Americans do not agree with former vice president Richard B. Cheney’s famous comment that “deficits don’t matter.” Last December, a Politico-Harvard telephone poll asked 1,014 adults what the new Congress’s priorities should be. Reducing the budget deficit was one of the top three, with 80 percent calling it extremely important. And that opinion was bipartisan, held by 81 percent of Republicans and 76 percent of Democrats.
But when it comes to making a budget, would the public do any better than Congress?
To answer that question, this spring the University of Maryland’s Program for Public Consultation conducted a unique online survey with a probability-based sample of 2,403 voters provided by Nielsen Scarborough (margin of error +/-2 percent) from April 10 to May 13.
Respondents were told the budget deficit for 2019 is projected to be $900 billion. We gave them the opportunity to propose their own budget, getting instant feedback about how their choices would affect the deficit. They were not pressed to cut the deficit; we presented and had them evaluate written arguments both for and against the importance of cutting it.
Nonetheless, they did cut the deficit. Given options for changing discretionary spending and/or general revenue, majorities overall cut the deficit by $544 billion. Republicans cut it by $401 billion, while Democrats cut it by $663 billion.
What’s perhaps most striking, considering that Congress finds it so hard to work across the aisle, is that Republicans and Democrats agreed on steps to cut the deficit by $376 billion. These steps represent bipartisan convergence, or overlap, on steps taken by majorities of Democrats, Republicans and Americans overall.
Both Republicans and Democrats cut the deficit by raising taxes
Spending cuts played a relatively minor role. We showed respondents the 2019 discretionary budget, broken into 34 line items, and gave them the opportunity to reduce or increase each one. Majorities made net reductions of $64 billion. Interestingly, majorities of Republicans cut relatively less ($27 billion) than Democrats ($114 billion). The biggest target was defense spending — 56 percent of respondents cut the base defense budget by at least $42 billion, in addition to some other cuts to military spending, but 53 percent of Republicans cut it by $7 billion.
A point of consensus was a $7 billion cut to subsidies to agricultural corporations, supported by 56 percent of respondents overall, 55 percent of Republicans and 58 percent of Democrats. All other cuts were quite small.
By far the biggest deficit cuts came from increasing taxes on high incomes. Bipartisan majorities reversed the 2017 tax cuts for incomes over $200,000, generating $111 billion: That included 64 percent overall, 54 percent of Republicans and 74 percent of Democrats, with even larger percentages rolling back the tax cuts for higher incomes.
Similar majorities decided to treat capital gains and dividends as ordinary income for those with an income over $200,000, generating $122 billion. Overall, that percentage was 60 percent, with 54 percent of Republicans and 67 percent of Democrats. Fully 75 percent — with 65 percent of Republicans and 83 percent of Democrats — adopted an extra tax of at least 4 percent on incomes over $5 million, generating $13 billion. Sixty percent of Democrats went further, charging 8 percent.
Respondents did not go as far as Sen. Elizabeth Warren (D-Mass.) says she would, imposing an extra tax of 7 percent on corporate income over $100 million. But 68 percent of Republicans did impose such a tax of at least 1 percent, yielding $12 billion, as did 86 percent of Democrats, for 78 percent overall. Fifty-three percent went further and imposed a 3 percent tax, including 66 percent of Democrats but 37 percent of Republicans. That proposal would generate about $36 billion.
Despite Republican leaders’ friendliness to Wall Street, Republican voters, as well as Democratic ones, brought them higher taxes. Overall, 63 percent of respondents — 55 percent of Republicans and 71 percent of Democrats — approved of a 0.1 percent financial transactions fee on trades of stocks, bonds and derivatives. That’s an idea originally proposed by Nobel laureate economist James Tobin as a way to discourage short-term currency speculation as much as to generate revenue. It’s estimated that such transaction fees would produce $70 billion.
Three in 4 respondents supported a new fee of 0.15 percent on uninsured debt held by large banks — an idea popular among analysts concerned about big banks once again becoming overexposed, thereby increasing the risk of another financial collapse. This proposal would generate about $11 billion in revenue and was supported by 66 percent of Republicans and 83 percent of Democrats.
Sin taxes got bumped up. Bipartisan majorities raised alcohol taxes to 25 cents per ounce of alcohol, generating $5 billion, including 61 percent of all respondents, with 56 percent of Republicans and 65 percent of Democrats. Raising taxes on various tobacco products generated another $5 billion, supported by 73 percent overall, 66 percent of Republicans and 80 percent of Democrats.
The overall majority and the Democrats went further than Republicans on a few other proposals. Fifty-three percent of respondents supported reversing the 2017 tax cuts for incomes of $100,000 to $200,000. Sixty-four percent of Democrats supported the proposal, while 42 percent of Republicans did. Fifty-four percent supported rolling estate taxes back to 2011 levels, including 68 percent of Democrats but 37 percent of Republicans. Sixty percent supported adopting new taxes on carbon dioxide emissions, including 80 percent of Democrats but 38 percent of Republicans. On sugary drinks, 57 percent supported imposing a half-cent-per-ounce fee, including 65 percent of Democrats and 48 percent of Republicans.
Readers can try making their own budgets — and can send their proposals to their members of Congress — here.
What might this mean for the 2020 elections?
Neither party is likely to claim fiscal rectitude, because both accepted the red ink. But outsider candidates who want to distinguish themselves on the deficit might consider running on a platform that speaks to Americans’ preferred budget directions.
Steven Kull is director of the Program for Public Consultation at the School of Public Policy, University of Maryland.