Higher Taxes, Budget Cuts Needed to Reduce Deficit: CNBC Poll
A majority of Americans believe taxes will have to be raised and government services will have to be reduced in order to cut the federal deficit, according to a new CNBC-Associated Press poll.
However, there is sharp disagreement over which taxes should be raised and which services should be reduced.
The two most popular options among poll respondents: cutting the number of federal workers and freezing the salaries of federal workers. Coincidentally, President Obama on Monday announced a plan to freeze the pay of government workersin order to save as much as $60 billion over the next decade.
The president's deficit commission, a bipartisan panel studying ways to slash spending and close the budget gap, has floated various ideas over the past several weeks and will to issue a formal report on Wednesday.
Among the commission's tentative proposals: raising the retirement age, changing Social Security benefits, and eliminating the mortgage interest tax deduction. Those are considered "third rail" issues—politically dangerous to elected officials who dare to support them.
The CNBC-AP Poll found that 54 percent say tax increases and service cuts are necessary to balance the federal budget. Twenty-five percent say it can be done with service cuts only, while 11 percent say the task can be accomplished solely with higher taxes.
In terms of priority, 59 percent say services should be cut before raising taxes, while 30 percent say taxes should be increased before reducing services.
Most poll respondents (54 percent) say changes made to close the deficit should be evenly distributed among all Americans—a shared burden with shared sacrifices and shared costs. But, more than a third (38 percent) say the changes should be targeted to impact the wealthy. Only six percent say the changes should focus on low-income citizens.
When it comes to specific areas of the budget to cut, 62 percent support a reduction in the federal workforce, while 25 percent oppose it. Similarly, 59 percent favor a freeze in federal worker salaries, while 32 percent oppose that option.
The popular federal tax deduction on mortgage interest could be on the chopping block and nearly half of those surveyed (49 percent) would support that change, in exchange for lower overall income tax rates (31 percent opposed the idea).
If given the choice between paying a lower tax rate and eliminating the mortgage deduction or paying a higher tax rate while still being allowed to deduct mortgage interest payments, 51 percent favor dropping the deduction, while 38 percent favor a higher tax rate with a continuation of the deduction.
More than eight in 10 (85 percent) Americans say they're worried that the growing U.S. debt will harm their children's and grandchildren's futures, with 45 percent believing things will be worse for the next generation. More than two-thirds (69 percent) consider the federal budget deficit an extremely or very important issue and more than half (56 percent) think it is likely the deficit will cause a major economic crisis in the next ten years.
Despite such serious concern, there is little agreement on solutions and strong opposition to cutting specific areas of the budget. For example, 67 percent oppose reducing federal spending on education, 65 percent oppose raising the gasoline tax 15 cents, and 61 percent oppose eliminating the child tax credit.
Opinions are pretty evenly split on potential changes to entitlement programs, which represent a massive budgetary burden as Baby Boomers reach retirement age. Forty-five percent of those surveyed favor reductions on Medicare benefits for seniors with higher incomes (43 percent oppose such a move), and 44 percent favor lowering Social Security benefits for seniors with higher incomes (46 percent are opposed).
Other proposals relating to entitlements are just as controversial. Americans are about equally divided on whether higher-income earners should contribute more to Social Security. Forty-nine percent say the cap on income subject to Social Security taxes should be raised (it's now about $107,000), while 47 percent say it should be left alone.
Most people are against raising to 69 the age at which Social Security benefits can be collected (64 percent oppose it; 51 percent strongly oppose it), even if it would be phased in between now and 2075.
Finally, on the subject of extending the Bush tax cuts, the poll results are, once again, sharply divided. Fifty-percent say the tax cuts should expire for those with higher incomes (over $250,000 a year), 14 percent say they should expire for everyone, and 34 percent say the tax cuts should continue for everyone.
The CNBC-AP Poll of one thousand adults nationwide was conducted November 18-22 by GfK Roper Public Affairs and Corporate Communications. It has a margin of error of plus or minus 4.3 percentage points.
Watch for CNBC's special coverage of the deficit commission's report to President Obama on Wednesday, December 1. Erin Burnett will anchor "Squawk on the Street" and "Street Signs" from Washington DC. And, look for continuing reports on-air and online in "The Fleecing of America" series, focusing on the federal budget and wasteful government spending.