For Immediate Release
February 4, 2011
Contacts: Neil Tickner, 301 405 4622 or email@example.com
Americans Know How To Solve Deficit, UMD Study Finds
COLLEGE PARK - A new University of Maryland study finds that when average Americans are presented the federal budget in some detail, most are able to reduce the budget deficit dramatically and resolve the Social Security shortfall.
Through a combination of spending cuts and tax increases, on average, respondents cut the discretionary budget deficit projected for 2015 by seventy percent. Six in ten solved the problem of the projected Social Security shortfall through adjustments in payroll taxes, premiums, and benefits. The projected Medicare shortfall was also dramatically reduced.
The study was conducted by the Program for Public Consultation (PPC), affiliated with the University of Maryland's School of Public Policy, and fielded by Knowledge Networks.
Unlike conventional polls PPC consults with the public by first presenting respondents with information on policy issues and a range of options for addressing them. "When given information and a chance to sort through their options, most Americans do a pretty good job of dealing with America's budget problems - better than most politicians," says University of Maryland Senior Research Scholar Steven Kull, who directs PPC.
Respondents were presented 31 of the major line items of the discretionary federal budget with a description of each one, the amount budgeted for 2015, and the projected deficit. They were then given a chance to increase or decrease each item as they saw fit and to try to reduce the deficit.
On average respondents made net spending cuts of $145.7 billion. The largest cuts included those to defense ($109.4 billion), intelligence ($13.1 billion), military operations in Afghanistan and Iraq ($12.8 billion) and the federal highway system ($4.6 billion) - all of which were cut by majorities.
On average respondents increased revenues by $291.6 billion. The largest portion was from income taxes which were raised by an average of $154.8 billion above the levels currently in place. Majorities increased taxes on incomes over $100,000 by five percent or more, and increased them by 10 percent or more for incomes over $500,000.
Majorities also increased corporate and alcohol taxes, and turned to new sources of revenue, including a tax on sugary drinks, treating 'carried interest' income as taxable (also known as the hedge fund managers' tax), and charging a crisis fee to large banks. A plurality (49 percent) favored a tax on carbon dioxide emissions. But a sales tax was rejected by 58 percent of respondents.
For the estate tax, a majority (77 percent) favored reverting at least to the 2009 levels, taxing estates over $3.5 million at a 45 percent rate. Only 15 percent of respondents supported the estate tax levels recently passed: taxing estates over $5 million at a 35 percent rate.
Most respondents also successfully dealt with the problem of Social Security. Respondents were presented eight possible steps for dealing with the Social Security shortfall that will occur as the baby boom generation retires.
Six in ten respondents selected enough steps to resolve the problem. This was the case even though many of them also chose to make the problem more difficult by increasing benefits to low income retirees.
The most popular approaches - selected by large majorities - called for raising the limit on wages subject to the payroll tax to at least $156,000, and increasing the retirement age to at least 68. Substantial numbers also selected a gradual increase in the payroll tax rate, as well as changes to cost-of-living adjustments.
Because the effect of the new Health Care law on Medicare in the future has not been fully analyzed, it was only possible to have respondents evaluate a series of options for reducing the Medicare deficit, rather than a full exercise at erasing it.
Some options were found at least "just tolerable" by majorities. These included raising Medicare premiums to $135 a month, raising the payroll tax rate by 1 percentage point, reducing payments to doctors by 5 percent, and gradually raising the age of eligibility to 68. Views were divided on the tolerability of raising the payroll tax by 2 percentage points.
A separate sample was also asked to consider reducing or eliminating certain deductions for individual incomes taxes. A majority found the following at least "tolerable":
The study was conducted in two waves. A sample of 1,250 respondents was fielded October 8-22 and a second sample of 793 respondents was fielded December 18-29. It was conducted using the web-enabled KnowledgePanel©, a probability-based panel designed to be representative of the U.S. population. More technical information is available at Knowledge Networks.
Additional study details here.
The full study is reported here.
Information provided by the Office of University Communications
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