Public would accept tax hikes in debt deal

Voters are more likely to embrace tax increases for households making $250,000 or more than cuts to Medicare or other domestic spending, according to the latest United Technologies/National JournalCongressional Connection Poll. They are also more worried about cuts in entitlement programs than about tax hikes as a part of any deal that policymakers strike to fend off the sequester’s $1.2 trillion in automatic cuts at the start of next year.

The public’s opinions are virtually unchanged from similar National Journal polling one year ago when a congressional super committee was facing the same dilemma—make a deal or face automatic cuts. The super committee failed. The cuts are still looming. The only difference between then and now is that the deal-making is slated to occur after the election, which theoretically will shield the negotiators from voter blame for at least two years.

Then, as now, just over half of poll respondents (55 percent) said they think that tax rates for families with incomes above $250,000 should increase on Jan. 1 as part of expiring Bush tax cuts or that wealthier families should see a decrease in their itemized deductions (58 percent). Last year, those figures were 53 percent and 55 percent, respectively.

About one-third of the most recent poll’s respondents (36 percent) said they are most worried that Medicare or Social Security will be cut as part of a deficit-reduction deal, a much higher percentage than those whose biggest concern is that their personal tax rates will go up (24 percent). Last year, those figures were a similar 38 percent and 23 percent. Women (42 percent) and African-Americans (43 percent) were more likely to be concerned about entitlement cuts than men (29 percent), whites overall (36 percent), or Hispanics (37 percent).

Concerns about entitlements are surprisingly even across age groups, income categories, and educational levels. The percentage of respondents who are most concerned about severe Medicare and Social Security cuts varies only a few points between those making more than $75,000 annually (30 percent), those making $30,000 to $75,000 per year (36 percent), and those making below $30,000 per year (39 percent). On the same question, the difference between people ages 18 to 50 and those over 50 is only 4 points—34 percent to 38 percent, respectively.

Government spending seems to cause little trepidation among the public. Only 15 percent of respondents are worried that a deficit deal would allow too much federal spending or not meet its target for reducing the federal debt.

It should come as no surprise that Democrats (50 percent) are  far more likely to worry about Medicare and Social Security cuts than Republicans (20 percent). Republicans, on the other hand, are far more likely than Democrats to worry that a deficit deal will allow too much federal spending, 27 percent to 8 percent.

Even though the public sees entitlements as most vulnerable in a deficit deal, there is no clear consensus that any single outcome of an agreement will cause problems. That is because the looming fiscal cliff is not a big worry among the public. NJ’s findings correspond with other polling in which laypeople and professionals alike believe that Congress is going to fix the problem. Consumer confidence is at its highest level since 2009. The University of Michigan/Thomson Reuters consumer sentiment index jumped from 59.5 in August 2011 to 78.3 in September 2012.

Economists, who are paid to be worrying about such things, don’t seem concerned. More than half of professional economic researchers surveyed by the National Association for Business Economics (55 percent) think that the Bush tax cuts will be extended for all income levels, and 77 percent predict that automatic spending cuts will be “greatly reduced” by subsequent legislation.

The public, meanwhile, appears willing to embrace a multifaceted approach to deficit reduction that combines tax hikes and spending cuts. Taxing wealthy families is the most popular of potential items to be included in a deficit-reduction deal, but a healthy minority of respondents also believe that the package should strictly limit how much the federal government will spend on Medicaid and Medicare (43 percent), raise the eligibility age for Medicare from 65 to 67 (39 percent), and freeze spending on domestic programs such as education or parks and housing (35 percent).

There is also a clear desire among the public to see opposing parties work together to find a solution. Almost two-thirds of the respondents (63 percent) said negotiators should be willing to accept things they don’t like as part of a compromise, while only 26 percent said negotiators should “stand by their principles.”

Even more telling, 61 percent of respondents said “all parties”—President Obama, congressional Republicans, and congressional Democrats—would be equally to blame if Congress fails to reach a deal. Far fewer respondents individually singled out Republicans (18 percent), Obama (10 percent), or Democrats (6 percent) as the scapegoats for a possible failure.

The demographic groups less likely to spread the blame equally are, in all cases, more likely to blame congressional Republicans. Among African-Americans, 45 percent said everyone would be to blame if there was no deal, while 28 percent said Republicans would be to blame. Similarly, 47 percent of those over age 65 would put the blame on everyone while 22 percent would single out the GOP. The numbers were similar for white male college graduates; 51 percent said everyone would to blame and 27 percent said it would be the GOP’s fault.

The United Technologies/National Journal Congressional Connection Poll, a telephone survey of 1,006 adults, was conducted Oct. 12-14 and has a margin of error of 3.7 percentage points.