American Pragmatism or American Radicalism?

Public Opinion Support for a ‘Mixed’ Deficit Reduction Solution

Washington is presently in crisis mode as time is running out before automatic tax increases and spending cuts go into effect in early 2013. Many analysts believe such measures—the so-called ‘fiscal cliff’—would have a strong negative effect on the economy, pushing the US back into recession.

Obama and the Democrats have put forth a deficit reduction plan that would split the burden about equally between tax increases and spending cuts. Similarly, several years ago the Simpson-Bowles commission on deficit reduction proposed a mixed solution, where two-thirds in savings would come from spending cuts and one-third from tax increases.

House Speaker Boehner, however, has not been able to convince his conservative base to bite. They still are demanding greater spending cuts of social entitlements, including Social Security and Medicare. Some argue that all savings should come from spending cuts. Little movement, as such, has occurred over the last few weeks as no consensus exists about the right mix of spending cuts and tax increases.

Against this backdrop, Obama has called back Congress during the holiday break to hash out a deal. In the interlude, the world is holding its breath. Already, uncertainty is affecting the markets globally.

Often overlooked in this discussion is what Americans think about the issue of deficit reduction. Do they support more tax increases? Spending Cuts? Or some mix of the two? So where does public opinion fall?

To answer these questions, I analyze a question tracked by Ipsos since 2010 (see below).

 “When you think about the US budget deficit, which of the following solutions comes closest to your opinion?”

FiscalCliffchart1

Ultimately, Americans are quite pragmatic when it comes to deficit reduction. Indeed, 60% of Americans support a mixed approach with some sort of combination of tax increases and spending cuts. However, they trend towards support of more spending cuts than tax increases (62%).

So a solution should be easily achieved, right? No, the devil is actually in the details. Democrats and Republicans differ significantly in how they see solutions to deficit reduction.

FiscalCliffchart2

Here we find both consistencies and differences.  Indeed, a majority of Democrats, Republicans, and Independents support a mixed solution (see table above number in yellow). However, a strong plurality of Republicans (40%) views “cutting existing programs” as the only credible solution to deficit reduction. A closer look at these Republicans shows that a super-majority of them are socially as well as economically conservative—the political base of the House Republicans who have balked at the present proposals on the table.

So what does this all possibly suggest?

First and foremost, that American public opinion is pragmatic when it comes to deficit reduction. People support some sort of ‘mixed solution,’ with an emphasis on more spending cuts than tax increases. This should make any deal easy.

Second, conservative House Republicans still find a plurality of support from Republican voters for a singular ‘spending cut’ solution. Put differently, conservatives do have political staying power and might not easily budge from their present position; thus making a deal supported by the entire Republican base difficult.

Third, it is, however, important to remember that 53% of the Republican base still does support a “mixed solution” approach: one including more spending cuts than tax increases. As such,  the final bill will probably be Democrat in origin and will probably only include a slight majority or, more probably, a plurality of House Republican support.