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Trickle-Down Misperceptions Muddle Debt Debate: Albert R. Hunt

The American comic strip Pogo once famously noted, “We have met the enemy, and he is us.” This may be the best way to describe the current fracas in Washington over the deficit.

Politicians of both parties have done a poor job of educating the public, and voters are sending conflicting, and in some cases, misguided, messages.

A Bloomberg National Poll published last week, in line with other surveys, is instructive. Americans consider the widening deficit and debt a big deal; they also reject most of the measures necessary to deal with the threat by warning against touching entitlements such as Medicare and Social Security or popular discretionary spending programs. The public believes significant deficit reduction is possible without raising revenue, while also wanting to raise taxes on wealthier Americans.

“The public embraces sacrifice in theory, but not in practice,” says J. Ann Selzer, the Des Moines, Iowa, pollster who conducts the Bloomberg surveys. “The stalemate in Congress has a doppelganger in individual Americans’ minds. People really do not know what things cost and what cuts would have a significant effect on the deficit. They know only what they want.”

The bipartisan Bowles-Simpson commission laid out a reasonable path to lowering the deficit, though it involves difficult tradeoffs. Both President Barack Obama and House Republican leaders have given it short shrift. The painful political choices were specifically enumerated recently by the economists Chris Payne and Ted Buckley in a white paper written for Bloomberg Government.

60% of GDP

They say government debt would climb to 85 percent of the economy, without any action, by 2020; the goal is to reduce it to 60 percent of gross domestic product, generally recognized as the standard for fiscal stability, over the next 10 years.

If this were done primarily on the revenue side, as some Democrats suggest, that would involve repealing all the tax cuts enacted under President George W. Bush -- Obama only wants to end those for the more affluent -- and also raising another $2.7 trillion in taxes over the next decade. If the Republican rhetoric about achieving this only on the spending side were followed, it would entail cutting Medicare over the next 10 years by almost $1 trillion, Buckley and Payne calculate, and Social Security by $1.2 trillion.

There aren’t many politicians who publicly acknowledge those realities. And the Bloomberg poll offers comfort for some who would choose avoidance.

Tax Increases Unnecessary

There’s appetizing fodder for the Republican sound-bites, starting with the 61 percent who say raising taxes isn’t necessary to reduce the budget deficit.

By 53 percent to 44 percent, Americans say that when it comes to creating jobs, it’s better to cut spending and lower taxes than to invest in projects such as high-speed rail, broadband Internet and new sources of alternative energy. That’s an argument Republicans often make.

Also a majority believes Obama lacks “an effective strategy” for dealing with the economy; by a 2-to-1 ratio Americans oppose the central tenet of the health-care bill, mandating insurance coverage.

There is even more for Democrats to cheer in this poll. The public, while not high on Obama’s vision for the economy, thinks it’s a lot better than the one put forth by Republicans.

No Entitlement Cuts

In the short term, Americans don’t like many of the cuts Republicans are making in discretionary spending for the current fiscal year. By a ratio of 2-to-1 or greater, they oppose substantial changes in funding for the Environmental Protection Agency, or education programs, like college loans, or federal funding for medical and scientific research.

This battle, despite the current political clamor in Washington, really is small-ball; the big fight will be over longer-term measures.

On that point, the Republicans don’t do any better. Reducing Medicare benefits is opposed 76 percent to 22 percent. The proposal by House Budget Committee Chairman Paul Ryan of Wisconsin to replace Medicare with vouchers is rejected.

Truly striking is the persistent perception that somehow, this can be done on the cheap. More than 7-in-10 Americans think foreign aid is a major government program, and want to substantially cut it. The reality is that foreign aid is only 1 percent of the $3.8 trillion budget; even draconian cuts would have negligible effects on the long-term deficit.

Withdrawing Troops

Frustrated by tradeoffs, a large majority of Americans say they would favor withdrawing all troops from Iraq and Afghanistan to reduce the budget deficit. Even if that were feasible or desirable, most of these expenditures wouldn’t disappear.

Contradictions abound when it comes to the campaign vows of many successful Republicans last autumn to undo much of the agenda the Democrats enacted in the 111th Congress. A majority of respondents, when asked directly, say the Obama health-care law should be repealed. But when given options, 42 percent say we ought to see how it works first, and another 12 percent say it should be left alone.

And on the Dodd-Frank financial regulatory measure, fewer than 1-in-5 say banks are now regulated too strictly, thus hampering the economy; twice as many say banks still aren’t regulated enough. The rest say the Dodd-Frank bill has struck the right regulatory balance.

Although the American public is simply wrong on some issues -- including foreign aid, which Republican and Democratic internationalists alike think would be disastrous to sharply cut -- their positions reflect the superficial character of the political discourse and the lack of leadership from both sides.

“I don’t think that either party has the guts to deal with the serious issues,” says Mark Violette, a 54-year-old Vermont piano teacher and a poll respondent. “The Republicans don’t want to raise taxes, and the Democrats seem to only want to address cosmetic changes.”

Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net.

To contact the editor responsible for this column: Max Berley in Washington at mberley@bloomberg.net.

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