to come. And yet the Republicans have this maximist, and apocalyptic vision that EVERYTHING rides on this vote, and so default is a ‘reasonable’ threat.)
I was hanging off the other post, the “Excellent link.”
And using that opportunity to muse on why the clean CR isn’t pushed … with honey? Rather than vinegar?
“The police should stop holding those bank employees hostage and give the robbers the van and private jet that they asked for, just like they gave them the pizza they asked for”
Heck, you can be effective with “maximalist” goals. It’s maximalist demands at each and every point along the way that are the problem. A successful movement takes what it can get, without accepting that as The End. I mean, hey, did Reagan transform America into wingnut paradise? Nope. But he moved things, in some very important ways, in that direction (sadly). Later GOP politicians were able to expand on what he & his cohort did, and the Dems were only partly successful at pushing back (to this day).
The obvious comparison is the lefty who, pissed that the PPACA wasn’t single-payer and didn’t have a “public option” decided that it was best to oppose the reform and hope for their preferred reform later. This was, in my view, foolish. The PPACA was attainable – just. It’s not The End. Nothing is.
It’s interesting, because I see tenacity as of the great strengths of movement Conservatism. On many issues, liberals thought they’d won, and kind of wandered off. Conservatives fought, lost, fought some more, lost, fought some more… won a bit, fought some more, won a bit more and before liberals knew it, they were in dogfights on issues they thought were “settled.” Nothing is ever truely settled. For a long time, I think Conservatives understood that.
The great fear, I think, is that the PPACA, once it really kicks in, is undoable in the same way Social Security is. Well, if that’s the case, one might consider the possibility that if that’s true, maybe the reform has some merit…
Nixon: we’re all Keynesians now. Did that last? No (unfortuantely). Conservatives fought and fought and changed the Beltway concensus on economic matters to better reflect their ideology.
Clinton: the era of big government is over! Was that really true? I’d say no, even though welfare reform was a significant thing. There was much more to the welfare state than, err, welfare. Clinton’s triangulation was not something lefties enjoyed. However, I think there’s a strong case that he preserved much in the face of the continuing headwind of the Reagan revolution, which was still playing out.
The wind shifted a bit lately, back to the left a bit. Adjust, fellas.
Name the year or years that the US Government has ran without a deficit. No fair using Google.
Funny how most Republicans and conservatives believe in the first school of thought whenever there is a Republican in the White House and then switch to believing the second school of thought whenever there is a Democrat in the White House…
You know, it might be worth recalling that the taxation & spending approach advocated by this very same party in the last election would have almost certainly resulted in more debt, not less. IIRC, there was more in the short-term, and they alleged it would work out later because their tax cuts (“tax reform”) would supercharge growth (that’s where Ryan had his magical unicorn GPD growth rate baked in).
This very same party is now threatening to trigger a default by the US government, crying about debt (or is it the PPACA? They can’t seem to get it straight), even though the deficit is falling (too fast, IMO) and the long-term picture keeps improving.
Their tactics are unacceptable, but their underlying claims are also fundamentally bullshit. This is the same bull they tried to sell the country on in 2012.
Slightly OT, but has anyone seen this
band of nitwitswonderful strategy by god-fearing patriots?
The Financial Times, I think, had the correct response: “assuming that this will be any different from standard DC traffic…”
@Rob in CT:
“This is the same bull they tried to sell the country on in 2012.”
If you are talking about how tax cuts supercharge growth, that’s because it’s worked so well for them in the past (see 2003, 2001, 1981, etc.). Note that they always end up referring to Kennedy’s tax cuts, as they were the last time it really worked that way.
Of course, if we had a 91% marginal tax rate before the tax cuts, it might have worked again all those other times, as well.
When will “Constitutional conservatives” read the Constitution?
Well, that plus ACA repeal was their major pitch in 2012. And it failed, miserably.
Re: marginal rates, IIRC there was a study out recently that attempted to actually find the peak of the “laffer curve” and the authors decided it peaked (produced the best mix of economic activity + tax rate to = the most revenue) right around 70%. Funny, that.
Chait, in top form:
Key points made:
1) This whole thing was manufactured by the GOP, particularly Ryan.
2) Cruz charged in and helped mess it up, by switching the hostage (shutdown instead of default) and ransom (PPACA instead of budget cuts).
3) The GOP lie about the Dems not negotiating over the budget could, possibly, be useful in extricating us from this mess.
Dysfunctional Government Has A Real World Impact
Well sure, obviously closing monuments will impact the world economy severely. After all, the monument closures are the only real problem caused by all this, right?
@grumpy realist: That is seriously some of the dumbest shit I’ve ever heard of.
Traffic’s been a bit thinner since the shutdown began, maybe this “trucker’s protest” will just bring it back to its normal insane level.
My prediction is there won’t be enough showing up to make a measurable difference.
Something to add to all this becomes clear once you read through this 30pg focus group study on how the GOP base really feels.
I often find the GOP to be largely unaware of its projection. Here too, we see the party of the Southern Strategy and white grievance to not only believe that Obamacare is wrong, but a ploy by conspiring Democrats. Almost as if the Dems know that it’s a bad idea, but don’t care because that’s how they will buy votes from the shifty minorities and the lazy. The GOP base believes that evil is winning and they now stand at the edge of an inescapable abyss where the Democrats will be handed electoral landslide after landslide by the undeserving rubes.
@ grumpy realist
The battle cry of the wingnut
Or, as someone else likes to put it “once we become a one-party state…”
Frum’s article (linked by John Persona above) includes “apocalyptic fears” as one of the pitfalls to avoid. The US has seen parties lose big before (far worse than 2008 or 2012) and even crack up entirely. What happens is new parties form, and the battles begin anew.
@Rob in CT:
Excellent link, good piece. But for the TL;dr folks out there:
This is a GOP-manufactured crisis.
Any commentary that does not take this into account is worth bubkes.
Very interesting study. It reads to me like the breaking point between the Moderates and the rest of the GOP (Tea Party and Evangelicals) is not too far off, though likely not before Obama is out of office.
I agree with the link above that the Republicans, via Ryan, are trying one last time to present new demands as negotiation and not extortion … even as they refuse to accept the “steady as she goes” clean CR.
Will Doug support their “negotiation?” Tune in later today.
Though certainly anyone with right leanings, who is part of the value network, who has the mood affiliation will at least try to give some sympathy for Ryan’s hostage ploy.
@Mikey: Considering that there’s probably a high overlap between these people and the birfers, I expect about the same turnout level as one finds at birfer events: “one million people march!” == five people show up.
If Ryan hadn’t done all he could to block negotiation over the past ~6 months with the goal of using the debt ceiling for extortion, he might have some credibility (outside the echo chamber). As it is, some of us can actually follow a timeline.
I often hear the common wisdom that the GOP needs to drop its social agenda and then everything will fall into place, but the proportion of the demographics at play here are important. For quite some time now, I’ve concluded that there simply aren’t enough people who are so narrowly motivated by economics as to support a viable opposition to the Democratic Party. In the study above, Moderates only account for 1/4 of the base and they don’t like the Tea Party who also put economics over social issues.
If the last two presidential elections have taught us anything about the Obama campaign, it’s that microtargeting and canvassing face-to-face works. One needs boots on the ground to shore up support, and the huge social/religious bloc provides this for conservatives in addition to the benefits of their size. If the GOP loses the social/religious bloc they will join the Whigs, as they should IMO.
At that point, I don’t know where the other party comes from.. honestly I see the Democratic big tent splitting off into a social-justice/environment wing and a pro business wing, but I don’t know. I’d actually like to see what Joyner and Taylor would say about the future if the GOP did disappear, although I’d suspect they’d decline the hubris of prognostication.
Something I tried to point out in all the arguments we had in the 2012 campaign season:
If you are speeding along and need to slow down do you:
a) apply the brakes, carefully; or
b) slam your car head-on into a brick wall.
[Jeopardy theme music]
“For quite some time now, I’ve concluded that there simply aren’t enough people who are so narrowly motivated by economics as to support a viable opposition to the Democratic Party.”
I tend to agree. I think it’s more likely that we get a smaller (and rapidly shrinking) Republican Party consisting of the Tea Partiers and the Evangelicals, with the Moderates becoming less affiliated with either party. The Republicans would need to win a much bigger percentage of the unaffiliateds to win either state or national races.
Eventually the Democrats will split, but I think they feel like there’s more work to be done together first, many of which (climate change, war on drugs, etc.) they will likely get some Moderate support for.
I don’t disagree with any of this. Perhaps my brevity implied that what I said would happen quickly, but I don’t think that is so. Again, it would take more expertise than I have to guess as to how all this will shake out, and even that would probably be a shot in the dark.
Offered with out comment:
Liberal comment trolling polarizes conservatives (but not vice versa), study says
it was expected that liberals/Democrats would move to the left (e.g., opposing the sequester and supporting Obama), and that conservatives/Republicans would move to the right (e.g., supporting the sequester and opposing Obama), in response to incivility from the left and right. However, when the results from the interactive models were graphed, we only saw polarization among those on the right. This suggests a greater sensitivity to incivility among conservatives and Republicans. Why this is the case is unclear at this time; however, previous research has shown that incivility does appear to be more common in conservative than liberal media.
@Ken: This is silly. The Republicans have already passed bills which would fund government except for Obamacare. What more power do they have?
The House has no hostage it can harm. The power is all Senator Reid’s and President Obama’s. WHat power do they have? They have the power to shut down government and make it hurt as much as possible. And they are, every way possible.
Again, an even better offer, fully neutral, favoring no side more than the other, is on the table.
The clean CR.
It is transparent when Republicans say “no, don’t do the neutral thing, do this big change for us, or else.”
@An Interested Party: Yes, what you say is true. Both parties have racked up debt. This is one of Glenn Beck’s favorite topics. Also Karl Denninger at Market-Ticket.org.
Remember that the Tea Party started under President Bush. The essence of the Tea Party idea is that government needs to live within an honest budget and become smaller. It is irresponsible for the government to spend more than it collects in taxes on a sustained basis.
The GOP is asking for the change, therefore they are making the demands. The GOP position, which you may agree with is “Defund Obamacare or shut down the government”. At least have the decency to admit what your side is doing.
Secondly, what is the GOP offering in return for defunding Obamacare? It’s obviously a very large request, so they have to offer something equally important in return.
Please document a Tea Party protest of Bush policies that took place prior to the 2008 election.
I had always heard that TARP was the beginning of the Tea Party and had always taken it on faith.
“But even though TARP eventually passed, September 29th was still the key moment, one that I’ll always think of as the birth date of the Tea Party movement. It didn’t get its name until CNBC’s Rick Santelli famously ranted on air about Obama’s housing rescue plan a few months later, but the spirit had been there ever since TARP was initially defeated.”
I remember the public was overwhelmingly against the bailout. I cannot say when the first protest took place that was labeled as a Tea Party protest. Do you?
Oh, the heck with it. We’ve got too many moronic Americans. Let’s go ahead, default, crater the economy back into subsistence agriculture and watch them whining for the next 50 years: “but I never thought that this would happen!”
Between the idiots thinking that you can run a government like a small-animal vet clinic and those who think that default is hey, no biggie! I’ve given up on these goofballs.
Doesn’t surprise me. This is the same population of the US that refuses to believe in evolution, global warming, or the world being older than 6000 years. It’s no wonder they have such a ridiculous view of monetary policy.
Another unsubstantiated claim. Do your political views rest entirely on things you think are true? Is there nothing you actually know for a fact? BTW, the bailout/TARP probably saved us from a depression.
There are these really bitchin’ things called search engines…
List of Tea Party protests, 2009
Search Wikipedia for “Tea party protests 2008” and you get this result:
The page “Tea party protests 2008” does not exist.
@ grumpy realist
The other day Jenos was telling us that he trains people at work, and this qualifies him to tell Obama how to do his job. Apparently he does not know the difference between a supervisor and a CEO.
Oh, did it really? Funny how it didn’t make any real noise until the black man was in the White House…
If such is the case, I’m sure that elderly members of the Tea Party will be more than happy to accept fewer benefits from the government and the wealthier members will be more than willing to pay more in taxes…after all, they believe that the government really should live within its means…
@ An Interested Party
It’s odd. Bush was wildly popular on the right when he was in office. Now all you hear is “was not a real conservative”, and “never liked him anyway”.
Remember that kid you went to high school with that spent three years kissing the quarterbacks ass? Then when the quarterback threw three interceptions and lost the homecoming game your senior year, the same kid went around the rest of the year telling everyone “I always knew he sucked”…
That kid is a charter member of the tea party.
Huh. I dunno, let me think….. Hey wait – how about “fund the government.”? Radical, I know. Then they could use the normal legislative process to attempt to defund or repeal any established law they don’t like.
“Give in to our demands or the United States govt./economy will go into default.” Yeah, I also have a hard time understanding who the metaphorical “hostage” might be in this situation. Then again, I’ve been drinking since about 9 o’clock this morning. What’s your excuse?
I was going to type a bunch more, but honestly? At this point in the discussion this is either willful ignorance or shameless lying on your part. Or both. In my experience, there is no fourth option.