Exploring Attitudes Toward Deficit-Financed Investments in the Economy
By Ethan Winter
In a new piece for the New York Times, economic reporter Talmon Joseph Smith outlines how inflation and a rising national debt have not decreased the appetite for United States Treasury bonds. The political upside of Smith’s reporting is that the United States is well-positioned to deficit-finance new spending. The challenge is then political.
Gallup has compiled longitudinal data on concern about the deficit. As of March 2021, 49 percent of those surveyed said they worry “a great deal” about the debt. While this is high, the Gallup data also suggests that concern about the national debt is ebbing somewhat. In 2011, for instance, 64 percent of those surveyed said they were concerned “a great deal” about the debt.
From January 19 to 20, 2022, Data for Progress conducted a survey of 1,305 likely voters nationally to measure attitudes toward deficit spending and the national debt. Specifically, we sought to measure whether or not mention of the low interest rates currently available to the U.S. government is an effective argument in favor of deficit financing.
In the first experiment, likely voters were asked if they think the government should be doing more or less to generate economic growth, or if they think the government is already doing enough. Likely voters were then reasked the same question, this time telling them that these government efforts would involve taking on more debt.
Sixty-two percent of likely voters say they want the government to be “doing more” to generate economic growth. This number falls by 13 points when voters are told this effort will involve the government taking on more debt. Nonetheless, 49 percent, a comfortable plurality, still want the government to be doing more to stimulate economic growth. While concerns about the deficit are important, larger concerns about the state of the economy outweigh the deficit in importance.
Looking at attitudes across self-identifying partisanship, we can observe a familiar pattern. Sixty-six percent of self-identifying Democrats say they want the government to do more to generate economic growth. This falls by 5 points to 61 percent when reference to the national debt is made. Among likely voters who self-identify as Independent/third-party and Republican, the fall is larger — 14 points and 21 points, respectively — when they are told government efforts to create economic growth involve taking on more debt.
The next experiment was set up in three parts. First, likely voters were asked if they would support $2 trillion in infrastructure spending over 10 years. Second, they were reasked the question, this time being told that this investment will add to the national debt. Third, support was asked a final time, with likely voters being told that, with interest rates on Treasury bonds below 2 percent, the government can make this investment cheaply, with the resulting growth paying for it in the long run.
We find that support for investing in infrastructure is high initially, it dips when voters are told it would add to the national debt, and then some support is recovered after likely voters are told the statement about low interest rates and economic growth. Specifically, support for $2 trillion in infrastructure spending is +29 points on net, falling 23 points to +6 when voters are told about it adding to the debt, before increasing by 13 points to +19 on net in the third ask.
When responses are broken out by self-identifying partisanship, we see a pattern in line with the first question. By a +73-point margin, Democrats support investing in infrastructure. Net support falls by 11 points to +62 when they are told this would add to the national debt. Support remains at +62 points in the third iteration of the question when Democrats are served the statement about the low interest rates.
Independents and Republicans again display far more concern about the national debt. Independents initially support the infrastructure spending by +29 points. Net support falls by 31 points when they’re told this would add to the debt, before increasing by 22 points in the third iteration of the question. Republicans begin skeptical of investing in infrastructure, opposing it by a -14-point margin, on net. When they are told this proposal would add to the national debt, opposition increases by +28 points. Attitudes shift back somewhat when Republicans are told about low interest rates, with net support increasing by +18 points.
Voters want the government to do more to generate economic growth in general and particularly support investing in infrastructure. How these efforts are paid for matters. When voters are told government efforts involve adding to the national debt, support declines. However, there is evidence drawn from the Gallup tracking data that concern over the national debt is declining. There is a degree of partisan sorting on the issue. Independents and Republicans evince higher concern over the debt than Democrats. Emphasizing that low interest makes deficit financing affordable stands out as a strong argument for adding to the national debt.
Ethan Winter is a senior analyst at Data for Progress.