Permafrost Friday: On The Wrong Track

July 15, 2010: A quick glance at a menu of public opinion polls shows one consistent theme; Americans believe the country is on the wrong track.

An average of 63% of those polled through various surveys over the last month have expressed concern about the direction of the country, while an average of 31% have said the country is on the right track.

When taken in context over the last two years, the amount of dissatisfaction is creeping upwards to levels not seen since the economy began collapsing in 2008, when polls showed an average 75% of Americans felt the country was on the wrong track.

So what is driving the sour mood?

The number one issue in poll after poll is the economy. With sluggish job growth in the private sector and unemployment still hovering around 9.5%, most respondents feel that strengthening the economy and creating jobs should be the number one prioirity.

Meanwhile, President Obama is feeling the heat from the dissatisfaction from around the country as his job ratings have reached a low point of 44%. But while his job approval ratings have fallen to new lows, the public seems to like him more than his policies. In turn, a recent FOX News poll showed that 52% of those polled had a favorable opinion of Obama.

But as we know in politics, the president gets none of the credit when the economy is good and all of the blame when the economy is bad. Government cannot create private sector jobs and that's what people want more than ever.

In June the economy shed jobs as private sector positions failed to absorb the end of temporary employment for thousands of census worker jobs created by the stimulus.

While the unemployment rate declined from 9.7% to 9.5% in May, it wasn't because more jobs were created, it was because more unemployed workers stopped looking for work.

The sluggish unemployment rate is exacerbating several other problems, both political and non-political.

Political Factors

In hopes of reviving the economy, the Federal Government has passed several major pieces of legislation over the last two years. The first was the $987 billion stimulus passed in January of 2009, then health care reform a year later.

All in all, government spending has skyrocketed and the national debt now stands above $13 trillion dollars. To put that into perspective, many might remember the quixotic campaign of Ross Perot back in 1992, when he warned of the growing threat of government spending and a burgeoning national debt.

Back in the day, with Perot and his charts, and his worries that the national debt was like a "crazy aunt living in the basement," and sooner or later we'd have to deal with it, the total national debt was $3 trillion dollars.

Economist would argue that in times of recession, deficit spending is necessary to hold the economy up, however the average citizen doesn't see it that way. They're angry at what they see is run away government spending and a growing federal bureaucracy.

But here's the rub, the government is currently spending 65% of its budget on three areas; military, social security and medicare. So if Americans want less government, they'll have to take less government, which means cutting programs that nobody has the guts to touch.

So while Americans are angry at government spending, they don't seem in any rush to do with less from entitlements. Given the aging demographics, the boomer retirement that is upon us and the fact that more Americans are caring for an aging parent, taking less isn't an option for the average American household.

It isn't just government spending however, it's like a stew of anger comprised of many different things. Immigration, the wars in Iraq and Afghanistan, the Gulf oil spill and the sluggish economy all creates this feeling the country is on the wrong track.

Non-Political Factors

There is without a doubt a factor of personal dissatisfaction embedded in all of these polls. If were not happy with our own lives, we tend to think everything else around us is miserable as well and in some way responsible for the state of affairs.

While we blame run away government spending, consumers themselves have enjoyed a decade of runaway personal spending and debt. Now with a sluggish economy, declining home values and tight credit, the free spending days have come back to haunt many American families.

The generation that endured growing up in the great depression era had a more reserved outlook on debt, which was replaced by the 50's generation that was the start of the consumer boom.

With advancement in manufacturing and technology, Americans began using credit to buy all kinds of durable goods like appliances and televisions. Families replaced their cars more often. And the emergence of credit cards allowed consumers to buy now and pay later.

Compared to the previous generation, where money was tight and credit something to protect, later generations have been taught to believe that if you want it, there is a way to pay for it even if you can't afford it.

While spending increased, savings decreased and consumer credit regularly outstripped growth in GDP.

In 1945, consumer credit in America totalled $5.7 billion. In 2008, consumer credit totalled $2.6 trillion.

During the last decade credit was relatively easy to obtain. Credit cards would show up in consumers mailboxes. Come ons of cheap interest rates, buy now pay much later was the sales pitch de jour. Americans used their inflated values of a bubbly housing market to fuel their spending habits for flat screen televisions, new cars and vacations.

Between 1997 and 2006, mortgage equity loans rose from $20 billion a quarter to more than $140 billion a quarter. Then came the crash and consumers were suddenly upside down in the value of their homes.

Today, with much tighter credit restrictions imposed by lenders, consumers are having a harder time obtaining the necessary credit to continue fueling their spending ways. In many cases, the inability to refinance ones home is leading to foreclosures and bankruptcy.

Throw in medical costs that have grown exponentially in the last ten years and more and more Americans getting older and sicker and you have the perfect storm for increased financial angst and despair.

All of these things funnel into the recent polls that show while we despise government and in some cases think it's the problem, we still expect government to solve problems it can't like create jobs, protect our credit scores and stabilize the housing market. And we expect this all without government spending any money.

A recent poll of 450 Alaskans showed that 83% think the country is on the wrong track. This is a perfect example that sums up my point.

For the last fifteen years we have rejoiced, ney, celebrated every federal dollar we have received from Washington D.C. In Alaska we've built Sea Life Centers, Airport Rail Depots and our federal take at one point was the highest per capita of any state.

Today the bill is coming due for our spending sprees both government and personal, at a time when we can't afford it and that makes us angry.

However the buck stops with each one of us.

If we feel the country is on the wrong track, we have no one to blame but ourselves because we didn't get here overnight, we've been travelling this same track for a long time.