A large majority of Americans say the U.S. economy would probably suffer serious harm if Congress fails to give the federal government more borrowing authority. But barely half support raising the government’s debt limit, even if lawmakers also sharply cut spending.
A Washington Post-ABC News poll shows that 55 percent of Democrats and half of Republicans and independents support a debt-limit deal that includes a steep reduction in the size of government. But 37 percent of Republicans, a third of independents and nearly a fifth of Democrats say they are against raising the debt limit, under any circumstances.
The survey highlights the political pressures facing lawmakers and the White House as they lurch toward Aug. 2, when the U.S. Treasury says it is likely to default on its obligations unless Congress agrees to raise the $14.3 trillion debt limit. Bipartisan talks aimed at reaching a compromise are set to resume Thursday on Capitol Hill, focusing on Democratic demands for fresh revenue as well as possible mechanisms for enforcing a multi-year agreement to cut spending.
While that effort is generating ambivalence among the general public, it is being closely watched on Wall Street and in global financial markets, with investors worried that the world’s largest economy could fail to pay its bills for the first time in U.S. history.
On Wednesday, Wall Street fired another shot across Washington’s bow, with major credit rating agency warning that even a brief default would damage the nation’s sterling AAA credit rating. Fitch Ratings said it would downgrade affected U.S. securities to junk bond status “in the extremely unlikely event” that U.S. officials failed to make scheduled payments to investors.
Treasury Secretary Timothy F. Geithner faces a key test on Aug. 15, the agency said, when the United States is due to make $25 billion in payments on more than $1 trillion worth of securities. If those payments are missed, the Treasury would find it difficult to regain its AAA status immediately, the agency said, potentially raising borrowing costs by billions of dollars.
Fitch is the third major credit rating agency to issue a warning. White House press secretary Jay Carney said the report underscores the need for action.
“There is no alternative here to raising the debt ceiling,” Carney told reporters. “This is not about additional spending. This is about honoring the obligations that the United States government has made. And the consequences of not raising the debt ceiling, as some of these rating agencies have suggested, would be severe.”
The poll suggests that people believe such warnings. But large blocs — particularly among Republicans and independents — still do not like the idea of permitting the national debt to continue its upward spiral. Nor do they particularly like their options for reducing the debt.
The political backdrop shows risks for both parties. When asked who they trust to address the nation’s biggest problems, a record 20 percent of Americans — and more than a third of political independents — said they have faith in “neither” party. That’s the highest percentage in polls going back nearly 30 years.
Overall, Democrats have a nine-point edge on the trust question, but Republicans have momentum on the deficit issue. More voters now side with congressional Republicans than with President Obama, with a slim majority saying the debt should be tackled primarily through spending cuts, not new taxes.
However, Republicans appear to have handed Obama an opening on Medicare in the budget blueprint they adopted this spring. Nearly half of voters say they trust the president to protect Medicare, compared with 35 percent who trust congressional Republicans. That’s a slightly smaller advantage than former president Bill Clinton had over the GOP Congress in 1995, just ahead of his successful reelection campaign.
Seniors are evenly divided on the trust question, but they are the staunchest opponents of the GOP plan to replace Medicare with government subsidies for private insurance starting in 2022. Although those over 55 would not be affected, people 65 and older reject the proposal nearly 2 to 1.
Fewer than half of Republicans polled support their party’s plan to overhaul Medicare. Overall, the proposal — perhaps the boldest debt-reduction idea on the table — garners significantly more opposition than support, with 49 percent opposed and a sizable number – 19 percent — undecided.
The telephone poll was conducted June 2 to 5 among a random national sample of 1,002 adults. Results from the full poll have a margin of error of 3.5 percentage points.
Polling analyst Scott Clement contributed to this report.