Biweekly Public Opinion Roundup: Deficit Reduction, Tax Cut Extensions and Program Spending

The deficit commission's recent release of a deficit reduction strategy prompted much discussion and debate about the deficit, what it could mean, and how it should be handled.  Talk of the deficit triggers pessimism for most.  Most see tax cuts and federal spending as being at odds with deficit reduction, and a choice must be made between the two, although there is a good deal of support for allowing tax cuts to expire for wealthier families. People believe, however, that a majority of tax dollars are spent in a way that does not benefit the public, and so it comes as no surprise that, when push comes to shove, they prefer spending cuts to tax increases to reduce the deficit.  The programs with the greatest reach enjoy the most support for protection from spending cuts.  Ultimately, Americans need to hear about the positive changes that occur as a result of policy, otherwise progress goes unnoticed and misperceptions abound.

Pessimism Around the Deficit

A recent AP-CNBC poll finds much deficit-related gloom and doom among Americans.  A plurality (45%) believe life for the next generation will be either a little or a lot worse than life today, with a majority (56%) asserting that the current size of the federal budget deficit will cause a major economic crisis for the United States within the next 10 years, and a large majority (85%) stating that they are somewhat or very worried that the federal debt will harm the financial future of their children and grandchildren.  When asked to choose, public opinion is split between increasing government spending on important programs such as education, health care and green energy (46%) and reducing the deficit by curtailing spending on the same programs (47%), but less than a third (30%) believe increasing taxes is an option to assist in balancing the deficit, with a majority (59%) in favor of cutting government services instead.  People are pragmatic, however, with 65% acknowledging that some taxes will have to increase and 79% admitting that some government services will have to be reduced in order to balance the budget.

When considering the tax cuts passed by the Bush administration (see a previous blog post on this topic), half of respondents believe the tax cuts should expire for people earning more than $250,000, but should remain for everyone else.  This is a substantial increase from 32% who said the same in early November, and 39% in September, according to previous AP polls.  A majority (54%) believe that the tax burden and spending cuts should be shared equally by all Americans, while 38% believe they ought to have a greater impact on wealthier Americans.

In addition:

• Americans are split on whether to increase the Social Security salary cap  of $107,000 (see a previous blog post on this topic) with 49% saying the cap should be increased and 47% supporting the cap
• 64% oppose raising the retirement age for Social Security

A recent CNN poll corroborates the findings from the AP poll regarding the tax cuts, and found that 49% were in favor of allowing the tax cuts to remain for families making less than $250,000 per year, and letting taxes return to previous levels for families who make more; 35% favored extending the tax cuts for all, regardless of income.   A majority of Americans (56%) believe tax cuts and deficit reduction can be accomplished simultaneously, with more men (60%) than women (53%), more whites (59%) than non-whites (49%), and more Republicans (69%) than Independents (54%) or Democrats (47%) in agreement with this view.

Spending Cuts on Domestic Programs

Yet, the poll by CNN also finds that Americans are evenly divided - 49% to 49% - over whether the government should spend more or less money on domestic programs.  Democrats (64%) and Independents (53%) were far more likely than Republicans (23%) to say the government should spend somewhat or a great deal more on domestic programs.  There is also a noteworthy race gap, as 40% of whites, compared to 70% of non-whites, believe the government should spend somewhat or a great deal more on programs.  

The following shows the percentage of respondents who prioritized reducing the budget deficit over preventing cuts to the stated program:

Data from CNN

By age, there was little difference in regards to prioritizing the deficit over Social Security spending between those who were under 50 years old (21%) and those who were over 50 years old (17%).  Those who were over 50 were much more likely to prioritize the deficit over aid to farmers (47%), funding for the arts (67%), and loans to college students (40%) than were the under-50 cohort (28%, 57%, and 29% respectively).  There were two income categories:  those who earn more than $50,000 year and those who earn less.   There was typically a higher percentage in the higher income category who prioritized the deficit over program spending, with the exception of unemployment spending.  When it came to assistance for unemployed, 40% of those in the lower income category, compared to 32% of those in the higher income category, prioritized the deficit.

Opinion on Tax Dollar Utilization

An international poll conducted in the early fall by World Public Opinion and Knowledge Networks on how government spends tax dollars found:

• Americans believe 55% of tax dollars are not used in the interest of the public, a percentage comparable to Germany (58%), France (53%) and India (54%)
• A majority of Americans (58%) are either somewhat or strongly opposed to significantly increasing government spending to help the economy, up from 48% a year ago; Germany and France are the only countries who show greater opposition to increased government spending at 66% and 63% respectively
• America and Turkey had the highest levels of opposition to increased government oversight: 56% are somewhat or strongly opposed to increasing government regulation and oversight in the economy, an increase from 45% for the United States in 2009
• 52% of Americans want to take steps to reduce the federal budget deficit, a lower percentage than the UK (60%), but comparable to Canada (51%), Germany (51%) and France (48%)

Failing to Communicate

It is important to remember that, ultimately, the deficit is not the highest priority for Americans.  According to a recent poll analysis by Mark Blumenthal,  the economy and jobs – even spending to create jobs – ranked higher than deficit reduction and cutting taxes.  While there seems to be a consensus that, generally, there ought to be cuts in spending and the deficit reduction is important, there is moderate support, at best, for measures that could actually accomplish this goal.  

Finally, complicating the issue, policymakers have failed to communicate to the public what they have accomplished, and what the actual consequences of their efforts will be in the long term.  Hence, misperceptions abound:

• 57% believe health care reform will increase the federal budget deficit (AP-CNBC)
• when asked how much of the federal budget is designated to foreign aid, the median response is 25% (in reality, 1% of the federal budget is allocated to foreign aid) (World Public Opinion)
• 52% believe taxes on the middle class have increased in the last two years, 61% believe the economy has declined in the last year, and 60% believe that most of the money committed to saving Wall Street banks was lost (Bloomberg)