On Obama's watch, Americans worry more about deficit

WASHINGTON Fri Jan 29, 2010 3:47pm EST

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WASHINGTON (Reuters) - American voters are becoming more anxious about the U.S. budget deficit in an election year dominated by fears of high unemployment, creating a potential albatross for President Barack Obama and his Democratic party.

Reeling from the loss to Republicans of a critical Democratic Senate seat, Obama has promised to stick with an expensive plan to overhaul healthcare despite concerns about its effect on government spending.

The electoral loss in Massachusetts, which deprived Democrats of their 60-vote supermajority in the Senate allowing Republicans to erect procedural barriers to legislation, has thrown the sweeping healthcare reform initiative in doubt.

Its nearly $1 trillion price tag over 10 years had already thrown Obama on the defensive after a year in which he also presided over a $787 billion stimulus package and multibillion dollar bank and auto bailouts. Now he is trying to sell a $155 billion jobs creating bill for 2010.

"The public has had a kind of cumulative sticker shock," about spending levels, said Karlyn Bowman, a polling analyst at the American Enterprise Institute.

"You just get the sense from a lot of different polling data that people are more concerned about the size and the scope of government right now."

The United States had a record deficit of $1.4 trillion in 2009 and Obama's next budget, to be released on Monday, is expected to project a similar figure for 2010.

Politically, it's bad timing for Obama. In a Pew Research Center poll released this week, 60 percent of respondents said reducing the budget deficit was a top priority, up from 53 percent when he came into office a year ago.

"Americans ... increasingly see the deficit as a problem," said Andrew Kohut, president of the Pew Research Center.

"Washington has to be sensitive to the fact that the public is more wary of the deficit than it was a year ago, even though the deficit's been high for some time," he said.

Republicans and Democrats, eyeing elections in November that could change the congressional balance of power, are both trying to argue they could best tackle the problem.

THE MESSAGE WAR

Obama has proposed a three-year spending freeze on some domestic programs that would save $250 billion by 2020 and is sticking to his pledge to halve the deficit by the end of his term in 2013.

Republicans say Democrats are out of sync with the country while sought-after independent voters who decide elections seem to be leaning much more their way.

"If the Democrats in Congress continue to spend like drunken sailors, it will continue to push independents away from Democrats and toward Republican candidates in the fall," said Republican pollster Whit Ayres.

"Americans are scared to death that the Democratic Congress is going to spend us into bankruptcy."

The White House has reminded Americans that Obama inherited a $1.3 trillion deficit from his predecessor, George W. Bush. But the administration acknowledges it owns the problem now.

"We're the governing party. We didn't create the mess that we're in, but ... we're the responsible party now," said David Axelrod, senior adviser to the president. Still, he indicated job creation would trump deficit reduction this year.

The months leading up to the November election are certain to see the economic message war escalate. If unemployment begins to fall, history suggests that general anxiety about the economy will ease.

Senator John McCain, Obama's Republican presidential challenger in 2008 who is now running for re-election to the Senate, focused a fundraising note earlier this week on the deficit debate. It read:

"It seems nearly every single elected Democrat has ignored the public's disapproval for their out of control spending. They are out of touch with every day American values and each national poll shows a majority of Americans agree with us."

Axelrod said Republicans would have a hard time selling themselves as deficit tamers after their record under Bush.

"It would be a tremendous feat for the party that ran up as big a load of red ink as those guys did to then transform themselves into the ... fiscally responsible party in one election cycle," he told reporters earlier this month.

"I don't think they're gonna be very successful."

(Editing by Alan Elsner and David Storey)

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