Let’s be clear: there is no public opinion on the complex piece of legislation known as Dodd-Frank. Americans rarely give specific legislative guidance. They speak in broad terms about their concerns and values. And today, four years after the passage of Dodd-Frank, the severity of the crash and ensuing downturn continue to shape their beliefs about financial and other key institutions, government regulation, and the gap between the rich and poor.
Fear isn’t an emotion you see often in polls, but it was palpable in the aftermath of the crash. Seventy percent said they were following economic news very closely in September 2008, putting the events a few percentage points shy of the top news stories of 22 years in Pew’s polling. Seventy-nine percent worried the economy was going into a depression. The preliminary Reuters/University of Michigan Index of Consumer Sentiment registered the largest decline in the 50-plus year history of the survey in October. Although there is some tentative evidence that Americans believe the economy is picking up, they don’t believe it is healthy. Five years after the crash, in 2013, just a third told Pew the US economic system was more secure than it had been before the crash. In a new GQR poll, eight in ten say another crash is likely in the next ten years. Hardly anyone believes their household incomes have fully recovered.
In addition to taking a toll on Americans’ wallets, the long slump has exacerbated our loss of confidence in central institutions. Americans’ confidence in all three branches of government has reached record lows. In Gallup’s extensive examination of other key institutions, only a few have seen an increase in high confidence since 2008. Strong confidence in banks and banking remains low at 26 percent. That response is a far cry from the 60 percent who voiced high confidence when Gallup first asked the question in 1979.
In Gallup’s trend, confidence in banks hit a significant low during the S&L crisis, but it bounced back. In the early part of this century, when the economy was booming, banks polled well again. In a new Pew poll, people were split, 45 to 42 percent, about whether Wall Street helps the economy more than it hurts or vice versa. The responses represent only a slight improvement from a few years ago.
The public is clearly aware of the distance that separates them from Wall Street’s tycoons, but this is hardly new. Americans have long believed, in the words of a question asked by Harris for almost 20 years, that “most people on Wall Street would be willing to break the law if they believed they could make a lot of money and get away with it.” They disagree with the idea that “most people on Wall Street deserve to make the kind of money they earn” (Americans believe that of celebrities and members of Congress, too, by the way). Nearly all the negative responses about Wall Street shot up in Harris’s polling after the crash. But Americans also understand, in the words of another Harris question in this battery that “Wall Street is absolutely essential because it provides the money business needs to invest.”
Americans continue to support greater Wall Street oversight, but in most recent polls, they lean against additional regulation of business now, fearing that more regulation could further weaken an already anemic economy. During the Enron and WorldCom scandals, Americans told pollsters that the kind of activity those firms engaged in would not happen at their workplaces. They wanted the bad actors punished, but they opposed new laws and regulations that would hamper business as a whole. The judgment here is similar, and it is based on performance.
The long economic slump has focused attention on inequality, but the issue is a tricky one in public opinion. Financial institutions and Wall Street are big powerful institutions that are far removed from most people’s lives. Just 34 percent told YouGov pollsters in April 2013 that they knew a millionaire. Fifty-eight percent in the same poll said they or someone they knew had lost a job in the financial crisis. Only 15 percent say they personally own stock.
Still, as the Washington Post reported recently, President Obama is pivoting from inequality. The Post suggested that the move is “at least partly driven by Democratic polling that found that talking about income inequality does not register strongly with the American public and risks accusations of class warfare.”
One reason is that Americans still believe our society provides opportunity for those willing to work hard, although the sentiment has eroded. Today, whites no longer believe their children will do better than they have done. African Americans and Hispanics are more optimistic. These changes in public opinion are deeply consequential, but we don’t know at this point from the polls whether they are a temporary effect of the prolonged downturn or a more permanent condition.
Lack of confidence in government’s ability to address inequality is another reason it ranks low in public concern. Three polls with different questions reveal the complexity of public views. Pew’s polling shows that around seven in ten favor government action in the abstract. Reason/Rupe polls show, however, that around 60 percent do not believe fixing inequality is a federal government responsibility. Three polls by Selzer & Co. since 2010 show an even division of opinion about whether it is better for government “to implement policies designed to shrink the gap” or “stand aside and let the market operate freely even if the gap gets wider.”
Americans continue to feel the reverberations of the financial crisis, and it has taken a significant toll on them and their views on central institutions. At this point there is no clear collective judgment about government’s role in addressing inequality. Nor do people know whether Dodd-Frank was the right response to the financial crisis. Their low levels of confidence in the financial sector and fear that we could see a repeat of 2008 showed that Americans wanted a strong response from Washington to Wall Street, but not one that harmed the free enterprise system.