American Voters Continue Their Perpetual Fiscal Immaturity

We won't be able to solve our fiscal problems until the American people grow up. So far, there are no signs of that happening.

As Congress heads towards a battle over the Fiscal Year 2012 Budget, spending, and raising the ceiling on the National Debt, a new poll from The New York Times demonstrates once again that the American public has no clear idea what it wants when it comes to fiscal policy:

As President Obama and Congress brace to battle over how to reduce chronic annual budget deficits, Americans overwhelmingly say that in general they prefer cutting government spending to paying higher taxes, according to the latest New York Times/CBS News poll.

Yet their preference for spending cuts, even in programs that benefit them, dissolves when they are presented with specific options related to Medicare and Social Security, the programs that directly touch the most people and also are the biggest drivers of the government’s projected long-term debt.

Nearly two-thirds of Americans choose higher payroll taxes for Medicare and Social Security over reduced benefits in either program. And asked to choose among cuts to Medicare, Social Security or the nation’s third-largest spending program — the military — a majority by a large margin said cut the Pentagon.

While Americans are near-unanimous in calling deficits a problem — a “very serious” problem, say 7 out of 10 — a majority believes it should not be necessary for them to pay higher taxes to bridge the shortfall between what the government spends and what it takes in. But given a choice of often-discussed revenue options, they preferred a national sales tax or a limit in the deduction for mortgage interest to a higher gasoline tax or taxing employer-provided health benefits.

Americans’ sometimes contradictory impulses on spending and taxes suggest the political crosscurrents facing both parties as they gird for debate over how to address the fiscal woes of a nation with an aging population, a complex tax system and an accumulated debt that is starting to weigh on the economy.

None of this is really a surprise, of course. Back in December, there was another poll that similarly showed that the American appetite for sacrifice in order to deal with a problem that pretty much everyone agrees in unsustainable was virtually non-existent. And, of course, the proposals put forward by the Bowles-Simpson Deficit Commission after the midterm elections fell flat with the pubic, and with Congress.

So once again we learn that the public still has not gotten the message that everyone is going to have to sacrifice if  we are going to deal with the fiscal problems facing governments at all levels in this country. From the left, the means accepting that the entitlement state as we’ve known is unsustainable and that we aren’t going to solve our problems merely by taxing the rich. From the right, it means accepting the fact that the defense budget is not sacrosanct, that a foreign policy of perpetual war is fiscally unsustainable, and that, yes, we’re going to have to raise some taxes on some people for awhile.  For the American middle, it means accepting the fact that they can’t continue refusing to make the choices necessary to get us back on a sustainable path. For all of us, it means accepting the fact that it’s largely our fault we’re in this mess. We put the people in office who created this leviathan. We told them we wanted lots of benefits from Washington but that we didn’t want to pay taxes. We’re the ones who  stood by and said nothing while Congress spent money the government didn’t have. Now, it’s time to fix it. It’s going to be painful, but not nearly as painful as it will be if we let this continue until things get even worse than they are now.

When the Bowles-Simpson plan was released after the elections, I said this:

If we lived in a country with adult political parties, the release of the Commission’s report would serve as the beginning of a long overdue national conversation about how to get our fiscal house in order. Liberals would recognize that social spending would have to be cut, and conservatives would recognize that defense spending cuts and tax increases would have to be on the table. Instead, what we’re likely to see is more of the same political gamesmanship — liberals accusing the GOP of wanting to starve Grandma, conservatives accusing liberals of just wanting to raise taxes so they can spend more. And the debt will continue to rise.

At some point we’re going to be forced to deal with these problems, but it’s not going to happen until we start feeling the pain that we could ward off if we’d just grow up already

So far, I’m seeing very few signs that it’s happening.

FILED UNDER: Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. James Joyner says:

    So Americans prefer higher taxes to cutting popular programs. That would in fact be a mature sacrifice. Except that they’re not willing to actually pay said higher taxes themselves! They think someone else should pay. Or, at least, the taxes should be hidden.

  2. Hello World! says:

    I’m not sure I agree with you. Its not really “our” mess. This mess belongs to bankers, hedge-fund managers,investors, and wall street greed. All I did was get a college education, buy a house, and work. Our spending habits as a country belong to past presidents and congresses. Most people, right and left, that I talk to really are on the same page about government spending and waist. But, look what always happens…just 2 months ago the new congress was talking about major cuts to everything from defense spending to airline and corn subsidies. We were supposed to see the first round of cuts in January. Well, guess what….

  3. Hello World! says:

    “They think someone else should pay”.

    Granted, I do not want to pay more taxes either but it gets back to a fair tax code, that really does benefit the already rich. If I earn 40,000 in a year from stocks why shouldn’t that be taxed as income as if I worked for it? If my house is sold and I’ve made 200,000 on it – why shouldn’t I get taxed on that? Its not more taxes but fair taxes and then it gets back to “what you cut”. We could eliminate a lot of waist by cutting certain engineering firms that operate in, say, John Boehners district…or waistful farm subsidies in Iowa, etc, etc, etc. These programs benefit a few but will never be cut. However, they will cut free lunches to poor kids, which we could have a whole other conversation about as to why it may or may not benefit all of society to support.

  4. Maggie Mama says:

    The local school board here, when their budget was voted down, has always used the tactic of threatening to cut bus transportation and sports programs …. two very popular “goodies” as it were … because they knew parents would change their vote rather than lose those desirable budget items

    So let’s forget about the “goodies” of Social Security and Medicare and let’s look at the WASTE AND OUTRIGHT FRAUD/THEFT OCCURRING. Americans know there is financial abuse in so many of the government bureaucracies ….

    Let’s look at each program that is NOT working. The list is LONG but they are so entrenched in the Congressional psyche no one wants to end them.

    So Congress resorts to emotional blackmail and points at the “goodies” … they’re no better than my local school board.

  5. john personna says:

    A majority of Americans support elimination of farm subsidies, and yet those subsidies do not go away.

    So it’s even worse than Doug describes. Americans are willing to cut little, and their Congress won’t even cut that.

  6. EJ says:

    “If I earn 40,000 in a year from stocks why shouldn’t that be taxed as income as if I worked for it?”

    You are if its short term gains. If its long term gains, yes you pay a lower rate (15%) but that is not adjusted for inflation. You get taxed on nominal gains not real. If you hold a stock for 5 years and inflation is 2% each year, add roughly 11% on top of the 15% for you real tax rate of 26%. Interest taxes are similar. If I earn 5% on a CD in a year, i am taxes on 5% but if inlfation is 2% my real gain is 3%. With interst rates so low right now, the real tax rate on savings is over 100% for most people right now. I have no prblem with a inocme level tax rate on capital gains and interest income IF it were adjusted for inlfation.

  7. EJ says:

    the other issue from a revenue standpoint, taxes on capital are far more distortive because people change their actions. You dont have to save and invest. I can just spend more. Or I can avoid a lot of cap gains taxes by just holding the security longer. So you raise cap gains rates, you dont bring much more revenue in.

  8. bob says:

    I can cut the budget, it takes no talent most people do it in their own lives. Stop spending, rein in entitlements and repleal Obamacare to start. It only takes will power.

    Raising taxes is an option to pay down the debt only after spending is back to the 2006 or so level,

  9. Alex Knapp says:

    James,

    Except that they’re not willing to actually pay said higher taxes themselves! They think someone else should pay.

    I’m trying to figure out how this agrees with the evidence presented in the article, which shows that Americans are willing to pay higher payroll taxes or pay a national sales tax to pay for Social Security and Medicare.

  10. EJ says:

    Alex,

    I think that was in refference ot an earlier survey where voters support raising the payroll tax cap but not raising the rate on themselves. So translation: voters are in support of getting stuff for free that others pay for.

  11. TG Chicago says:

    I think the premise of this post is rather silly. Did you really expect the American public to all agree on one particular way to reduce the deficit? I mean, that’s kind of like looking at the results of the 2000 Presidential election, where nobody got 50% of the vote, and saying “The American public doesn’t know who it wants as president!” Well, no. Some people want one guy; some people want another guy. “The Public” isn’t a monolithic being that can be expected to have coherent aims. You’re missing the point if you look at it that way. The fact that the overall results seem incoherent doesn’t necessarily mean that any individual respondent to the poll answered incoherently.

    To put it another way, if in the mid-90s, you polled The Public about gays in the military, you plausibly might have had significant support for letting them all in and significant support for keeping them all out. You might have had very little support for a half-a-loaf compromise like DADT. But DADT is where we ended up because it was in the middle of the possible options. Something that is few people’s first choice, but many people’s second choice, can often be adopted as the solution.

    I don’t see much value in polling all the individual pieces of deficit reduction individually. If it happens, it will happen through many compromises which constitute a grand plan — kind of like healthcare reform.

  12. jpe says:

    My strong suspicion is that years of GOP carping about discretionary domestic spending has led to the public thinking we spend 40+% of the budget on NPR and sociological research and that if we just cut those we’re good to go.

    If I’m right about that, then it’s no surprise that they both want to cut spending and keep all the actually-expensive programs.

  13. jpe says:

    @ EJ: nothing is taxed on real income. If I have a bank account paying 2% interest and inflation is 1%, I still pay tax on the 2% interest income. (same goes for deferred salary or, well, everything)

    There is literally *nothing* for which one is taxed on inflation-adjusted income, so it’s always baffled me that people raise it as some kind of trump card.

  14. Drew says:

    “So once again we learn that the public still has not gotten the message that everyone is going to have to sacrifice if we are going to deal with the fiscal problems facing governments at all levels in this country.” “We told them we wanted lots of benefits from Washington but that we didn’t want to pay taxes. We’re the ones who stood by and said nothing while Congress spent money the government didn’t have.”

    Stuff like this irritates me. “We,” did no such thing. The first sentence is like watching your spendthrift neighbor spend lavishly on house, car, vacations etc and finding themseves broke, and then invoking the irresponsibility of “our” actions and how you have to help them out of this mess.

    This blogsite has practically made a cottage industry in castigating the Tea Party and those associated with it. I don’t think they are part of “we.” In contrast, our current President continued the political heritage of selling snake oil, telling everyone not to worry, “only 3% of taxpayers will be affected by a tax increase,” and there was hardly a peep here. Further, among all the ridiculous blather about vitriolic speech in the wake of the AZ shooting we now have talk of Nazis and child murder when it comes to leftist screching about repeal of Obama care.

    Different people can have differnet worldviews about the role of government or tax policy, that’s fine. But let’s do away with this mindless notion of “we.” Its the failure to call bullshit on the tax and spenders – Democrat or Republican – in he name of “centrist/moderate – can’t we all just get along” orthodoxy that got us here.

  15. john personna says:

    Stuff like this irritates me. “We,” did no such thing. The first sentence is like watching your spendthrift neighbor spend lavishly on house, car, vacations etc and finding themseves broke, and then invoking the irresponsibility of “our” actions and how you have to help them out of this mess.

    The difficult thing is that those neighbors and those voters are exactly the same people.

    They can’t save for retirement OR balance the Federal budget.

  16. Tlaloc says:

    I’m very willing to raise taxes. For instance we should add three or more brackets to the top end of the current tax code so that a person making 10 million a year does not have the same tax liability as someone making $750,000. What’s that? I’m only willing to raise taxes on other people? No, not really. but given the obscenely regressive tax structure we currently have we need to raise taxes on the rich a hell of a lot to achieve the kind of parity where the idea of middle class tax increases should even be considered.

    Here’s a metric, when the US tax structure is progressive enough that income inequality starts decreasing year over year, if there is still a budget deficit we can seriously discuss middle class tax hikes.

  17. Richard says:

    It’s disturbing when people start using the tax code as a vehicle of driving income structure and social change. I mean, income differences are due to natural differences in ability, work ethic, productivity, and starting capital. If I defer gratification for 10 years and save all the while, why shouldn’t I be entitled to the income stream arising from that investment? Instead, people only see the end result (that I am rich, for example) instead of all the hard work and sacrifices it took to reach that point.

    An example. My family was part of the landowning class in China before the communist revolution. That might have been due to political connections or innate ability or whatever. When Mao took over, he confiscated my family’s land. Now, my relatives have worked hard and saved up enough money to buy all of the land back. Lo, the spendthrift peasants are still where they are in the overall class structure.

    It’ll be the same thing if you redistribute the entire national wealth equally in the US. Some people will spend. Others with more discipline will save and invest wisely. Natural inequality will arise.

    In that vein, I’m more interested in reforming the tax code to make it simpler, more stable, and efficient. Cut off all the deductions. That will remove much of the difficulty in filing. Treat all sources of income as the same (salary, dividend, capital gains, interest, inheritance). Tax at a constant fixed percent. The reasoning behind that is to prevent the majority from soaking the minority. Either you raise everyone’s taxes equitably or you cut them proportionally the same. Having different rates is the same as inciting class warfare. I’d suggest a fixed revenue tax of 10-15%, without differentiating individuals and corporations, would be a good start. Add on top of that a 10-15% VAT tax. Overall, that tax code would be much simpler and produce more predictable revenue streams.

    Of course, I’m not against a robust social safety net, but currently, we have far too many inefficient agencies and programs. Instead of giving people food stamps, unemployment insurance, and medicaid, why not send everyone a large blank check to use as they wish? Milton Friedman had the right idea in a negative income tax. We can set that at or slightly below the poverty level. Give everyone a nonscalable $12,000 tax credit that does not change with income. Again, we don’t want to create the poverty trap of diminishing benefits reducing one’s incentive to work and produce. It would be far simpler (and I suspect cheaper) to have direct deposit, no questions asked, instead of useless bureaucrats administering entitlement programs. Cutting out the middleman, as done here, is the same thing many on the left have used to argue for a more efficient single payer system for health care, which I am supportive of in principle.

    With that said, none of this is politically feasible given the public’s sad ignorance of budgetary nuances, the basic economics of incentives, and efficiency of various approaches. See how they reacted to Simpson-Bowles, which was a great starting point for discussing reform on this matter.

  18. sam says:

    @Drew

    “Stuff like this irritates me. “We,” did no such thing.”

    Just curious, Drew. Do any of the companies you own benefit from government programs? Do any of them get tax breaks from the federal government?

  19. An Interested Party says:

    “I mean, income differences are due to natural differences in ability, work ethic, productivity, and starting capital.”

    Really? And which of those things have helped, say, Paris Hilton? Of course many wealthy people have worked very hard and have used their talents to achieve their success, but to act as though income differences are due solely to the factors you indicated is fantasy…

    “Having different rates is the same as inciting class warfare.”

    That’s rather amusing…to paraphrase Warren Buffett, it’s his class that’s winning that war…

    “Just curious, Drew. Do any of the companies you own benefit from government programs? Do any of them get tax breaks from the federal government?”

    Drew benefiting from rent-seeking!? Surely not, as that would negate a lot of what he’s contributed in these parts…

  20. Steve Plunk says:

    It irritates me that some want the average citizen to have an answer to the mess created by politicians. The fact is something must be done, the average Joe doesn’t have a vote in Congress, Therefore the responsibility lies with Congress and the President. Blaming citizens and business for this problem is ridiculous. Elected officials with a backbone could have kept the spending under control.

  21. An Interested Party says:

    “Blaming citizens and business for this problem is ridiculous.”

    Not when so many citizens and businesses exhibit the same behavior that Congress is being criticized for…

    “Elected officials with a backbone could have kept the spending under control.”

    And such officials would be voted out of office to be replaced by others who would promise no painful cuts but also tax cuts…of course, this isn’t meant to excuse their behavior, but rather, to state political reality…

  22. john personna says:

    It irritates me that some want the average citizen to have an answer to the mess created by politicians.

    It is not a coincidence that personal and federal debt exploded at the same time.

  23. Spoker says:

    Perhaps if those in power to do so would make a real effort to clean up the waste, fraud, and abuse on the spending side of this budget mess that average taxpay would be more inclined to a part of the solution. And although that will not solve things, it will show the American public that those that spend their money are serious about not wasting it and the tax payers will be significantly more inclined to participate in a solution. However, at the present the average taxpayer is quite certain that his participation in any solution only be met with more out of contol spending, fraud, waste and abuse.

    Don’t expect a horse to pull a cart with a broken wheel.

  24. ratufa says:

    Look at all the buck passing going on.

    How about saying that people and corporations are responsible for their own actions:

    – When a politician votes for a bill, they have the responsibility for their vote.

    – When a voter votes for a politician who consistently votes to increase spending or who campaigns on how much pork they’re bringing in to their district, that voter has some responsibility for keeping that politician in office.

    – When a corporation helps a politician get elected because that politician helps the corporation out with subsidies or other government goodies, that corporation has some responsibility for keeping that politician in office.

    There. That wasn’t so hard, was it?