An underappreciated risk in the U.S. economy is that Americans have lost confidence in the federal government. The Gallup Organization has tracked Americans’ trust in government since the 1970s. It is striking how much Americans used to trust the government compared to now. When Richard Nixon was president in 1972, 75% of Americans had a “great deal” or “fair amount” of trust that the government could solve international problems compared to 44% now. Seventy percent had this amount of trust that the government could solve domestic problems compared to 37% now.
This loss of confidence is unprecedented in American society and once trust is lost, it is hard to be regained. The first step would be acknowledging there is a problem, which no one in power is even doing.
Trust in all three government branches is currently underwater. In 2023, only 41% of Americans put a “great deal” or “fair amount” of trust in the executive branch, 32% in the legislative branch and 49% in the judicial branch. It was not always this way; in 1972, 73% of Americans had a “great deal” or “fair amount” of trust in the executive branch, 71% in the legislative branch, and 66% in the judicial branch.
Watergate did not erode trust in the presidency beyond a brief blip. Trust in the executive branch fell to 40% in 1974 but rebounded to 58% in 1976. Thus, with only 41% of Americans trusting the executive branch now, trust in the presidency is currently on par with what it was during the worst part of the Watergate scandal.
Trust in the executive and legislative branches began to decline after the 9/11 terrorist attacks, likely because the wars in Afghanistan and Iraq went poorly despite promises to the contrary. During the 2008-09 financial crises, trust further declined after Americans saw their fellow citizens lose their jobs and homes while the big Wall Street banks got bailed out on the taxpayer dime. COVID did little to erode trust in government, simply because trust had already been eroded by the time the pandemic began.
This loss of trust is a risk because addressing the challenges surrounded by the budget deficit and national debt will require short-term costs in the form of higher taxes and spending cuts. The benefit will be long-term when we, or future generations, don’t see the risks that I discussed last month materialize.
Trading off short-term costs for long-term benefits is only possible when Americans trust the government. Americans need to trust that elected officials are implementing these measures out of necessity to prevent a long-term disaster. When trust is lost, Americans will not believe the government will deliver a long-term benefit in exchange for these spending cuts and tax hikes. Challengers and out-of-power incumbents will capitalize on this sentiment by opposing these measures for political gain, ensuring they will not be enacted in the first place. The risks associated with the deficit and debt will thus persist.
This loss of confidence is unprecedented in American society and once trust is lost, it is hard to be regained. The first step would be acknowledging there is a problem, which no one in power is even doing. We will hope for the best.
