With little more than a year until the presidential election, two new reports—a survey from CBS/NYT and a CBO brief on household income—illuminate the treacherous terrain on which the campaign will be waged. The candidates will be fighting for the sympathies of an electorate that is utterly dispirited and in no mood for promises of uplift from either party. They say they want change, but they have lost confidence in the public sector as the agent of change.
That would seem to give the edge to the Republicans, but unfortunately for them, most people think they’re out to serve the interests of the rich, who already have too much. That would seem to move the edge back to Obama and the Democrats. But unfortunately for them, the people can’t figure out whose interests Obama and the Democrats want to serve—or whether they have a plan that could translate good economic intentions into tangible results.
Let’s begin with the latest CBS/NYT survey, which finds that only 10 percent of the electorate trusts the federal government to do what is right most of the time—by far the lowest level of confidence ever recorded. Only 9 percent approve of the way Congress is doing its job, which—as Senator John McCain is fond of stating—pretty much narrows its base of support to staff and family members.
Trust in the political system is low because the country is widely perceived as heading in the wrong direction and politicians aren’t seen as providing answers. From Barack Obama’s inauguration through the end of 2009, on average, 39 percent of the electorate thought that the country was generally heading in the right direction—not great, but much better than the 2008 average of 13 percent. But things have gone downhill ever since: The “right direction” choice averaged 33 percent in 2010 and 28 percent thus far in 2011. As of this week, it stands at 21 percent.
When it comes to the public’s faith in government providing effective answers, in mid-September, 43 percent of the people thought that Obama had a clear plan for creating jobs. Five weeks later, after a non-stop presidential jobs tour, that figure has fallen to 38 percent—unimpressive, but far better than the Republicans in Congress, who have persuaded only 20 percent of the electorate that they have a jobs plan. But the people aren’t grading the president on a curve: Only 35 percent approve of the way he is handling job creation, and only 38 percent approve of his handling of the economy as a whole. (By contrast, public approval of his handling of foreign policy and Iraq stands at 50 and 60 percent, respectively. But these aren’t likely to be voting issues next year.)
Such high levels of pessimism and mistrust should be political gold for Republicans. But the electorate has its own distinct worries about the GOP, and they center on the issue of income inequality. The CBS/NYT survey asked the people a blunt question: “Do you feel that the distribution of money and wealth in this country is fair, or do you feel that the money and wealth in this country should be more evenly divided among more people?” 26 percent of the respondents thought that the current pattern is fair, versus 66 percent who thought the distribution should be more even.
This brings me to the second new report—from the Congressional Budget Office, on trends in household income. Its core finding can be stated simply: In the three decades from 1979 to 2007, the distribution of household income became substantially more unequal, even taking transfer payments and taxes into account. The bottom four quintiles saw their share of income drop, while the share going to the top quintile rose from 43 percent to 53 percent. And in that top quintile, near all of the gain went to the top 1 percent, whose share rose 9 percent points, from about 8 percent to 17 percent. Among that rarified group, average real household income after taxes rose by 275 percent, versus 35 percent for households at the median. When the “Occupy” movement talks about the 99 percent, they’re on to something. And so are the people as a whole.
CBO identifies the widening dispersion of income derived from the market—wages and salaries, capital and business income, and capital gains—as the major reason for the increasing inequality of household income. It turns out that all these sources of income have become less equal. In 1979, the bottom 80 percent of households received 60 percent of total labor income, 33 percent of business and capital income, and 8 percent of capital gains. By 2007, those figures had fallen to 50, 20, and 5 percent, respectively.
Simply put, people are justifiably worried that income inequality is too high, and they see Republicans as working to exacerbate it. For example, when asked whom they think the policies of Congressional Republicans most favor, 69 percent say the rich. Only 9 percent say the middle class, and only 2 percent say the poor. Only 15 percent believe that Republican policies treat all groups equally. Here are the comparable figures for the Obama administration: 28 percent say its policies favor the rich, 23 percent say the middle class, 17 percent say the poor, and 21 percent say Obama’s policies treat everyone equally. The American people know what Republicans stand for, and they don’t much like it. By contrast, they can’t figure out what Obama stands for—and they don’t much like that either.
In sum, while Americans sense that generating jobs and economic growth is an urgent task right now, they’re also concerned about the long-cycle trend toward increasing inequality and whether it’s compatible with either economic or civic health. But they still have no idea to whom they should turn to address those concerns. Unless the way the free market works changes dramatically, they know they can’t expect the “invisible hand” to reduce inequality. If the people want more equality, which they say they do, they can only get it through public policy. The catch is they don’t think they can trust the government to get the job done. They feel, in other words, that they’re stuck with a status quo they dislike.
It will be the job of the presidential candidates, of course, to capture and appeal to this dispirited mood. In that way, one thing is already clear: It won’t be a campaign full of “hope and change.”
William Galston is a senior fellow at The Brookings Institution and a contributing editor for The New Republic.