Why it matters that we've lost confidence in government's ability to govern

Gallup reports:

A record-high 81% of Americans are dissatisfied with the way the country is being governed, adding to negativity that has been building over the past 10 years.

The New York Times' Catherine Rampell says:

My concern [is] that, in order for government policy to be effective, people must believe it will be effective. This is as true for economic policy as it is for anything else.

In particular, part of the reason that economic stimulus works is that it gives consumers and businesses confidence that the economy will improve. That belief becomes self-fulfilling as they feel more comfortable increasing their purchases and investments.

Likewise, if Americans believe that Congress cannot be counted upon to do anything that will help the economy, nothing that Congress does — no matter how well designed and well executed — will succeed in helping the economy. Perception matters.

I pointed out a year ago that if people aren't aware that government stimulus is happening, this can't be brushed aside by saying it was "was the right thing to do economically" but "politically . . . nobody knew." That's what President Obama said about his tax cut. My response:

I find it hard to believe that the economics and the politics were so out of sync with each other. If the specific way the tax cuts were implemented caused people to feel like they hadn't gotten any relief, wouldn't that have undermined the goal of stimulating the economy?