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Americans Back Obama Tax-Rate Boost Tied to Entitlements

Dec. 13 (Bloomberg) -- Bloomberg's Hans Nichols reports on the latest news on fiscal cliff negotiations including new word from House Speaker John Boehner on increasing revenues. He speaks on Bloomberg Television's "Bloomberg Surveillance."

A majority of Americans say President Barack Obama is right to demand that tax-rate increases for the highest earners be a precondition for a budget deal that cuts U.S. entitlement programs, a Bloomberg National Poll shows.

Just over half say Obama and Democrats are more on their side in the debate over taxes and government spending than House Speaker John Boehner and other Republicans, in a survey conducted Dec. 7-10 that suggests the president has broad public backing for his stance in the deficit-reduction talks.

While Americans are divided over solutions to avoid spending cuts and tax increases slated to take effect in January if no deal is reached, majorities want the wealthy to bear the burden of such a compromise. And while more than half say Republicans were right initially to sign a pledge never to raise taxes, that includes about one-third who say things have changed and lawmakers should back away from the promise.

The results indicate a sense of urgency among Americans for an accord between Obama and Congress to avert a fiscal crisis, and a willingness to make sacrifices to strike a deal.

J. Ann Selzer of Selzer & Co., the Des Moines, Iowa, firm that conducted the poll, says the findings encapsulate American views on the fiscal debate.

Photographer: Kevin Dietsch/Pool via Bloomberg

The poll results indicate a sense of urgency among Americans for an accord between President Obama and Congress to avert a fiscal crisis, and a willingness to make sacrifices to strike a deal. Close

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Photographer: Kevin Dietsch/Pool via Bloomberg

The poll results indicate a sense of urgency among Americans for an accord between President Obama and Congress to avert a fiscal crisis, and a willingness to make sacrifices to strike a deal.

“Obama won the election promising to raise taxes on the wealthy,” Selzer says. “Republicans who refuse to budge from their pledge not to raise taxes are wrong-headed. Failure to strike a deal would put the national economy and the people who live in it at risk.”

‘Saber-Rattling’

Sixty-five percent of respondents say failing to reach a deal by year’s end, which would trigger more than $600 billion in tax increases and automatic spending cuts, would destabilize the economy and send the country back into recession. Twenty-two percent say it would be OK to let the changes take effect.

“These folks have to get off their horses -- they’re just saber-rattling or chest-thumping,” Steven Burns, a 72-year-old retiree living in Oldsmar, Florida, said of Obama and lawmakers, in a follow-up interview. “That’s all got to stop.”

The survey’s results are in line with those of a poll released today by the Pew Research Center for the People & the Press. It showed that Democrats have public opinion on their side in the deficit debate, with Republicans being seen as more “extreme,” 53 percent to 33 percent, and Democrats viewed as more willing to work across party lines by a margin of about two-to-one.

Tradeoff Favored

In the Bloomberg poll, 58 percent say Obama is right to insist on raising taxes on the wealthy in exchange for reductions in entitlement programs, including Medicare, while 37 percent say he is wrong to do so.

To decrease the deficit, 52 percent say they would favor allowing tax cuts for households making $250,000 or more to expire -- Obama’s signature demand -- and reducing Social Security benefits for high earners, an idea Republicans have advocated. Three in five back the repeal of tax cuts for households earning more than $1 million and reducing Medicare benefits for higher-income people.

“Both sides have got to give -- it cannot be overly one- sided,” says Laura Young, 58, an unemployed restaurant worker in Sarasota, Florida. She says she backs raising taxes on families earning $250,000 annually in return for cutting Social Security and Medicare.

Castor Oil

“We’re definitely going to have to address the entitlements or this isn’t going to be resolved,” she says. “We all need to take our dose of castor oil, and nobody wants to.”

As a recipient of Social Security and Medicare benefits, poll respondent Burns says he’s willing to see the programs curbed to get a deal that could strengthen the country’s economic future.

“I’m one of those who’s in the system now, and the reality of it is that’s going to have to happen,” he says. “I don’t know that much, other than there are fewer people supporting more people, and changing the program certainly is a start.”

Burns, like Young a self-described independent who backed Republican Mitt Romney in the presidential election, says he once favored lawmakers embracing an anti-tax-increase pledge. “Now, it’s become a thorn in the way of getting things done, because government needs some money,” he says.

Tax Deductions

Other steps being discussed by both parties as part of a compromise -- including limiting tax deductions for home mortgages or charitable giving, gradually increasing the retirement age for Medicare and Social Security, and cutting Medicaid -- draw more opposition than support.

Those findings corresponded to the Pew survey, which also showed that the only deficit-reduction proposals that drew more support than opposition were those that shifted the burden to wealthier people, including raising the top tax rate --supported by 69 percent -- and cutting entitlement benefits for higher earners, backed by 51 percent.

While most respondents to the Bloomberg poll say they favor tax-rate increases on higher-income earners to close the budget gap, the poll indicates conflicted feelings about how to raise revenue.

Limit Breaks

Fifty-two percent say they would rather limit tax breaks compared with 39 percent who prefer raising rates. Respondents are against tackling two of the most widely used breaks: limiting the mortgage-interest deduction -- opposed 49 percent to 38 percent -- and curbing the amount that can be deducted for charitable giving -- rejected 51 percent to 41 percent.

There’s no hunger to see tax rates raised across the board; 38 percent favor doing so while 50 percent oppose it.

And most -- 52 percent -- say keeping investment income taxed at a lower rate creates jobs, compared with 36 percent who say it would be fairer for such proceeds to be taxed at the same, higher rate on wages.

Of the deficit-cutting steps favored in the poll, it was the lowest earners -- not the wealthier individuals who would be directly affected -- who were least supportive. By 53 percent to 45 percent, those earning $100,000 or more back raising tax rates for families making at least $250,000 annually; those earning less than $50,000 were split, 46 percent in favor and 47 percent opposed.

‘Vastly Benefited’

On the idea of reducing Social Security benefits for high earners, those making at least $100,000 are supportive by 64 percent to 32 percent; those earning less than $50,000 are divided, with 47 percent backing the move and 50 percent opposed.

“People who are wealthy should not be getting any Social Security -- I’m sorry, I know they’ve paid into the system, but they’ve also vastly benefited from the system,” says Tom Signore, a 50-year-old poll respondent in Fairmount, New York. “Everybody should have to pay and help out. We’re in a financial crisis.”

“There should be increased taxes, but for everybody,” he says. “If we all made this mess together, why shouldn’t we all solve it together?”

Thirty-four percent of respondents say Republicans were wrong to have signed a pledge never to raise taxes, the same amount as say they were right initially yet should now break it. Republicans are split over whether lawmakers should back away from the promise, with 39 percent saying they should and 40 percent saying they shouldn’t. Just 23 percent of all respondents say Republicans should hold firm.

‘Stay Out of It’

Grover Norquist, the creator of the anti-tax-increase pledge, “should just stay out of it,” says Signore, a baseball coach. He is “welcome to his opinion, but it shouldn’t prevent anybody else from doing what needs to be done.”

Norquist, who heads the Washington-based Americans for Tax Reform, isn’t familiar to many respondents, with 37 percent saying they weren’t sure who he was. Thirty-four percent have a favorable view of him, compared with 29 percent who see him negatively.

The survey of 1,000 adults has a margin of error of plus- or-minus 3.1 percentage points. The Pew poll of 1,503 adults had a margin of error of plus-or-minus 2.9 percentage points.

To contact the reporter on this story: Julie Hirschfeld Davis in Washington at   or Jdavis159@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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