As the battle over the 2012 federal budget continues to heat up, a variety of interesting and important things have taken place; some publicly trumpeted as terribly important, and others less well-observed.
The item that has perhaps most dominated the news cycle in recent days has been, of course, the downgrading of U.S. Treasury Bonds from "stable" to "negative" by the Wall Street ratings firm Standard & Poor's, followed quickly by warnings from the company that America could even lose its AAA rating. (A threat on which S&P did not make good.) Much I-told-you-so clucking ensued from the chattering classes, but what went largely ignored outside the financial press was that the effect this announcement produced among investors was anything but sobering.
After a quick climb in interest rates - the result one would expect if U.S. debt is now, in fact, riskier - the 10-year rate on T-bills continued heading south, indicating - if anything - growing confidence in treasury bonds as a safe investment. Even leaving aside the rank failure of ratings agencies to do anything approaching a good job in the years leading up to the 2008 financial crisis, the reaction of the people actually investing their money is a far better indicator of expected performance than any pronouncement from the deservedly maligned Standard & Poor's. As Paul Krugman put it, "... this was a non-event."
Perhaps an even more surprising break from the established narrative, however - if even less reported - are the results of a number of surveys concerning the manner in which the American public wants its government to address our current financial situation. As we moved into 2010, there was already a broad disconnect between the spending most Americans wanted to cut from the budget, and the significance of the impact such cuts would have on overall spending:
That ignorance of actual budget priorities has continued, and was most recently best exemplified by the hue and cry over federal funding for National Public Radio (NPR):
Nonetheless, despite the yawning chasm between general public perception of federal spending and actual budget realities, some very interesting trends can still be discerned from new polling. A Washington Post/ABC News survey from April 19th revealed that not only is the prospect of combining spending cuts with tax increases gaining traction, fully 72% of Americans believe taxes on those making $250,000 or more a year should be raised as one element of any plan to reduce the deficit. Likewise, two-thirds agreed that Medicare should remain a defined benefit program, rather than a voucher-driven initiatve subject to market forces, as proposed by Republicans:
Further, albeit with markedly less precise wording, a New York Times/CBS News poll from last Friday revealed lower support for raising taxes in general, but again found that 72% of all adults would increase the taxes paid by those making more than $250,000 a year. Even more arresting is the fact that a majority of Republicans questioned feel this way:
More worrying still for movement conservatives is the fact that a clear majority of all adults who took part in the Times poll again believe that government has a role to play in providing health care to the poor and the elderly, with even members of the GOP solidly behind federal involvement in medical care for seniors:
And if all that weren't enough to have Paul Ryan tossing and turning in his bed at night, not only was it revealed that the Wisconsin GOP budget hawk - who frequently blames "entitlements" for the country's fiscal woes - had received significant benefits from Social Security as a child, but a third poll from McClatchy/Marist also shows strong opposition to cuts in Medicare and Medicaid from all points on the political spectrum. Fully 80% of the McClatchy poll respondents are against reducing Medicare and Medicaid to close the deficit gap, as are - somewhat astoundingly, given their anti-government rhetoric - 70% of Tea Party supporters.
What does all this mean? It's probably premature to draw fully-formed conclusions, but there are strong indications that not only have Republicans in the House of Representatives badly miscalculated with their passage of the Ryan budget proposal, but that Americans are starting to wake up to the extremist ideology at the heart of modern GOP leadership. It would be nice to think that realization stems from compassion, but the reality is that things have gotten so bad on such a broad basis that almost everyone either has firsthand experience of the economic downturn, or knows someone close to them who has.
As President Obama recently said, "Nothing is easier than solving a problem on the backs of people who are poor, or people who are powerless, or don’t have any lobbyists, or don’t have clout. I don’t think that’s particularly courageous." For whatever reason, more Americans seem to be realizing that, and that fact is - perhaps, just maybe, hopefully - indicative of better things to come.