The debt-ceiling deal may not have lasting economic significance. After all, it doesn’t bind the future where it’s supposed to do the heavy lifting. The debt-ceiling debate, however, may have changed American politics. The politicians looked terrible but may not be able to change the subject get Americans excited about something else.
The Pew Research Center for the People and the Press released an extraordinary set of findings on public participation and interest in news coverage of the debt-ceiling debate.
Forty-one percent of Americans were “very closely” following the drama in Washington last weekend. The debate beat out the economy generally, the Norway massacre, the NFL labor agreement, the stock market, and the 2012 elections. Amazingly, 10% of those surveyed said they bothered to contact an elected official on the federal deficit. Furthermore, those who were most interested and most likely to weigh in fell equally on both ends of the political spectrum. Twelve percent of conservative Republicans and 14% of liberal Democrats say they contacted their representatives.
The vast majority, likely, after many hours of watching television and reading press reports, didn’t go to bed meekly regretting their economic illiteracy; they felt sure enough about what was going on to volunteer that their politicians were “ridiculous” and “disgusting.”
Effectively, Americans have experienced another national trauma. It’s too early, of course, to say anything with confidence, but there surely will be consequences—in politics and in the economy. Here are three bald assertions:
One: Washington’s perceived economic incompetence is a critical economic factor, it affects consumer and investor behavior.
It matters when people stop trusting banks and the stock markets, and it matters as well when they think Washington is incapable of offering coherent economic leadership. (Is there any point increasing public borrowing to stimulate consumer demand if consumers respond by saving more because they fear that $trillion deficits will break the economy?)
Two: simple economic slogans won’t get you elected.
People may or may not be polarized. However, they are now intensely interested in economic issues and have been exposed to many points of view on what should be done. They didn’t tell the Pew Center that Washington politicians were ridiculous because they didn’t use the right sound bites, but because sound bites were all the politicians had to offer. Promises like “jobs, jobs, jobs” and “cut, cap, and balance” and retorts like “job-killing taxes” and “fair shares from millionaires and billionaires” won’t work with the un-indoctrinated.
Three: the public watched what was happening because they know that what leaders do still counts.
The Iraq War led to severe voter remorse in 2006 and 2008. People didn’t turn their backs on the world then and they are not going to try to fix the economy without a competent federal government.
Democratizing elite policy-making has been America’s unique political dynamic. It has worried the world for over a century. However, as often as not, in foreign as well as domestic affairs, the final verdict of the people has favored enlightened American self-interest. But, nothing’s a sure thing.