The Economy – Number One in Voters’ Minds

The country’s economic recession technically ended two years ago, but it’s still the top concern for voters.

A Gallup poll showed 92 percent of voters considered the economy the most important issue in the 2012 presidential election. (For reference, only 72 percent considered terrorism and national security an important issue and only 38 percent considered social issues like gay marriage and abortion important.)

The economy is always an important election issue, according to University of Wisconsin – Madison Political Science Professor Barry Burden. But in especially tough economic times, like 1992 when Bill Clinton beat incumbent candidate George Bush and 1980 when Ronald Reagan beat James Carter, it matters even more.

And this time it’s even more pronounced, Burden said. The deficit is bigger, unemployment is higher and home values haven’t recovered since the real estate crash in 2006. The stock market has been faring better, Burden said, but that isn’t enough to calm Americans’ fears about their economic futures.

“The economy is a complicated bag of things because it’s so many indicators, and they don’t always point in the same direction,” Burden said.

According to the National Bureau of Economic Research, the recession began in December 2007, and the unemployment rate rose to almost 7 percent by the fourth quarter of 2008. Unemployment eventually hit over 10 percent.

To combat the recession, President Barack Obama implemented a stimulus to boost the economy, spending $787.6 billion since 2009 to fund projects around the country. Over $13 million was spent on 52 projects in Door County.

Although the stimulus helped the country avoid disaster, it didn’t fix the economy. The national debt is over $16 trillion, and unemployment in September was 7.8 percent.

Congress agreed to raise the federal debt ceiling, the amount of money the federal government is allowed to borrow, to $16.694 trillion in August 2011. In exchange for the higher debt ceiling, Congress also created a Joint Select Committee on Deficit Reduction, six Democrats and six Republicans, to propose ways to reduce national spending by $1.5 trillion over a 10-year period. It had to come to a decision by Nov. 23, 2011.

The committee missed the deadline.

Without a budget, the United States is on its way to hitting a “fiscal cliff” in January 2013. The “fiscal cliff” was set up by the Joint Select Committee on Deficit Reduction as a way to encourage Congress to pass a budget. If nothing’s done before Jan. 1, 2013, $100 billion of spending will be cut, and taxes will increase, adding $380 billion of revenue. The Congressional Budget Office estimated the deficit would be cut by $560 billion in 2012-2013 under fiscal cliff policies.

If we hit the cliff, cuts will be made to unemployment benefits, Medicare payments to doctors, and $65 billion in cuts to most government programs, including a $30 billion cut to defense. Bush-era tax cuts and payroll tax cuts will expire, and the alternative minimum tax and health care taxes will increase.

Leaders from some of the country’s largest financial firms have warned of interest rate hikes and a drop in the United States credit rating, according to a Washington Post article.

“We’re about to hit the trigger, the financial cliff, in January,” Burden said.

Burden doesn’t have much hope that Congress will pass a budget in time to avoid the huge cuts and tax increases. They’ve allowed other big deadlines to come and go, like the Farm Bill, and have passed up handfuls of budget suggestions.

“This is probably the least productive Congress in most of our lifetimes,” Burden said. “They’ve barely governed.”

The United States Congress has passed 61 bills this year, just 1.6 percent of those introduced, and only 90 bills in 2011. That’s compared to 125 bills in 2009 and 258 bills in 2010.

Only 13 percent of Americans approve of the job Congress is doing, according to a Gallup poll.

The future of the country’s economic policy depends on who is voted into Congress in November and if those legislators can work together to reconcile the philosophical differences between their parties.

Republicans believe the government is the problem with the economy, Burden said. They tend to believe it regulates business too much and keeps businesses from growing and creating jobs. By paying for services like unemployment and Medicaid, Republicans also tend to believe the government creates dependency for people who get those services.

Across the aisle, Burden said Democrats believe the government has a role to play in the economy by providing a safety net for people in trouble, and stepping in with programs like the stimulus when the market fails. They also believe the government should regulate businesses to protect the environment and public health.

“Probably the differences are clearest when it comes to how they would levy income tax,” Burden said.

Republicans typically want everyone to pay the same percentage of income tax so everyone contributes equally, Burden said. Democrats tend to want a more progressive system, where people with higher incomes pay a higher percentage of income taxes than people with lower incomes.

The Republican model has been played out in Wisconsin over the past two years. In 2011-2013 the state balanced the budget without raising taxes but made some deep cuts, including $834 million cut from public schools and $500 million cut from Medicaid, according to the Wisconsin Council on Children and Families. Wisconsin ended the 2011-2012 fiscal year with a $342 million fund balance, and that was after depositing $109 million into the state’s “rainy day” fund.

To see where the 2012 candidates stand on economic policy, as well as a recap of their views on healthcare and education, take a look at the candidate boxes on the following pages.