Why Washington and its debt woes eclipse 'jobs' as public's top concerns

A Pew Research Center poll in December found, for example, that 74 percent of Americans say a combination of tax increases and spending cuts in "major programs" would be the best way to reduce federal deficits. OK, public opinion polls don't reveal any groundswell for entitlement cuts or middle-class tax hikes. But this middle-ground view stands in contrast to the prevalent sound bites emanating from Washington, where Republicans lean heavily against tax hikes while many Democrats resist entitlement restructuring (though President Obama himself has left that door ajar).

Separately, some polls show rising worry among Americans about living standards in the future. A USA Today/Gallup survey asked how likely it is that today's young people will have a better living standard than their parents. In both December and in back in 2011, a slim majority said "unlikely." By contrast, the mood had been much more optimistic, even in the recession's immediate aftermath, in January 2010.

Some economic research bears out the notion that as a country's debt level rises above normal levels, the excess borrowing becomes a drag on economic growth. "Countries with high debt must act quickly and decisively to address their fiscal problems," economists at the Bank for International Settlements concluded in 2011.

"The level of indebtedness has now reached extraordinary heights," says George Feiger, an economist who heads the wealth-management firm Contango Capital Advisors in San Francisco.

"[I'm] actually quite bullish on the underlying economy," he says, citing factors such as technological progress and new opportunities for domestic energy production. But the potential for solid growth is being cast into doubt, he says, by the failure of political leaders to chart a long-term fiscal path for the US government.

Of course, there's another side to the story of the latest Gallup poll: the apparent decline in anxiety about unemployment.

To some extent, that shift probably reflects real progress in the job market. The unemployment rate, now at 7.8 percent, is little-changed since October. But the climate for job-seekers has been improving slowly but tangibly, many economists say. One sign: The number of people who have been unemployed for 27 weeks or more, although still high at about 4.8 million people, has declined by more than 800,000 over the past year.

An improving housing market, meanwhile, may help explain why the number of poll respondents listing "the economy" as the top US problem has been falling.

Still, it's clear American's don't feel as if everything about the economy is back to normal. Job creation has remained tepid. An index of economic optimism, derived from a monthly Christian Science Monitor/TIPP poll, is generally negative and doesn't show much change since October. Similarly, the consumer confidence index from the Conference Board fell in December, partly because Americans became more concerned about higher taxes coming in 2013.

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