Americans don’t approve of keeping the breaks for upper-income taxpayers that are part of the deal President Barack Obama brokered with congressional Republicans, a Bloomberg National Poll shows.
The survey, conducted before, during and after the tax negotiations, shows that only a third of Americans support keeping the lower rates for the highest earners. Even among backers of the cuts for the wealthy, fewer than half say they should be made permanent.
Another third say they want only the tax cuts for the middle class to be extended, while more than a fourth say all the tax cuts should be allowed to expire Dec. 31, as scheduled.
The agreement Obama announced Dec. 6 would temporarily sustain the tax cuts for all income levels. The president said the compromise was needed to break a deadlock with congressional Republicans who vowed to block tax cuts for middle-income Americans if those for individuals earning more than $200,000 and couples earning more than $250,000 weren’t extended, too.
“I’m as opposed to the high-end tax cuts today as I’ve been for years,” Obama told reporters yesterday. “In the long run, we simply can’t afford them. And when they expire in two years, I will fight to end them.”
Still, many of the respondents in the poll conducted Dec. 4-7 said they wouldn’t support the compromise.
Widening Income Gap
Poll respondent Vicky Vasconi Hale, 51, of San Jose, California, says she disagrees with the president because the agreement will widen the gap between the rich and poor.
“We used to have three income levels: poverty or lower income, middle class and high income,” says Vasconi Hale, a Democrat who ran a clothing business and is now unemployed. “The middle class is gone.”
Obama yesterday described the agreement as a “good deal for the American people.” In exchange for the concession on the tax break for high earners, Republicans said they would lift their opposition to a 13-month extension of federal unemployment insurance for the long-term jobless. The deal also included Obama’s proposal to cut the payroll tax that funds Social Security and Medicare by $120 billion for one year to help spur hiring.
“My job is to do whatever I can to get this economy moving,” Obama said.
Obama, 49, inherited an economy in crisis. Joblessness, which reached a 26-year high of 10.1 percent in October 2009, stood at 9.8 percent nationwide last month.
Most U.S. stocks retreated today as concern over China overshadowed optimism the tax-cut plan would help bolster growth. The Standard & Poor’s 500 Index slipped 0.3 percent to 1,218.93 at 10:42 a.m. in New York, erasing an early gain of 0.4 percent.
Treasuries slid yesterday, pushing the two-year note yield up the most since March, amid concern the extension of the tax cuts would widen the budget deficit, which was $1.3 trillion for the fiscal year ended Sept. 30, according to the Treasury Department. The rout in Treasuries sent the 10-year yield to a five-month high of 3.13 percent. In trading in New York at 10:18 a.m. today, the yield rose to 3.24 percent.
There is a big divide among self-described Republicans and Democrats over the tax cuts. More than half of Republicans want to extend them for wealthier Americans, while only 1 in 6 Democrats supports that view. Independents are a little closer to Democrats on the issue.
A plurality of Democrats favor extending the cuts only for middle-class taxpayers, though a third would let all tax cuts expire and use the revenue to help cut the federal budget deficit. Put in the context of deficit reduction, 6 in 10 poll participants favor raising rates on the wealthiest.
“The middle class is being hurt in every single way,” said poll respondent Marleny Diaz-Gloster, 39, who works as a researcher for a nonprofit organization. “We are the hardest hit when it comes to taxes, and we’re being squeezed.”
Diaz-Gloster, a Democrat who lives in New York City, said she was happy to see compromise between the parties, though those making more than $250,000 “can afford to pay more.”
Poll participants with the highest incomes, those making $100,000 or more, are slightly more supportive of making the tax cuts permanent for all income levels than others. Those earning the least, less than $25,000 a year, are the most likely to support letting all the tax cuts expire.
When asked to choose an appropriate income level for higher taxes, about 20 percent of poll respondents said taxes should be raised only on those earning $1 million or more. About 3 in 10 selected a $500,000 threshold, while more than 4 in 10 picked the current $250,000 limit.
“The public seems reasonably ready for a tax on the wealthiest because it addresses a core issue of deficit reduction,” says J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the nationwide survey. “Time will tell whether the mood in two years will be more or less favorable to a main Obama campaign promise.”
In making their case for the compromise, Obama and his advisers said that while the nation can’t afford to extend the lower top tax rates permanently, a standoff that would have allowed taxes to increase for the rest of taxpayers would damage the fragile economic recovery.
“Extending tax cuts for the wealthy is unpopular,” said David Axelrod, a senior adviser to Obama. “It’s unpopular with us. But ask people if they would rather we forge a compromise that would prevent a tax increase on the middle class, the denial of unemployment insurance to millions of Americans and resultant loss of many more jobs, you’ll get a starkly different answer.”
The Bloomberg National Poll is based on interviews with 1,000 U.S. adults age 18 or older and has a margin of error of plus or minus 3.1 percentage points.