Great Disconnect, Act Two

April 25th, 2011



What just happened? The mood of the country has suddenly taken a nosedive in the past month.

In the April CBS News-New York Times poll, 70 percent of Americans say the country is off on the wrong track. That’s the highest figure since President Obama took office. The number who say the economy is getting worse jumped from 26 percent in March to 39 percent in April – the highest level of pessimism in two years.

What brought this on? The nation’s unemployment rate, while still high, has been trending steadily downward – down a full point since November. The stock market rally, driven by strong profit reports, has sent the Dow Jones Industrial Average to its highest level since June 2008.

Could it be a sudden panic brought on when Standard and Poor’s issued a negative outlook on U.S. national debt? That got Washington’s attention. “It’s pretty rare when Washington says this is a problem, everybody agrees on that and everybody agrees on about how much we need to do to solve the problem,” President Obama said last week.

The debt issue may be preoccupying Washington and Wall Street, but it’s hardly a kitchen-table issue for the American public. There’s certainly no evidence people are willing to make a major sacrifice to deal with the deficit. Except for raising taxes on the rich. (To the middle class, the rich means “not me.”)

So why all the gloom? Two words: gas prices. The average retail price for a gallon of regular gasoline has risen from $2.71 last September to $3.83 as of April 18. Gas is over $4.00 a gallon in six states, including California.

In this month’s ABC News-Washington Post poll, 71 percent of Americans say the price increase has caused a financial hardship in their household. 43 percent call it a “serious hardship” – about the same number as in July 2008, the last time gas prices hit $4.00 a gallon.

Here’s another clue. In the ABC-Post poll, 37 percent of Americans say the job situation in their area is getting worse. And 44 percent say the nation’s economy is getting worse. But a whopping 78 percent say the prices they pay for the things they buy are getting worse.

Bingo. It’s gas prices, stupid.

The United States is a nation of suburbs. A majority of Americans have been living in suburbs since 1990. The trend is continuing. White flight? No. Minorities are now abandoning the inner cities for the suburbs, where the jobs are. And people are continuing to move farther and farther out in order to find affordable housing.

The availability of cheap gas drives the American economy and lifestyle. When Americans had to wait in line to buy gas back in the 1970s, or when they were told they could only buy it on certain days, it nearly caused a revolution. Moreover, gas prices are the most conspicuous prices in the country. They’re advertised on big signs everywhere, and they change every day.

President Obama could hardly have missed them last week when his motorcade passed stations in Los Angeles featuring gas at $4.23 a gallon. Apparently, he didn’t. “My poll numbers go up and down depending on the latest crisis, and right now gas prices are weighing heavily on people,” he said at his Los Angeles fundraiser.

Members of Congress have gone home for two weeks, and they, too, are getting a jolt of reality. “We talk about the [continuing resolution] and debt limits and budgets, and I go home and think, we didn’t do anything about gas prices again,” one House Member told Politico. “I’m just as frustrated as they are over the fact that we aren’t addressing that.”

That’s likely to change. Leaders of both parties have announced plans to Do Something as soon as they get back to Washington. What are they planning to do? Round up the usual suspects. For Republicans, that means “Drill, baby, drill.” Republicans have an American Energy Initiative aimed at relaxing restrictions on offshore drilling and expanding U.S. energy production.

Democrats plan to “Investigate, baby, investigate.” Attorney General Eric Holder has announced a task force to look into price gouging at the pump and speculation in the oil futures markets. It will find the same thing previous investigations found: some incidents of fraud and manipulation in the wholesale and retail markets, as well as speculation in the futures market. Well, guess what? All financial markets are driven by speculation. That’s what traders do. And right now, the speculation is being driven by instability in the Middle East.

Expect lots of photo ops at gas stations and fulminations about greed and corruption. Government can provide some temporary relief by doing things like releasing oil supplies from the strategic petroleum reserve. That’s a short-term solution. But politics is lived in the short-term and right now, gas prices are taking a toll on all elected officials. The latest approval rating for Congress in the CBS-Times Poll: 16 percent. The latest 2012 trial heat in the McClatchy-Marist poll: President Obama 46, Republican Mitt Romney 45. A virtual dead heat.

Remember back in 2009, when President Obama insisted on talking about health-care reform when the country wanted to hear about jobs? That was the Great Disconnect, and Democrats paid a price for it. Now House Republicans insist on talking about national debt while the country wants to hear about gas prices. Welcome to the Great Disconnect, Act Two.