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Most Americans wrongly believe that the federal deficit has been going up

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Paul Krugman EXPLAINS:

You probably won’t be surprised to hear that voters are poorly informed about the deficit. But you may be surprised by just how misinformed…

[A] 1996 survey that asked voters whether the budget deficit had increased or decreased under President Clinton. In fact, the deficit was down sharply, but a plurality of voters — and a majority of Republicans — believed that it had gone up.

I wondered on my blog what a similar survey would show today, with the deficit falling even faster than it did in the 1990s. Ask and ye shall receive: Hal Varian, the chief economist of Google, offered to run a Google Consumer Survey — a service the company normally sells to market researchers — on the question. So we asked whether the deficit has gone up or down since January 2010. And the results were even worse than in 1996: A majority of those who replied said the deficit has gone up, with more than 40 percent saying that it has gone up a lot. Only 12 percent answered correctly that it has gone down a lot.

Am I saying that voters are stupid? Not at all. People have lives, jobs, children to raise. They’re not going to sit down with Congressional Budget Office reports. Instead, they rely on what they hear from authority figures. The problem is that much of what they hear is misleading if not outright false.

The outright falsehoods, you won’t be surprised to learn, tend to be politically motivated. In those 1996 data, Republicans were much more likely than Democrats to hold false views about the deficit, and the same must surely be true today. After all, Republicans made a lot of political hay over a supposedly runaway deficit early in the Obama administration, and they have maintained the same rhetoric even as the deficit has plunged. Thus Eric Cantor, the third-ranking Republican in the House, declared on Fox News that we have a “growing deficit,” while Senator Rand Paul told Bloomberg Businessweek that we’re running “a trillion-dollar deficit every year.”

Do people like Mr. Cantor or Mr. Paul know that what they’re saying isn’t true? Do they care? Probably not.

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16 Comments

  1. Yes but what about the debt?

    If I was making 50,000 a year and I was spending 150,000 a year and I did it for ten years, I would have an annual deficit of 100,000 and have accumulated a 1,000,000 dollar debt. That of course does not count accruing interest.

    If I then got “serious” and cut my deficit in half, I could certainly trumpet that fact, but wouldn’t you be a bit concerned that I was still spending 100,000 a year when I was only making 50,000 a year?

    Wouldn’t my debt then be 1,050,000 next year and 1,500,000 dollars in ten more years. Add on the impact of compounding interest and I bet you might think I had a problem.

    I know my bank would.

  2. doc: The point of this post is that most Americans wrongly think deficits are rising. And they believe that because Republican liars like Rand Paul and Eric Cantor tell them that’s the case.

    Moreover, despite what the Republican liars imply, 62 percent of the current national debt was accumulated before Obama became president. And most of those previous presidents weren’t faced with the economic problems Obama inherited.

    A couple of other things:

    1) The national debt as a share of the U.S. economy reached a maximum during Harry Truman’s first presidential term. Public debt as a percentage of GDP fell rapidly in the post-World War II period, and reached a low in 1973 under President Richard Nixon. The debt burden has consistently increased since then, except during the presidencies of Jimmy Carter and Bill Clinton.

    2) According to the Treasury Department, when George W. Bush took office in 2001 the national debt was $5.73 trillion and when Bush left office in 2009, the national debt had increased to $10.63 trillion. That’s a 85% increase of $4.9 trillion.

    3) The Center on Budget Policies and Priorities said this last fall: “By themselves, in fact, the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time.”

  3. It doesn’t matter a whit to the bank if I spent the money or my wife spent the money or my kids used a credit card without asking.

    I still owe them the money, plus interest which will continue to accrue even if I get my deficit to zero.

    Of course, in the real world, I could always declare bankruptcy for the foolish choices that my family and I made.

  4. Brian Opsahl

    Doc, just do as the republicans have been doing since Ronny was president….hit the Visa like no other before you and when it gets ugly…blame the other guys…as has been going on since 1980..!!

  5. Neftali

    Ever since the Tea Party came into national prominence in 2009 there has only been one party that has consistently introduced reforms to cut spending and balance the budget. Republicans.

  6. Neftali: Cutting spending in the face of economic problems has never been a good idea, as FDR learned the hard way in the late ’30s. The Great Depression finally ended when the government cranked up the spending machine at the start of WWII.

  7. Neftali

    Pat: But in this case, the recession already ended years ago. And the economy is growing, albeit more slowly than what anyone wants.

    As Krugman has pointed out, the yearly deficit is shrinking. In other words, the Republican sequester is working. Austerity is working.

    I also find it hypocritical that for years Krugman has called for increased spending, but now he’s taking credit for deficit reduction.

  8. “As many frustrated Americans who have joined the Tea Party realize, we cannot stand against big government at home while supporting it abroad. We cannot talk about fiscal responsibility while spending trillions on occupying and bullying the rest of the world. We cannot talk about the budget deficit and spiraling domestic spending without looking at the costs of maintaining an American empire of more than 700 military bases in more than 120 foreign countries. We cannot pat ourselves on the back for cutting a few thousand dollars from a nature preserve or an inner-city swimming pool at home while turning a blind eye to a Pentagon budget that nearly equals those of the rest of the world combined.”
    ― Ron Paul

  9. “Cutting spending in the face of economic problems has never been a good idea, as FDR learned the hard way in the late ’30s.”

    I too thought the economy had recovered. At least that is the line we are being fed. Nonetheless, there has to be a limit to spending. Think of it like a hockey stick shaped curve with a point of no return.

    At some point the debt will be large enough that we will have no choice but to cut spending just to service the interest payments on the debt.

    I know it is really fun to spend other people’s money, but eventually the well runs dry. Just ask the people of Detroit or the PIIGS of Europe.

  10. Brian Opsahl

    Now it’s a republican sequester…really.

    You better check that lie again…

  11. Steverino

    The Republican plan is simple. Go to war, complain about spending, push for austerity and blame the Democrats when it doesn’t work.

  12. The Democrat plan is even more simple. Spend other peoples money to buy votes and consolidate power. Their war is the fabled war on poverty and it ain’t going so well.

  13. “I know it is really fun to spend other people’s money…”

    How do you know this doctor?

  14. I don’t really know why you asked such a question, but I’ll play.

    To me money is a resource that must be carefully managed because it doesn’t “grow on trees”. You work hard to earn it and then you must decide what necessities and niceties you are going to spend it on. Necessities first, niceties as you see fit.

    This calculation and worry is all unnecessary when you think that the supply is endless. Maybe that isn’t fun, but it sure is alot less stressful.

  15. Steverino

    And bah humbug to you Doc.

  16. kevinb1986

    And then there’s “the rest of the story”… In 2014, it will still be 10% higher than it was in 2008. Color it, spin it, bury it, splash it with cologne – it’s still higher than it was 5-6 years ago. Inconvenient truths, indeed.

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