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    Talking Past Each Other - Economic Policy Institute (December 2006)

    What Everyday Americans Really Think (and Elites Don't Get) About the Economy


    FOREWARD

    It's Still "the Economy, Stupid"

    Throughout the 2006 election campaign, President Bush and his allies complained that they weren't getting the credit they deserved for what they considered to be a strong and growing economy. On the Friday morning before Election Day, when the U.S. Department of Labor announced that the unemployment rate had fallen to its lowest rate since May 2001, Bush couldn't contain his optimism about the economy—and the elections. Campaigning in Missouri for Senator Jim Talent (who would be defeated), Bush boasted: "If the Democrats' election predictions are as good as their economic predictions, we're going to have a good day on November the seventh."

    The President and his supporters didn't have a "good day" four days later, as Republicans lost control of the U.S. Senate and House of Representatives. But, in the weeks before the election, many of the nation's leading pundits echoed the administration's analysis. The economy, they agreed, was doing well, and, if the President's party was trailing, then the voters must be concentrating on concerns other than the economy—the Iraq War, the Congressional scandals, or simply the "six-year itch" that afflicts administrations entering the second half of their second terms. "Not a Pocketbook Election" was the headline on a column by William Schneider, the respected senior political analyst for CNN.

    Just as the election results confounded the President's predictions, the findings of the exit polls on Election Day offered a counterpoint to the conventional wisdom, which held that most voters weren't worried about the economy and were basing their decisions on other issues. Most surveys taken just before or on the day of the election found that the economy was second only to the Iraq War as an important issue on people's minds, that Americans were anxious about the issues of jobs and incomes, and that these economic anxieties were translating into votes against the President's party.

    Thus, on Election Day, 39% of the voters deemed the economy "extremely important" to their votes, and, by a margin of 59% to 39%, they said they were voting for Democrats for the House of Representatives, according to exit polling conducted by Edison Media Research and Mitofsky International for a combination of broadcast and cable television networks. Revealing the depth and breadth of economic anxieties, 81% of the voters told the exit pollsters that they had just enough to get by financially or were falling behind, and 68% thought the next generation would have it worse. Indeed, economic anxieties were driving the most volatile voters from the Republican to the Democratic camps. According to the national exit poll, voters without four-year college educations supported Democratic candidates for the House by 53% to 45%, compared to a 51% to 48% margin in 2004.

    In races for the Senate and House, especially in major industrial states, Democratic candidates used populist appeals to woo and win working class voters. For instance, in Ohio, where Sherrod Brown struck an explicitly populist note, 42% of the voters said the economy was extremely important—and these voters supported Brown over the Republican incumbent Mike DeWine by an overwhelming 71% to 29% margin. Similarly, Bob Casey defeated Rick Santorum for Senator in Pennsylvania, where 38% said the economy was extremely important, and Claire McCaskill defeated Jim Talent in Missouri, where 45% said the economy was extremely important.

    The voters' concern with economic issues; the potency of populist appeals; and President Bush's complacency about the economy's condition and the voters' attitudes towards it—all confirm the central theses of this report. Americans are anxious about national economic trends that extend well beyond the official employment rate. There is a "new insecurity" that includes concerns about layoffs, off-shoring, stagnant wages, cuts in health coverage, and the decline of guaranteed pension benefits. And the nation's decision-making and opinion-leading elites tend to be out of touch with the ways in which everyday Americans think and talk about their concerns about the economy.

    This report is based upon the findings of focus groups and national surveys that the Economic Policy Institute conducted in 2005 and 2006 under the sponsorship of the Rockefeller Foundation's Economic Resiliency Group, as well as a study of the findings of public opinion research about American's attitudes about the economy over the past quarter century. The purpose of this research was not to take a snapshot of public opinion in 2006 but rather to paint a portrait of how Americans think about the economy, allowing for changing economic, social, and political conditions. We sought to uncover and analyze Americans' underlying attitudes about the economy—basic ways of thinking that persist in the midst of upturns, downturns, and administrations of both major parties. Beyond the anxiety of the first half of this decade and the prosperity of the second half of the last decade, these attitudes have been more profoundly influenced by the transformative impact of what has come to be called the "New Economy"—the new ways of working and doing business that have emerged in response to new technologies, international trade and investment, and the deregulation of many major industries.

    In many important ways, the utterances of political and governmental elites on both sides of the spectrum—conservatives and liberals—do not reflect the ways that everyday Americans think about the economy. Most Americans tend to be simultaneously pessimistic and optimistic about the economy. Most people are pessimistic about how national economic trends are affecting people like them. They are concerned about insecurity, inequality, and the difficulty of attaining and maintaining a middle class standard of living. But, at the same time, most people are optimistic about their own economic prospects and their families' futures. They still believe that, if people study hard, work hard, and sacrifice for their families, they can achieve the American Dream.

    In general, conservatives have been out of touch with American attitudes by under-estimating people's pessimism about the national economy. Meanwhile, liberals have been out of touch by under-estimating people's optimism about their own situations.

    If these findings point to a new synthesis about how policy makers should talk about and act upon the economy, it is this: The nation should provide greater economic security to hard working families so that they can make the most of expanded economic opportunity. Now, as in the eras of the Homestead Act and the G.I. Bill, Americans need to stand on a solid foundation so that they can reach for their futures. Policy makers who listen to the people will best be able lead in the years ahead.

    Talking Past Each Other

    ABOUT EPI

    The Economic Policy Institute was founded in 1986 to widen the debate about policies to achieve healthy economic growth, prosperity, and opportunity. Today, despite rapid growth in the U.S. economy in the latter part of the 1990s, inequality in wealth, wages, and income remains historically high. Expanding global competition, changes in the nature of work, and rapid technological advances are altering economic reality. Yet many of our policies, attitudes, and institutions are based on assumptions that no longer reflect real world conditions.

    With the support of leaders from labor, business, and the foundation world, the Institute has sponsored research and public discussion of a wide variety of topics: globalization; fiscal policy; trends in wages, incomes, and prices; education; the causes of the productivity slowdown; labor market problems; rural and urban policies; inflation; state-level economic development strategies; comparative international economic performance; and studies of the overall health of the U.S. manufacturing sector and of specific key industries.

    The Institute works with a growing network of innovative economists and other social-science researchers in universities and research centers all over the country who are willing to go beyond the conventional wisdom in considering strategies for public policy. Found-in scholars of the Institute include Jeff Faux, former EPI president; Lester Thurow, Sloan School of Management, MIT; Ray Marshall, former U.S. secretary of labor, professor at the LBJ School of Public Affairs, University of Texas; Barry Bluestone, Northeastern University; Robert Reich, former U.S. secretary of labor; and Robert Kuttner, author, editor of The American Prospect, and columnist for Business Week and the Washington Post Writers Group.

    For additional information about the Institute, contact EPI at 1333 H St. NW, Suite 300, Washington, DC 20005, (202) 775-8810, or visit www.epi.org.
    Last edited by FRED; 01-07-07, 11:14 AM.
    Ed.
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