The Economist polled Americans about the deficit, government spending, and the like. Overwhelmingly, Americans prefer cutting government spending in order to balance the deficit (62%), compared to only 5% for raising taxes and 24% who favored doing both.
But there’s a big difference between general and specifics. According to this poll, only 5% favor raising taxes, but 62% 59% favor raising taxes on households making over $250,000 a year.
Similarly, the huge majority in favor of cutting government programs dissolves once Americans were asked which programs should have funding cut:
So a strong majority agrees on cutting foreign aid — but, alas, foreign aid makes up less than 1% of the federal budget. That’s like cutting the household grocery bill by cutting out half a candy bar every other month.
Conservatives favor cutting government programs to balance the deficit. But (and this is the conundrum part) conservatives also claim that for Congress to make policy that most Americans disagree with is virtually tyranny.
Since passing any policy that doesn’t poll well is tyranny — and cutting (say) Social Security polls far less well than the Affordable Care Act — what deficit-cutting measures can conservatives favor?
Other than raising taxes on households with incomes over $250,000, that is.
(Hat tip: Mr Drum).
Update: This graph from Annie Lowrey plots both what Americans say should be cut, and what percentage of the federal budget is spent in each area.
You’ve got your figures a little jumbled. (Typical innumerate liberal artist type!)
It isn’t 62/5 on raising taxes on the wealthy. When asked if taxes must be raised, who should pay them, 34% want them raised for everyone, 53% want them raised only for “the wealthy” (undefined), 13% other. (“Only the poor should pay!”)
When asked in general whether people making $250k or more should pay more taxes than they do, 59% say yes, 22% say no, 19% are unsure.
There are other interesting data pieces in the survey, though. There’s basically an 80-20 split in favor of more offshore drilling (question 8). I wouldn’t have expected it to be that strong. 54% think they’ll pay more for health care thanks to HCR (question 12).
Poor Obama cannot buy a perception of virtue. 60% think he’s intelligent, and 44% think he’s bold, but on most of the other items on the “virtue” list, he can’t break 30-40%. He can take solace from the fact that 63% like him as a person.
And to answer your original query: since there is wide agreement that expenses should be cut, but no agreement about which expenses, the solution which spreads the pain fairly would be an across-the-board cut. If we’re 3% over budget, everything is reduced 3%.
The military is a huge part of the national budget, between 33 and 50%, depending on how you count it (i.e. inclusion or exclusion of VA, social security spending, etc.) It could be cut with very little pain or risk to national security. I’m not saying we should take the Costa Rican route, but do we really need the ability to fight multiple wars at one time? Just cut the vanity war and we should be under budget in no time.
Since Obama seems intent on reviving Republican ideas from the past and presenting them as today’s ‘progressivism’ (see ‘health care reform’), maybe he could be persuaded to adopt the Republican Tax Restoration Act and reinstate the tax structure as it existed under Dwight Eisenhower, which taxed the top bracket at 91% (compared to today’s 35%).
@Dianne:
People always say that, but it isn’t true. Defense spending is 23% of the Federal budget. Yes, you can make that percentage higher by pretending that some kinds of government spending don’t count. But they do. 23% of Federal dollars go to defense. The end.
(http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2007.png)
Nor could the budget be balanced with just that sector. In 2009, revenues were 2.1 trillion, outlays were 3.5 trillion, the deficit was 1.4 trillion. (Source: http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf)
Defense spending being only about half the deficit, even going full Costa Rica would still leave us badly in debt.
Admittedly 2009 is a bad year because the stimulus bumped spending while the recession cut revenues. But even in later years, with optimistic projections, 2009-level total defense spending is smaller than the deficit in most years. Obama and the Democratic Congress have increased defense spending, not cut it, so that ratio isn’t going to go away anytime soon.
There is no way to balance the federal budget without raising revenues or cutting social expenditures. Defense cuts will have to be part of any budget-balancing plan, but progressive hopes of funding the welfare state by putting Dennis Kucinich in charge of the DOD are groundless.
@Ballgame:
You have to look at collections, not at what the statute says. We collected less money in the Eisenhower years as a proportion of GDP than we collect today. (Source: http://www.usgovernmentspending.com/us_20th_century_chart.html) Check it out – with the exception of the big spike during WWII, it’s a steady progression of federal government revenue growth.
There were a number of reasons for that. One, we had fewer rich people back then. “Great!” say progressives, but fewer rich people means less tax collections means smaller welfare state. You can’t run a 91% bracket on Joe the Plumber. He ain’t got it. Two, the tax code back then was a special-interest nightmare that makes today’s nightmare look like a child’s grammar primer. Yeah, the rate was 91%; Rockefeller didn’t pay it. Instead he spent a lot of time and money shuffling resources around and avoiding the tax man.
The real rate is what gets collected. The collection records indicate that we’re collecting more now than ever before; there is no Golden Age of high taxation (endorsed by Republican icons like Dwight “the happy lightbulb” Eisenhower no less!) that we can fall back on.
Defense spending being only about half the deficit, even going full Costa Rica would still leave us badly in debt.
Then halving the deficit would be of no benefit?
You didn’t say halve the deficit; you said “get rid of one vanity war and we should be under budget”.
Ok, so I overpromised.
You should run for office. Start with a small-town mayoralty somewhere. I look forward to being the guy who comes out to defend you on blogs when people attack your record. “Dianne isn’t wrong because she’s only run a small town. She’s wrong because she’s wrong.”
Robert, I appreciate your responding substantively. But, I do reject your rhetorical framing — though I give you points for being an artful conservative — and there are some serious flaws with your comment.
Well, yeah, if I wanted to make your point, but I was actually making my own point, which is that we had much higher tax rates on the rich under a true war hero Republican than we’ve had under Democrats and Republicans for a long long time.
Moreover, your link — though it’s a really cool link, thanks! — goes to a chart on government spending. If you want to look at collections, you need to go here. That chart shows a significantly different picture, with total government revenue now in the 33% of GDP range, while it was about 28% of GDP under Eisenhower. But that includes state and local taxes. If you just look at federal taxes, today’s federal revenues comprise a smaller portion of the economy than they did under Eisenhower.
Um, no, that doesn’t logically follow. The real question for a nation’s political economy is, “How is the nation’s wealth distributed (after taxes)?” The notion that we have to have rich people to support the welfare state is absurd, when you get right down to it. You DO need to have an economy that produces goods and services to be distributed in order to have anything to distribute, of course.
FTR, I’m not advocating a 91% tax on the middle class, but your statement once again does not logically follow. It’s entirely conceivable that Joe the Plumber could live quite well with a 91% tax rate … if housing, health care, public transportation, retirement pensions, and education for his kids through college were all paid for by the government. Obviously, it would depend on how pricey food was in this ‘socialist paradise’ and what his original salary was (and if 91% were simply the ‘top bracket’ rate, he would be taking home more than 9%). I’m not making the argument for or against this setup, nor do I necessarily believe that you would need a 91% tax assessment on the middle class to get it, I’m just saying your remark isn’t as self evidently true as you seem to believe.
You’re asking me to take your word here, Robert, which — no offense — I’m not going to do. While I don’t doubt that the rich did their best to dodge taxes then as well as today, I’m extremely skeptical about the notion that our tax code is actually simpler today (with fewer tax loopholes for corporations and the wealthy) than it was in the decades following the New Deal. You may be right, but you would have to show me actual evidence to persuade me.
As noted above, federal tax revenues under Eisenhower (as a portion of the GDP) were about a third higher than they are today (20% vs. 15%), and even the 2015 numbers (19% of GDP) don’t get to the Eisenhower level.
I’m frankly not even sure what this comment means.
However, in case it’s an insult, I’ll remind folks to please try to keep things civil, and avoid insults. (And Robert, it’s hardly like you’re never wrong about factual claims you make.)
I don’t recall a single conservative making the “doing something that polls poorly is tyranny!” argument suggesting that if there’s widespread agreement that something should be done, but the specifics are unpopular, then doing the unpopular thing is not tyranny. So no, I don’t think this answers my query.
Also, your plan doesn’t really address the deficit, because it doesn’t do anything about the rising costs of health care. The real deficit problem isn’t this year’s budget; it’s the long-term outlook created by rising health care costs. If we can “bend the curve” of health care spending by even one or two percent, that will have more long-term benefit for deficit reduction than a 3% across-the-board cut this year.
I’m frankly not even sure what this comment means.
I think it’s a reference to my comment above where I admit I overpromised. I don’t feel insulted except by the implication that I might be able to win an election. Hah!
Does it have to mean anything? Don’t be such an earnest quest-for-meaning Hillaryite! It’s me razzing Dianne. No insult was made or intended.
(And now I’m razzing you. Same disclaimer.)
@Ballgame –
Thanks for the information. I am not sure about the chart you provide; I have never heard anyone say that Federal revenues as a percentage of GDP whipsaw in the way that chart shows. So I have some implicit disbelief there. (And specifically, the chart relies on 2009 to put federal revenue at 15% of GDP – but federal revenue went into the toilet in 2009 because of the recession, while GDP did not. So I’m not sure that shows anything “real”.)
Perhaps it is absurd to say that we need rich people in order to fund a welfare state. If you’re talking about a social democratic model where we just share the poverty and have the government run the economy USSR-style, OK, I suppose we could all live in lovely equality and be poor together without needing rich people. But if you want to make *transfer payments*, specifically taking money from Joe and giving it to Jane, well, then Joe has to have it to begin with. That’s what we usually mean by welfare state in these parts.
Re: the tax code’s varying simplicity, see the Tax Reform Act of 1986. Not the only such law, but one of the more major and more recent ones. http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986
This claim from Ezra is interesting, in the context of this discussion:
The context is a discussion of the Wyden/Gregg tax simplification proposal.
Well, fuck. *has a part-time job preparing tax returns*
Here’s a graph of tax revenues as a share of GDP, from the Tax Policy Research Center (I stole the link from 538). From that it’s clear that federal income taxes have been holding fairly steady at roughly 8% of GDP since the 1940s, while Social Security has ballooned and corporate taxes have decreased significantly.
The 538 article I stole the graph from ends with another valuable datapoint; surveys of the Teabaggers indicate that they have no idea what the federal tax burden is and generally estimate it to be over twice as high as it really is.
Ok, stupid question of the day, what is an excise tax? Can/should we have more of it? It seems to be going down along with corporate taxes?
Sales taxes. Can be on consumer goods, or alcohol, or sales of a house, or all of the above.
If you take names into account, the teabaggers should REALLY hate those….
@Dianne –
An excise tax is a tax on a product, often but not always collected initially from the producer. The rate is specific to the product. The gas tax is an excise tax. Taxes on cigarettes or health care insurance policies are excise taxes. Versa Sailorman, sales taxes can be excise taxes, but usually aren’t. A sales tax is usually a percentage tax, set on a broad class of goods (5% of everything you buy at the hardware store), whereas an excise tax is an amount set on a specific thing ($20.24 for every snow blower).
Excise taxes are good because they let the government target particular products or industries, whether for moral purposes or as an implementation of industrial policy. Excise taxes are bad for exactly the same reason.
Thene, thanks for the info – but I notice that those two graphs don’t agree. The chart shows the total US taxation as 28% of GDP. The line graph shows it at 19%. One of those (if not both) is wrong.
I suspect that the Tea Partiers are thinking about government SPENDING rather than taxes paid. As this graph was the wrong one when I first posted it, I’m glad that it’s now the right one:
http://www.usgovernmentspending.com/us_20th_century_chart.html
That’s a lot more scary than 19% or 28%.
I always wonder how the responses would change if you provided numbers for all those categories — % of the total budget that they represent. Would simultaneously educate folks and force them into more realistic choices…
An excise tax is a tax on a product, often but not always collected initially from the producer. The rate is specific to the product. The gas tax is an excise tax. Taxes on cigarettes or health care insurance policies are excise taxes.
So the decrease in excise tax may be a good sign. If, for example, a significant part of the total excise tax was from tax on cigarettes then lower income from this tax means fewer people smoking and, ultimately, lower health care costs. Maybe. Or it could be just good lobbying from the cigarette companies lowering the tax and thus the income. (Assuming that cigarettes account for a significant portion of excise tax income, a statement I have no data to back.)
At a start I would cut Federal funding for transportation (with the exception of maintenance of the riverways and possibly the Interstate highways), mass transit, aid to the poor, education, agriculture and housing. Those should belong to the states. If they want them let them tax their citizens or raise user fees or some combination thereof and fund them. Remember, the question was “Where would you cut Federal spending?” not “Where would you cut government spending”, and saying “the Feds shouldn’t fund something” != “it should not be funded”.
I note that there is a significant expenditure not mentioned here. Buried in all these programs and in other areas as well are the salaries and benefits for Federal employees. Federal salary levels should be cut to something comparable to private industry, and there should be no further pension plans. Let them set up 401(k)s like we have to.
Over the last 8 years I’ve taken two salary freezes and one salary cut. Good enough for me, good enough for the people who work for me.
Here in Illinois the State government thought to increase revenues by increasing the taxes on tobacco products. The result was a lower revenue stream. Investigation revealed that it was not due to the factor you propose, however. It seems that the General Assembly forgot to factor in the fact that most of the state lives in urban or suburban centers that are less than an hour from a border of a state with lower tobacco taxes. It also underestimated the anger and frustration that people have with the Illinois state government these days and the lengths they’ll go through to not give it any more money. It is apparently the first time in State history (1818) that increasing a tax rate resulted in lower tax revenues.
Excise taxes are good because they let the government target particular products or industries, whether for moral purposes or as an implementation of industrial policy. Excise taxes are bad for exactly the same reason.
I suppose which side of that you take is a function of what role in enforcing morality you think the Federal govenrment should take. The current controversy over Federal funding for abortion is a good example of that.
And for those of you who think that military spending is high or out of control, military spending as a function of total Federal outlays is close to the lowest it’s been since the end of World War II. The 2010 number is a little over 20%.
This graph from Annie Lowrey plots both what Americans say should be cut, and what percentage of the federal budget is spent in each area.
Robert:
I think the chart includes state and local taxes while the graph only shows federal taxes.
At a start I would cut Federal funding for transportation (with the exception of maintenance of the riverways and possibly the Interstate highways)
Why make an exception for interstate highways? They’re nothing but a free subsidy for car owners. I’d start by making all interstates toll roads: at least recoup some of the money tossed down that particular drain.
While we’re on the subject of taxes, anyone want to comment on the alternate minimum tax? Good idea? Bad idea? Good idea but needs some reworking?
The point of a high tax rate is not to collect it on income, but to limit the number of people hoarding money above the top income line. A 95% income tax rate on all income above $3,000,000 anuually (with 20% on all income falling below, to a minimum taxpayer cap of 67% median), and a flat 5% corporate “use” tax would balance the budget and lower overall prices of just about everything over the course of a few years. My hope is that no one would ever pay the 95% rate, but would adjust their pay intentionally to below the $3,000,000 annual mark, either choosing to re-invest (creating jobs) or increasing the pay of their workers (increasing savings, average consumer capital) or shrink the size of their business (creating opportunity for more localized competition). In any of the above scenarios, the end result is the same; an increase in tax revenue and a decrease in expenditures on the federal level.
@RonF
your link in
And for those of you who think that military spending is high or out of control, military spending as a function of total Federal outlays is close to the lowest it’s been since the end of World War II. The 2010 number is a little over 20%.
goes to a chart which states that Iraq and Afghanistan war costs were mostly excluded.
That said, I wonder if the choices made for budget cuts would be different if War Spending was included as an option.
While I suppose it’s fair to exclude the Iraq and Afghanistan wars from “defense” spending since they were both first strike offensive wars, it’s a little disengenous to exclude them from “military” spending. Also to note that the chart Ron linked to also excludes homeland security, which is basically a military endeavor, only directed domestically.
Ron, it’s kind of complex determining if employees are comparable or not. I’ve seen conservatives griping about how much more the average federal accountant gets paid than the average private accountant, for example — but the accountants working for the CBO are doing much more high-skill work than the person who keeps the books for the Church where I work does. Just looking at average wages for job categories doesn’t tell us much.
Plus, if you ignore differences like that, it brings up a question: do you advocate raises for federal employees who are getting paid significantly less than the average for their occupation? In a lot of highly-skilled occupations, like computer programmer and plane pilot, the average federal wage is significantly less. If not, why not? What about federal employees who have accepted social security benefits worth less than standard, in exchange for pensions — do we increase the value of their social security benefits?
I’m not against raise freezes and other measures to bring genuinely overpaid government employees into line with their private-sector counterparts. But I think it’s going to make much less difference to the deficit than many conservatives imagine.
MDavis, good catch. I dug around a bit and it appears that the supplemental requests to support the wars are around $100 billion, which is 20% of the 20% of the total Federal budget that the non-war Defense spending would be – another 4% on the budget.
Dianne, Homeland Security is law enforcement, not military. Come to think of it, where the heck is law enforcement, the judiciary, federal prisons, etc. on that graph?
As far as Interstate highways go, they were established via progams initiated under President Eisenhower to ensure that we would be able to transport troops and defense materials quickly across the country if that became necessary; supposedly he got the idea from how the Germans used the Autobahn during World War II. But that’s hardly the main impact of the interstate highways on American society now.
Part of their actual impact is that they give American citizens tremendous mobility from city to city and state to state and even within a given state or urban center. As an example, I have a 50 mile daily commute to and from work, and about 40 miles of that is on interstate highways. All tollway, BTW – I pay $1.90 a day in tolls. It also greatly improves tourism, etc. But there’s another enormous impact, and that’s shipping. I’m going to guess that the cost of goods would jump significantly if the Interstate system didn’t exist, and some goods – like fresh produce in the winter – would be priced off the market. It would climb if it was all tollways, too.
I am very sympathetic to the argument that “the people who use it should have to pay for it”. Note, however, that the people who use the roads are already paying for it via Federal excise taxes on gasoline and diesel fuel. If all the roads become tollroads then the Federal excise taxes on fuels should be removed. It’s probably cheaper to collect excise taxes than tolls.
Here in Illinois the people approved the building of tollways because they were told that the tolls were to be used to retire the construction bonds for the tollways. Once the bonds were retired, the tollbooths would be taken down and the roads would become freeways. That of course turned out to be a lie; once politicians put their hands in the citizenry’s pockets they never take them out. The construction bonds for most of the tollways in Illinois (the Veteran’s Highway, a.k.a. I-355 was just completed recently) have long since been retired.
Everett:
The point of a high tax rate is not to collect it on income, but to limit the number of people hoarding money above the top income line.
1) Says who?
2) What right does the government have to decide that they should take money away from private citizens to keep them from “hoarding” it?
A 95% income tax rate on all income above $3,000,000 anuually (with 20% on all income falling below, to a minimum taxpayer cap of 67% median), and a flat 5% corporate “use” tax would balance the budget and lower overall prices of just about everything over the course of a few years.
Would the 5% corporate use tax increase or decrease the total corporate tax burden? If it would increase it, how would that lead to lower prices? It seems to me that in such a case it would lead to higher prices, not lower ones. Remember that corporations exist to make money. Their pricing structure is affected by competition, but if the cost of doing business increases for everyone then they’re going to raise prices.
I think rich people generally put their savings into investments and bank accounts, which is not the same as “hoarding” — that money is available to the rest of the economy as loans, business investment, etc.. (It’s only hoarding if they’re keeping the money as wads of cash stuffed into their mattresses).
I think that there’s a big problem with too many investments being not merely a waste of money, but actually bad for the economy (as we’ve seen vividly in the last couple of years). So it makes a lot of sense to worry about structuring investment markets in such a way so that investments that tend to grow the economy, rather than shrink it, are more attractive. But I don’t think we have to worry about rich people hoarding their cash.
Part of their actual impact is that they give American citizens tremendous mobility from city to city and state to state and even within a given state or urban center.
So? The same could be said for railways and airports. More so really, since buying an airplane or railroad ticket doesn’t require a huge capital outlay or training in how to operate a dangerous machine and therefore should be within the reach of more people. True, there are areas where mass transit is not practical-truly rural areas, for example-but the vast majority of US-Americans don’t live in such places, despite the nostalgic conservative propoganda about the heartland.
A number of people commute 50+ miles using Amtrak, New Jersey Transit or LIRR. Heck, a few people commute between DC and NYC or Philadelphia using air travel-which I think is insane not that anyone asked me. But you just declared their needs to be none of the federal government’s business while endorsing continued federal funding of your transportation needs. $1.90 is a very low toll for use of a major highway. I don’t know the numbers, but I’d be very surprised if $1.90 from each driver paid for the maintanence, muchless the recouped the cost of building the roads. Especially with the huge SUVs people drive on them.
Gas is also very undertaxed in the US-the taxes could easily be doubled. Basically, all this-low taxes on gasoline, low or no tolls, etc amount to federal subsides of cars to the detriment of other means of transportation. And that’s not even including the every 20 years or so bailouts the auto industry requires. Cars have their uses, but one of them shouldn’t be as the primary means of commute in a major metropolitan area.
But there’s another enormous impact, and that’s shipping. I’m going to guess that the cost of goods would jump significantly if the Interstate system didn’t exist, and some goods – like fresh produce in the winter – would be priced off the market.
Again, why assume that roads are the only way to get goods to market? Railroads are likely more efficient over long distances for many goods. And things like fresh produce in winter tends to come from overseas anyway-the infamous New Zealand apples, for example- so that waterways or air transportation are going to be significant components in their shipping. Roads are going to be secondary, at best.
For what it’s worth, I’m warming to a variety of stuff written at HolisticPolitics.Org, including a discussion of the merits of displacing part of the income tax with a carbon tax.
As someone working in the food distribution business I don’t think that this goes far enough. Railroads (even in their current weakened state) are unquestionably more efficient for everything except local deliveries. We use rail to bring in product whenever possible because it is so much cheaper. There’s a reason so many businesses want to be able to have a railroad siding and it isn’t a fascination with trains.
The interstate system was basically a giant subsidy to the auto, oil and trucking industries that was extra satisfying for its destruction of a robust rail system.
I think you are interpreting hording in too restrictive of a sense. Over the past three decades, wages for the top 1% have sky-rocketed, while wages for the other 99% have mostly stagnated. I think that is what Everett is referring to. Punitive taxes at the very high end incomes would discourage the very high end employees from negotiating fantastic salaries for themselves at the expense of the rest of the labor pool.
Thank you, Charles, that’s exactly how I meant it; looking at almost every major recession we’ve had in modern economic history, they’ve almost invariably been preceded by a large reduction in the top marginal tax rate. It leads to larger portions of the national wealth being held by relatively fewer people; “hoarding”. Also, while profit motive in and of itself is healthy in any capitalistic system, when attempts to amass larger amounts of wealth by larger than normal percentages of the population occur, it leads to severe market volatility and never-ending cycles of boom/bust when market activity (and outlays to the “financial class”) overtakes actual sustainable value as a function of average wealth. Aside from all of this, to the broader point, money supply should, realistically increase at only a slightly higher rate than population growth; however, we’ve seen the supply explode and almost all of that go into the upper levels of income, especially troubling because there is no real production or productive function to much of the financial sector where most of today’s higher incomes come from. Leveling off the top incomes cheapens production, puts more capital on hand for business owners and lenders, and encourages more efficient competition. With the median income actually tempered by counting only the bottom 95% of incomes, we begin to see that prices and costs in terms of housing, food, fuel, etc. has kept in line with the increase in income of the top 5%, not the rest of us. Our income has stagnated toward the extremes and actually decreased in the middle. By reducing the effective value (over time) of real property valued at the top 1%-5% levels, it will balance and effectively reduce the prices by similar margins through the spectrum.
The Corporate use tax (Any corporate entity pays 5% flat on outlays and nothing on income or profits) would collect roughly the same amount in taxation, but eliminate much of the “gaming”, and all of the capital spent on actively trying to avoid paying taxes.
Were the entire plan in place, we could cut the IRS down to about 10% of current size and much more in expenditure level. Not to mention all but destroying the anxiety of tax time, reducing the contact of the average citizen with the Federal government, which would make a great many people happy…
Everett, if we’re going to be sensible about things, let’s just become Georgists, put a whopping use tax on land, and eliminate all income taxes.