Budget Negotiations Essay, Research Paper

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In the midst of the current budget negotiations, there is one neglected question worth asking: what does the public really want? Tax cuts? Paying down the national debt? More spending? If so, more spending on what? The available polling data, analyzed in this report, helps answer these questions.

Does the public want to cut taxes?

All else equal, of course the public wants tax cuts. But in the real world, all else is generally not equal — cutting taxes involves giving up something else that might be done with the government’s resources. When the tradeoffs are made explicit, cutting taxes does not fare so well.

Take, for example, a choice between tax cuts and spending the surplus on strengthening Medicare or Social Security. According to a March 1999 Fox News poll, 65% of the public prefers funding Medicare while only 25% would choose tax cuts. The sentiment on Social Security vs. tax cuts is even more lopsided: a July 1999 CNN/Time poll found 74% wanting to use the budget surplus to stabilize Social Security, compared to just 21% who preferred a tax cut.

Even if Social Security and Medicare are taken off the table, the public still finds other uses of the surplus more compelling than tax cuts. In a July 1999 NBC/Wall Street Journal poll, 55% of the public preferred using that part of the surplus not dedicated to Social Security and Medicare for “unmet needs,” like “education, health care, and national defense.” Just 34% said they would award themselves a tax cut. Even more impressive, though, was that 69% of the public thought that, once Social Security was taken care of, additional monies should be spent on “education, the environment, health care, crime-fighting, and military defense,” compared to only 22% who thought that a tax cut was the proper use of the money (July 1999 Pew Center survey).

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Does the public want to pay down the debt?

While the public believes paying down the national debt is a worthy goal, when it is stacked against other uses of the surplus, the public doesn’t give it a high priority.

For example, a January 1999 Pew Center poll asked people to choose among four uses of the surplus: paying down the debt, tax cuts, spending on domestic programs such as health and education, and making Social Security and Medicare financially sound.The result: a hefty 50% of the respondents chose helping Social Security and Medicare, 21% chose domestic programs, 14% chose tax cuts, and only 12% chose paying down the debt.

Similarly, a February 1999 CBS/New York Times poll asked the public whether they preferred cutting income taxes, paying down the debt, or preserving Social Security and Medicare as uses of the surplus. A resounding 64% selected Social Security and Medicare, and only 14% expressed interest in paying down the debt. And cutting taxes – consistent with the discussion above – brought up the rear with a meager 12%.

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Does the public want more spending?

In a word, yes. Indeed, the only context in which they don’t want more spending is when government programs are put forward in a vague and unspecified way as a use for the surplus.

This is nicely illustrated by a July 1999 Pew Center poll that asked the public what they wanted to see done with the portion of the surplus not used to shore up the Social Security system. Did they want to see it devoted to a tax cut or to funding new (unspecified) government programs? By a wide 60% to 25% margin, the public declared themselves in favor of a tax cut.

However, the same poll asked respondents whether they preferred a tax cut or spending on programs for, specifically, education, the environment, health care, crime-fighting, and military defense. The result: by an overwhelming 69% the public preferred spending; only 29% preferred tax cuts