The Economist Asks: When Will Voters Care About The Deficit?

This week’s issue of The Economist contains an article that asks a question that has long bothered economists and political scientists: When will voters care about the deficit?

As I’ve mentioned elsewhere, people don’t really care about the deficit, though, as this article mentions, it is probably going to become a serious problem soon:

The deficit actually needs to be addressed. As the economy recovers over the next couple of years, the deficit will decline. It will only decline, however (and depending on what Congress does), to the nearly but maybe not quite sustainable range of 3% to 5% of GDP, and it will then begin rising again around mid-decade, thanks mostly to increasing entitlement spending. By the end of the decade, America’s debt-to-GDP ratio will be at troublingly high levels. And at some point between now and then, probably in a couple of years when America’s economic slack has largely tightened up, interest rates will rise. Depending on how high and how fast they rise, America’s economy will experience something between a slight drag on growth and a serious crisis.

Of course, as we know, the impact of a Federal issue on the deficit and the public’s desire to address that issue are virtually unrelated. First of all, the deficit isn’t a Federal program, so voters probably only see programs to cut, not a final objective at which cutting will no longer be necessary. Additionally, some programs can be clearly viewed as net losses to the U.S. economy, even if that loss is tiny: Foreign aid can be characterized as simple hand-outs to other economies, while the common trope that war is good for business may prevent voters from viewing the defense budget, dueling perennially for first/second place with Social Security as a deficit driver, as a “serious problem.” Voter preferences concerning the role of America in the world are probably also a part of that story.

In short, it is hard for voters to view the deficit as the sum of its parts. Voters are probably worried about the size of the government, the types of regulations being passed, and the ups and downs of the taxes that effect them personally – all different parts of the elephant.

When I think about the question of when will voters care, I think of one of my favorite forecasting books, the classic Forecasting Presidential Elections, by Steven Rosenstone. His model of electoral outcomes involves a simplistic but valuable metric: issue salience. He defines “the economy” broadly as one particular issue which, during any electoral cycle, has some degree of salience in voters’ minds compared to other issues. In general, when “the economy” is a salient issue, it’s bad for the incumbent – it’s probably “salient” because it’s in bad shape. (Loss aversion!)

“The deficit” =/= “the economy,” but the deficit is an element in the set of the economy. Thus, in my opinion, voters will never explicitly care about the deficit as much as they ought to, but they will care about the economy. As America comes up on its own entitlement program crisis, it will become more clear that addressing the economy and addressing the deficit can be viewed as more and more similar problems.

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One Response to “The Economist Asks: When Will Voters Care About The Deficit?”

  1. john Says:

    makes me want to drink alchoholic beverages

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