April 12, 2011

The Deficit Debate – Where the Public Stands

With the initial skirmishing over this year’s budget now settled, President Obama and Congress are preparing for the main event – figuring out how to make substantial inroads on the country’s $1.5 trillion deficit.  In a number of surveys over the past several months, the Pew Research Center has shown where the public stands on the budget deficit – the seriousness of the problem, views of competing policy proposals, and its confidence in the policy-makers:

A Big Concern, Not the Only Concern. In December, 70% said that the federal budget deficit is a serious problem that must be addressed now. But the deficit is not the public’s top economic worry. A March survey found that 34% said the job situation was the economic issue they found most worrisome, followed by rising prices (28%) and the budget deficit (24%). The number citing the deficit as their top economy worry had increased from 19% in December. Concern over rising prices increased even more dramatically – from 15% in December to 28% in March.

The Bottom Line: Cut and Raise. The public does not eagerly embrace sacrifice to achieve deficit reduction. Asked in March about four broad proposals to reduce the deficit, a clear majority approved of just one – lowering domestic spending. Nonetheless, most Americans agree that it will be necessary to cut spending and raise taxes to cut the deficit. In December, 65% said the best way to reduce the federal budget deficit is to cut major programs and increase taxes. Majorities of Republicans, Democrats and independents favored a combination of spending cuts and tax increases.

Anti-Deficit Measures – Mostly Not Acceptable. The public’s view of the deficit is often summarized as follows: Yes, Americans agree that the nation’s finances are in a precarious state and, yes, something needs to be done. Yet they overwhelmingly reject any specific ideas for reducing the deficit – particularly when it comes to changes in entitlement programs. There is some truth in that, but there is perhaps a surprising degree of variance in opinions about individual proposals to reduce the deficit. There are what might be called the Big No-Nos (70% or more oppose): These include taxing employer-provided health insurance benefits, raising the gas tax and reducing federal funding to states for education and roads. Then there are the moderate No-Nos (50% to 60% oppose); these include gradually raising the retirement age for Social Security and eliminating the home mortgage interest deduction. The public is evenly divided over trimming Social Security benefits for higher-income seniors. Still, of 12 proposals tested, only two attract majority support – freezing the salaries of federal workers and raising the Social Security contribution cap for high earners.

Less Support for Increased Spending, Modest Support for Cuts. The public’s views on federal spending for popular programs have changed – maybe not as rapidly as some deficit hawks would like, but they have changed nonetheless. The number of Americans who favor increased spending for unemployment assistance, Medicare, veterans’ benefits and defense has declined significantly since 2009. Despite these decreases, most are still not willing to cut spending in these areas. But this showed that opinions about government spending are not set in stone.

Who’s Winning? No One. As President Obama prepares for his highly anticipated speech on the deficit April 13, the public gives him and his party low marks for their handling of the issue. In a survey earlier this month, just 33% approved of his handling of the federal budget deficit; 59% disapproved. The GOP led the Democrats by 12 points as the party better able to handle the deficit (46% to 34%). Yet when asked whether the GOP, or Obama, has the better approach on the deficit, most Americans (52%) say there is not much difference between the two sides – and Republicans have lost ground on this measure, among their own base, since November. The public is even skeptical of the Bowles-Simpson commission, which Obama appointed to break the gridlock on the deficit. In December, just 30% approved of the deficit commission’s proposals while 48% disapproved.