Can Policymakers Learn Something From the Public?  A Majority of Americans Make Tradeoffs to Effectively Reduce the Deficit and Save Social Security.

By: Jill Mizell

February 28, 2011

As the economy slowly recovers, the debate is building on whether to ramp up government investment or to shift focus toward deficit reduction.  This dialogue could have significant implications for economic security, mobility, and shared prosperity in America.  Although the public’s concern over the deficit is high, it consistently ranks low as a priority, outranked by jobs and the economy as top issues.  Polls have indicated that the public prefers spending cuts to tax increases to help address the deficit, but a new study finds that, when forced to make tradeoffs, Americans increase taxes by a larger sum than they reduce spending.

Program Spending and Tax Revenue Questions, In Isolation

A recent AP-CNBC poll finds that, 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.

A recent poll by CNN 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

Interestingly, many people believe that a majority of tax dollars are spent in a way that does not benefit the public.  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%)

How Would the Public Balance the Deficit

A recent innovative study by the Program for Public Consultation and Knowledge Networks assesses how the public would make tradeoffs to reduce the budget deficit.  The study provided Americans with the opportunity to deal with the budget in an integrated structure, showing the impact of each choice – whether on the spending side or revenue side – on the final budget.  You can give it a shot here.

  • The average respondent reduced the deficit 70% by increasing tax revenue by $292 billion and reducing expenditures by $145.7 billion
  • 76% of Americans reduced spending overall by making large cuts to defense spending, intelligence, and military operations in Afghanistan and Iraq
  • Funding for several programs, such as job training, higher education and energy conservation, was actually increased
  • 91% increased taxes, on average raising an additional $292 billion, mostly by raising taxes on those with incomes over $100,000
  • In addition, a majority resolved the social security shortfall – a separate issue from the deficit – by raising the limit on wages subject to the payroll tax, while managing to increase benefit payouts to low-income retirees

The study also shows a breakdown by party identification, including those that are sympathetic to the tea party, and yields surprising results:

 

Table from Program for Public Consultation and Knowledge Networks Report, “How the American Public Would Deal with the Budget Deficit”

This information stands to have significant implications for economic security, mobility, and shared prosperity in America.  Policymakers may learn a thing or two by listening to their constituents.