click for ginormous graphic
wrong track
Source: Bloomberg

 

Most Americans say the country is on the wrong track:

“Americans also are pessimistic about the course of the country, with 68 percent saying it’s headed in the wrong direction, the most in two years, according to the poll of 1,000 adults conducted Sept. 20-23.”

Note this is not a general malaise:

“Americans’ negative feelings about Washington contrast with more optimistic views about their own prospects. Thirty-five percent of respondents expect their financial security to improve during the next year, up from 25 percent in December 2012.”

There are a variety of factors leading to this, one that is worthy of a deeper dive into the subject. For now, lets look at a few details related to investing.

I have been watching the political situation in D.C. with a sort of bemused detachment. My primary focus is trying to determine what sort of economic damage, if any, a government shut down will bring. What this might mean for US corporate profits is my primary professional concern.

The economic damage looks likely to be transitory and modest, with the most likely probability slicing some 25-50 basis points off of FY 2014 GDP. Its possible that the shut down gets averted, or lasts only a few days, and therefore the impact would be almost zero. The high end of the range is the possibility that the shut down goes on for a long while, and that leads to a significant slowdown, or even a recession (Note this is a low probability outcome).

For now, the markets have one watchful eye on DC. They do seem to be a bit tired, and the trade feels heavy. We are overdue for a modest correction anyway. But there does not seem to be an overwhelming concern about a major shut down occurring, or other market related issues. Lots of heat, not much light seems to be the market consensus.

As a socially progressive, fiscally conservative individual, I have never really identified completely with either party. The Jacob Javitz wing of the GOP is now extinct, and so I am without party. As a rational pragmatist, I don’t have any use for ideologies that drive the extreme wings of either. But the key difference between the Right and the Left is that the Left’s extreme wing seems to have been contained by moderate Democrats. The extreme right wing of the GOP, on the other hand, has taken over. That has enormous ramifications for the future of the GOP.

Click thru the graphic above — it shows that President Obama’s approval ratings are at two year lows, 47% net approval versus 49% disapproval. The Democratic Party is even worse off, with 44% approval rating (versus 47% disapproval). But the Republicans are getting the brunt of the public’s ire, with a net favorable rating of just 34%, and a disapproval rating of 56%. Those are astonishing, implosive numbers.

The more fascinating aspect of this is watching one of the two major political parties implode in real time (almost in HD/slow motion). Any two party system requires, well, two parties, and if the GOP internal rifts tears itself asunder, it can have very real and likely unforeseen consequences.

My best guess is that the public wants the government to try to solve major (not minor) problems. That includes issues like financial risk, Iranian nukes, persistently high unemployment, and expensive medical care costs. But the far Right’s ideology is fervently opposed to those sorts of large and interventionist government policies, despite a plurality of the public supporting them. Hence, the schism within the GOP itself and why the broader public disapproves of the Republicans more than the Democrats. This is not an endorsement of either side, but it is incumbent on us to acknowledge this simple reality.

I haven’t the slightest idea how this plays out. Stay tuned . . .

Category: Data Analysis, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

31 Responses to “Poll: 68% Say Washington on Wrong Track”

  1. [...] 68% of Americans surveyed believe Washington is on the wrong track. The other 32% were only half listening to the questions while fast-forwarding through commercials during a DVR'd Breaking Bad episode.  (TBP) [...]

  2. rd says:

    I haven’t had the impression that Washington was on a track – just a bunch of opposing ideologies being batted around inside the pinball machine of demagogery while the lobbyists pull strings in the background to make sure their pet demands are inserted regardless of the pontificating.

    I am hoping that we only get an economic slowdown out of this. Unfortunately, there are lots of countries in the world with serious economic issues, including our own. Historically, the politicians have blamed outside forces and started wars to get the people’s minds off of their internal problems during these types of periods. The main thing that gives me hope that this won’t be the case is that many of the economic problems are because the developed and major developing countries are aging, so even the politicians may have figured out that it doesn’t make sense to use up your 16 to 30 year segment of population in a war instead of factories. The one good thing that may come out of the Iraq war is that it may have vaccinated the country against doing something really stupid again.

    I suspect that the next two decades are going to result in a redefinition of each party as the demographics of race and age across the country force that change. The next census could result in a sea change in many parts of the country as previously gerrymandered districts end up becoming harder to gerrymander. It is going to be a long, slow slog until then.

  3. jlj says:

    The gop may be imploding but gerrymandering at the state level and $contributions at the state and national level means they will all still be reelected.

    • krice2001 says:

      Correct. A point I keep making to people asking me why this is happening. No threat of losing your seat. No need to be rational.

  4. denton310 says:

    seems to me the republicans blew their wad on supply side economics, rather than except the failure and move on with new ideas, they have decided to persist in pursuing the same failed ideas, assuring their demise. going forward i see the democrats evolving into the new two parties; clinton democrats will continue to follow the corporate sponsored policies and the progressives will splinter off and be a populace policy party

  5. peggysue says:

    Lost GDP, lost wealth, lost momentum and uncertainty. These pare all the results of the TP rants.

    What did T CRUZ do, why did he do it. No one has a clue.

    After his tirade, the senate voted 100-0 to take up the house bill. Cruz the crusader did NOT vote the way he was demanding that the senate vote.

    DISGUSTING!! Any wonder that citizens disapprove.

    Peggy

    • panskeptic says:

      Why is Ted Cruz doing what he’s doing? It plays well with the Teabaggers – Iowa, New Hampshire, South Carolina primaries. He’s the Rick Santorum of 2016.

  6. Petey Wheatstraw says:

    “Poll: 68% Say Washington on Wrong Track”

    Washington isn’t on the wrong tack — it’s off the freekin’ rails, altogether.

    The remaining 32% who took the poll are over-represented.

    BTW: There is no “extreme” left wing in US politics. There are individuals (Bernie Sanders and a few others come to mind), who are actually left of center, but who lack any political cohesion or national party presence. The mainstream left are right of center — drawn there by the false Liberalism that is Neoliberalism (which is, in turn, and from what I can tell, the homunculus political twin of Neoconservatism).

  7. wally says:

    “Wrong track”?
    That’s too general a question… are we talking economics, education, health care, foreign policy, money in politics, infrastructure policy, the environment… ?

  8. VennData says:

    The GOP is sabotaging the nation. Anyone who doesn’t accept that is missing what is actually being done and too caught up in the Fox News, WSJ Opinion page spin.

  9. b_thunder says:

    “…the public wants the government to try to solve major (not minor) problems. That includes issues like financial risk, Iranian nukes, persistently high unemployment, and expensive medical care costs. But the far Right’s ideology is fervently opposed to those sorts of large and interventionist government policies…”
    But they (that includes both parties) couldn’t have done all that without a very substantial help:
    - to solve the “financial risk” issues they get “help” and advice from all Wall St banks, Promontory, people like Lanny Brewers and Robert Khuzami (of Deutsche bank)
    - to solve Iran issue they have Lockheed and Raytheon with their F16s and Tomahawks
    - to reduce unemployment there are all sorts of “free traders” and “trickle down” economists (that includes everyone from Mankiw on the right to Summers on the left and the desperately “wealth effect” creating “non-partisan” Fed Board of Governors)
    - and for outrageously expensive health care there’s the Big Pharma that spent $100m on an ad campaign *for* Obamacare, which, in return, still prohibits re-importation of cheap drugs and in general does very little to reduce overall cost of healthcare.

    What I’m trying to say is that it’s not just the Nuttier wing of the Nuts party that’s seemingly not serving Us, The People, but it’s the corrupt bi-partisan system created by and serving primarily only a certain very small slice of the population.

    Finally, is this a real democracy if 89% of the population disapprove what Congress does, but almost every incumbent gets reelected time after time? Is it a democratic system where 89% majority cannot influence what their elected representatives do?

  10. NoKidding says:

    “I haven’t the slightest idea how this plays out. ”

    It plays out with more than ninety percent incumbent reelection rate in congress and another pool of old-money-hangers-on and social-issue-populists in the running for president. Change can happen if people say “I need to get rid of the guy I’ve been voting for” instead of “you need to get rid of the guy you’ve been voting for”. No time soon, unless the current crop of jckss’s manage to suck Putin into a ME proxy war. Even then I’d expect to see no fewer than three quarters of the same faces.

    • krice2001 says:

      No Kidding — You’re assuming new faces would operate differently in a system that requires near non-stop fund raising in order to get elected and re-elected. That means the same special interests providing the funding and the same strong pulls to do their bidding.

      I feel unless Citizen’s United can be undone and anti-gerrymandering legislation can be enforced (ridiculous thought, huh?), I suspect it matters little who is elected.

  11. denim says:

    Exactly. The poll only tells me that 68% disapprove of what unspecified things Washington is doing or not doing. It tells nothing about what Washington needs to be doing or stop doing that would be considered to be on the right track.

    Interestingly, the WaPo Plum Line shows that the GOP is putting their Political Platform into a house bill that is tied to the highly publicized debt ceiling bill. What ingenious Bernaysian Public Relations gimmickery for free distribution by the main stream media!
    http://www.washingtonpost.com/blogs/plum-line/wp/2013/09/26/the-morning-plum-the-gops-debt-limit-strategy-is-insane-people-should-say-so/

  12. gman says:

    Liquidity traps are no place for “fiscal conservatives”!

    Under recent conditions the “fiscal conservative” initiatives and media campaigns funded by Pete Peterson have been exposed as crazy as well.

    The time for austerity is in the midst of booms!

  13. [...] Poll: 68% Say Washington on Wrong Track  (The Big Picture) [...]

  14. rj chicago says:

    News flash:
    100% INSIDE the beltway in the swamp think Washington is on the right track!!!

  15. RW says:

    It’s reckless ignorance aside, hearing Republicans assert that catastrophe would not result from a protracted debt ceiling fight much less an unresolved one alternately makes me shiver uncontrollably and want to commit mayhem in the hallowed halls …but I just increased hedges instead; hope I’m not getting too used to this.

    “There is no salvation in becoming adapted to a world which is crazy.” –Henry Miller

  16. PDS says:

    BR….do you still adhere to your thesis that politics don’t matter, are irrelevant and have no impact on direction of markets?…seems to me you need to rethink that one as we continue to have a market driven by bad policy making currently…and policy, both monetary and fiscal, is driven by politicians

    • You are misstating AND overstating my position:

      Most of the time, politics biases investors, leading them to bad decisions.

      On rare occasions, policy can be very market friendly or unfriendly. A government shut down would be the latter

      • PDS says:

        BR…I did not mistate or overstate your position…you said March 5/13….”politics matters little to your investment incomes” in an article entitled “Investors Shoud Ignore Poltics” …your words…not mine..you can’t have it both ways

  17. rd says:

    Boehner has announced the debt ceiling can’t rise until spending is cut:

    http://blogs.marketwatch.com/capitolreport/2013/09/26/boehner-insists-no-debt-ceiling-deal-without-spending-cuts/

    Excellent places to start would be agricultural subsidies currently in play in various bills and bloated military spending.

  18. KDawg says:

    There are few extremists on the left in the United States. They certainly exist, but the number of extremists on the right quite simply dwarfs the number on the left.

    Let’s not forget that those moderate Democrats you are talking about are the primary reason few people have been sent to prison over the various financial frauds that brought us to where we are.

    Further, these moderates refuse to even consider bringing back Glass-Steagall. Instead, we get Dodd-Frank . Which seems good on consumer protection, but seems almost useless for banking system stability. It looks to me – and I could be wrong – that the banks are already weaseling their way back to opaque derivatives transitions by using third parties to carry out those transitions. How this works, I have no idea, just as I had no idea how CDS and CDO’s worked until it all blew up. Guess I’ll have to wait for the next crisis before I see any straight forward reporting on the new scheme.

    When we talk about moderate Democrats, they are not moderate liberals. They are moderate conservatives. Which is okay, but I’d certainly rather have moderate liberals running the show. One would think they would have cracked down harder on the executives that stole their way to riches. But who knows? Most people can be bought.

  19. Keith R says:

    This current fight seems to be normal beltway hyperventilating. I recall the 1995-1996 disagreements, and they were as bad or worse than today’s battles IMO. Bill and Newt fought constantly.. Everyone said that a gov’t shutdown would wreck the economy, but the shutdowns turned out to be non-events for the most part. I recall quite a few jokes that “gee, the government is shut down? Who can tell the difference?” Of course there were some issues, but the sky did not fall. Instead, bitter politics created good policy. The budget ended up getting balanced, and the economy cruised on. Does anyone else recall this differently?

    The democrats say that the current healthcare situation is a mess, and they are right. The republicans claim that Obamacare is a mess, and they are right too. Still, forward is the only direction we can go IMO. There will be a great deal of mudslinging over the next couple of years, but I don’t think that there is a big story here from an investment perspective except in healthcare itself.

  20. panskeptic says:

    Downgrading our debt because the Flat Earth Caucus doesn’t want to pay our bills means higher interest rates must be paid on Treasuries. That is a permanent tax all of us pay for these rightwingnut shenanigans.

  21. godfree says:

    The Chinese polls are almost the inverse of these results. With good reason: they’re eating our lunch.

  22. ravenchris says:

    The solution begins with one term in one lifetime for members of Congress.

  23. FrViper says:

    Jobs/Jobs/Jobs! That means encourage business with incentives – R and D, loan availability, etc.