Many consumers are scratching their heads about a sentiment two lawmakers share; in fact, it might the only thing the president and Speaker of the House agree on: the absence of an immediate debt problem. They might believe there are no huge financial problems for the nation, but their constituents most certainly believe otherwise. The question is why they can make those statements with a straight face.
Not only do the majority of Americans believe we have pressing debt problems, they’re bothered that no one seems to be addressing it. This is making all of us quite nervous. A full two thirds feel that way, which means only one-third of us believe our country is OK from a budgetary stance. Not only that, but an overwhelming number of consumers – 85% to be exact – believe there must be a budget passed in the very near future. Reducing the deficit should be top priority, they say. And that’s not all.
Half of American consumers are peeved about the sequester, too and they also believe there was a Chicken Little component to the president’s methods. And we all agree our frustrations are further heightened when we consider the out of control spending the government is doing.
So are there specifics these leaders should be focusing on? According to the polls, there most certainly are. For starters, there’s a growing frustration associated with the sequester. The Army, Marines and Air Force announced they would be pulling back on the tuition assistance program for this fiscal year and it’s all due to the sequester, even as bills are being passed that will allow undocumented immigrants to go to school tuition free.
Sequester Not Wrong, But…
It’s not that no one disagrees that the sequester is wrong, it’s just that they don’t like feeling as though they were backed into a corner or sold a bill of goods that are filled with inaccuracies. More voters – about 51% – say the across the board sequester cuts that went into effect on March 1 are a good thing, but say public tours of the White House for schools and tourists are unwarranted and that the president could halt those if he really wanted to. However, they say the way the government spends money bothers them and they believe the system is deliberately unfair and the complexity of both tax forms and understanding new healthcare laws is unnecessary. On that note, many support the call by Rep. Paul Ryan, chair of the House Budget Committee, to repeal the 2010 health care law known as Obamacare as a way to help balance the budget. Only 20% believe the law should stand as is.
Such pledges, even if the U.S. economy escapes unscathed, are not entirely reassuring. Prior to the housing market bubble and financial crash, then Fed Chairman Alan Greenspan assured that if problems developed in these markets the costs could be contained. That forecast turned out to be dead wrong. So despite the Fed’s public assurances that the costs can be contained within Europe, considerable uncertainty remains.
Slightly less than half have faith that Obama can fix the economy. One third of us are “not at all” confident in his abilities. And speaking of that, only half of Americans support the Obama Administration and the only time that number was higher than 50% was just before he was re-elected – and even then, it was only 51%.
Another interesting finding is that half of us believe Obama owes former President George W. Bush an apology for his comment while campaigning for the 2008 campaign that Bush was “unpatriotic” when he added $4 trillion dollars to the debt. After all, Obama has added more than $6 trillion since he took office that same year.
For the past couple of days, the central bank’s policy setting committee has put forth its predictions and among them, it was revealed even it sees only a modern pace recovery effort. Further, it also says unemployment will decline gradually at best as that the current 7.7% unemployment rate is entirely too high. It will take awhile, it says, before it will hit the 6.5% threshold for interest rate changes.
For its part, the Federal Open Market Committee weighed in and said inflation is moving below its goal of 2%, though expectations are stable. The fiscal policy, explained Fed Chairman Ben Bernanke, has become further restricted and is working against any positive recovery efforts. It will continue its efforts of stimulating the economy.
And let’s not forget student loans and credit card debt. Americans are still struggling. There is good news on both those fronts, but the fact is, until it begins to outweigh the burdensome truths of today, it will remain a significant problem both in the economy and the personal finance outlooks for consumers. Even if the U.S. economy escapes unscathed in the long term – which is certainly unlikely – historically, these types of predictions are misleading. Remember, just before the housing market bubble and financial crash, then Fed Chairman Alan Greenspan assured us that were problems to develop in these markets the costs could be contained. That forecast as we know couldn’t have been more wrong. So despite the Fed’s public assurances that the costs can be contained within Europe, considerable uncertainty remains.
Remember, the student loan total hit the $1 trillion mark in late 2012 and it has only increased since then. The Fed does see what it calls “potential bubbles” in more than a few specific markets. Bernanke referred to them as “frothy”. Finally, even Bernanke admits that it’s concerned about quantitative easing specifically due it its guarantee to buy $85 billion each month in bonds. It still isn’t clear about the impact on financial markets. Still, it’s opted to not shift its policies.
Other specifics that have Americans concerned about the Obama and Boehner comments are peripheral. Concerns about gun control and immigration have many holding on to their cash because of the uncertainties they present.
Also, and this is especially interesting because of the potential for spillage into U.S. markets, the banking and fiscal crisis in Cyprus adds even more uncertainty and risk. Bernanke addressed that too and said the Fed has taken steps to ensure that financial setbacks in Europe will not significantly affect the U.S.
It’s difficult to believe change is coming when it appears our elected officials are not seeing the same red flags as consumers see. With so many reports, studies and statistics, it makes little sense to anyone how either could insist there’s no immediate debt problem in this country.