Wednesday, December 5, 2012

How Main Street Feels About the Fiscal Cliff

A recent poll by Associated Press - GfK assesses how Americans feel about the impending fiscal cliff facing their nation in roughly four weeks.  Let's dig in noting that the error in the poll is plus or minus 3.9 percentage points.

When asked whether the Bush - Obama tax cuts should expire in January for earnings over $250,000, 48 percent of respondents agreed that they should.  In addition, 32 percent agreed that the tax cuts should continue for all tax payers and 13 percent agreed that the tax cuts should end for all Americans no matter what their level of income.

Among Republicans, support for renewing the tax cuts for everyone has dropped since 2010 from a level of 74 percent just after the 2010 mid-term elections to 48 percent in the latest polls.  Among Democrats, 61 percent support the ending of the tax cuts for the wealthy, down only slightly from 2010.

The poll also found that support for cutting government services has dropped to 46 percent from 56 percent in February 2012 and 62 percent in March 2011.  Only 30 percent of respondents agreed that raising taxes was the preferred method of balancing budget deficits.  A rather small 13 percent of respondents agreed that a balance of spending cuts and tax increases was the best option for achieving fiscal balance.

Getting to the details, 48 percent of respondents oppose proposals that would slowly raise the age of Medicare eligibility from its current level of 65 compared to 40 percent who approve.  The strongest opposition to this proposal came from people ages 30 to 64.  Only 30 percent of respondents favour the option that would see a slowing in the growth of annual Social Security benefits; respondents between the ages of 50 to 64 were most opposed to this proposal.  These sentiments were similar for both Democrats and Republicans.

Surprisingly, the proposal that would see the end of the deduction for home mortgage interest payments in exchange for lower income taxes was supported by 42 percent of respondents compared to 33 percent who were in favour.  This support level is down marginally from 2010.

In closing, just over half of respondents feel that it is unlikely that President Obama will be able to reduce budget deficit levels over his remaining four year term.  This is opposite to what people felt when he took office in January 2009.

It is intriguing to see that nearly half of Americans feel that tax cuts for the wealthiest Americans should end and that, while Americans want this impasse to end, they do not wish to sacrifice their entitlements.  It's hard to blame them, particularly when it is quite clear that there is so much waste in the increasingly invasive governments of today.

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