Americans want Congress to bring the $1.4 trillion federal deficit under control -- but they don't want anyone touching their Medicare, Medicaid or Social Security, entitlement programs that account for 40% of all spending. Nor, according to a new Bloomberg National Poll, do they favor drastic cuts in domestic or defense spending. And one more thing... Don't raise their taxes.
The public doesn't oppose all sacrifices -- as long as someone else is doing the sacrificing. Like the rich. Otherwise, the polling results are very bad news for anyone who expects public opinion to push Congress into making serious moves to balance the budget. Judging by the poll results, the electorate lives in a Cinderella world where Congressmen can sprinkle magic fairy dust on the federal budget and make the deficits shrink.
States Bloomberg: "According to the Dec. 4-7 poll, taken days after Obama's [budget] commission sounded an alarm over the nation's 'unsustainable fiscal path,' the public still believes it's more important to "minimize sacrifice" than to take "bold and fast" action to pare the $13.7 trillion debt."
The percentage of the overall population that believes the budget gap is "dangerously out of control" has declined to 48% from 53% in October. But there remains a deep reservoir of resentment of Wall Street bankers that spills over to "the rich" generally. A majority of Americans favor raising the cap on taxable earnings for Social Security, means testing Social Security and Medicare benefits, ending tax cuts for the highest-earning Americans, and taxing Wall Street profits.
It shouldn't come as a surprise that at least 47% of the population objects to cuts in programs that benefit them. That's the percentage of the population that, according to the Tax Policy Center, pays no personal income taxes.
But the really scary finding is the extent to which even Republicans, the vast majority of whom do pay taxes, are ambivalent about programmatic cuts. Forty-seven percent of Republicans support raising taxes on the rich. Half of them oppose cuts to Medicare and Social Security. Sixty-six percent of Tea Party backers reject Medicare cuts.
I share the middle-class anxiety about Social Security and Medicare cuts. I have paid payroll taxes all my life, and I've based my lifestyle and saving rate on the assumption that the money promised to me in that annual Social Security mailing will be honored. I'm counting on the two programs to account for roughly a third of my retirement income. Yes, I want to preserve the middle-class entitlements. Yes, I oppose raising tax rates. And, yes, I consider myself a deficit hawk.
Does that make me a hypocrite, as many progressive pundits insinuate? No, because I think it is possible to balance the budget without significantly cutting middle-class entitlements, or even entitlements for the poor.
First, we need real health care reform, not the pseudo-reform known as Obamacare. We need to restructure the health care industry around the market-based competition and innovation. The health care sector is incredibly inefficient. If hospitals and physicians increased their labor and capital productivity at the same rate as the rest of the economy, cost increases would level off and the long-term budget picture would improve dramatically. Obamacare targets productivity and quality in a top-down, bureaucratic manner. We need a bottom-up, entrepreneurial revolution.
Second, we can fix Social Security by raising the retirement aid for younger workers. Why target the young? Because they will live longer! The average life expectancy for Americans today is about 78. With retirement starting at 66, society pays for 12 years of retirement. However, life expectancy increases by roughly one year per decade. A 25-year-old today can expect on average to live four years longer. Under current rules, he/she would enjoy 16 years of retirement. Sorry, we can't afford that. If we raise the retirement age to match life expectancies, we could return Social Security to long-term solvency.
As someone who gave up on becoming "rich" long ago, I do not believe that taxing the well-to-do is the solution. For one reason, we won't squeeze as much money out of them as people think. Rich people have too many ways to convert taxable income into non-taxable income. For another, the rich include don't all clip coupons; they include the entrepreneurs and small businessmen who create a majority of our country's new jobs.
What I would support is eviscerating the $1 trillion in tax exemptions, deductions, credits and other loopholes in our tax code, most of which happen to favor the wealthy, as well as the $100 billion or more funneled to corporate welfare. We could get a long way toward a balanced budget by targeting wealthy people who got wealthy by feeding at the government trough, and still reduce tax rates. Let's just be clear though: It's the feeding at the government trough part that I resent, not the being rich part.
If there's one thing that gives me hope, it's the conviction that tens of millions of Americans see things the same way I do and would have answered that Bloomberg poll differently if asked the proper questions. The American people have more common sense than journalists give them credit for.