Why Americans Have Grown to Hate Congress


Congress has itself to blame for its low ratings among the American people. Policymaking is all about choices; it is the calculus of weighing costs and benefits and the distribution of those costs and benefits. In theory, there are lots of policies that can make everyone better off, but they can only be accomplished by redistributing the gains of the policy.

Congress recently passed a budget deal that ended extended unemployment benefits for those unemployed for more than six months. Congress could choose to increase government expenditures-rather than their current stance of decreasing them-as was done in all other economic recoveries.

Republican members of Congress think America's working families have forgotten that Republicans expanded real government expenditures (adjusting for inflation) in the 1980s under President Ronald Reagan and 2001 under President George W. Bush by about 16 percent at this point in the business cycle.

The stalemate caused by Republican refusal to increase government expenditures has resulted directly in lower public sector employment-the loss of hundreds of thousands of public school teachers across the country; and more broadly in a tepid recovery.

The argument against restoring government is that it will increase the federal deficit, leaving unpaid bills for our children to pay and put pressure on interest rates that will hurt investment and homeownership by the middle class and tie the hands of future budgets with large interest costs. Well, of course, the failure to back President Obama's America's Job Act back in 2011 has meant fewer teachers for our children today, rising class sizes and closed schools in many of America's cities, meaning our children will pay with higher dropout rates, lower achievement and lower future earnings. So, that is a trade-off most people think is not sensible.

Currently the Federal Reserve, understanding the dire situation of the economy, has been aggressively pursuing a policy to keep long-term interest rates down. Its efforts has moderated the loss of wealth in housing that most people experienced when the housing price collapse took away the savings America's workers stored in their homes as equity.

The Fed policy also has meant a tremendous growth in the Fed's holding of U.S. Treasury notes. The odd thing about that is that the Federal Reserve's profits from receiving interest payments from holding those bonds go back to the U.S. Treasury. So, currently the structure of U.S. debt is at long-term low rates, and the net interest payments are lower because the Fed pays the interest back to the Treasury. This makes the arguments about interest rates silly.

Ultimately federal debt does have to be paid. Since 2009 and the current recovery, 95 percent of income gains have gone to the top 1 percent of American incomes. In the fairness category, most people would agree that if the net result of policies has benefited the top 1 percent only, then they should be the ones paying taxes. It follows directly from a belief that everyone can be made better off, but only if the people benefiting from the economic policy share the gains with others.

But, Republicans have fought hard to protect the 1% from paying their share of policy gains with others. Today they take home more than 230 times the pay of their typical worker. And, while the federal government isn't taking advantage of low interest rates, CEOs are by using corporate borrowing to buy back the company stock and boost stock prices and CEO wealth and pay.

Oddly, the research on the effect of extending unemployment benefits has pointed to this anomaly-people getting the benefit are more likely to keep looking for jobs longer rather than give up and drop out of the labor force (disappearing from the statistics). By ignoring them, Congress wishes they would go away. By ignoring the imbalances in their choices, the American people are wishing Congress would go away.

William Spriggs is an economist with the AFL-CIO.

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Why Americans Have Grown to Hate Congress

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