Reason-Rupe Poll: 57 Percent of Americans Say Spending Cuts Will Help the Economy

Nearly 69 percent of taxpayers expect their taxes to go up in the next five years and 62 percent think Congress will spend tax increases on new programs instead of paying down debt

With growing concern about a double-dip recession and a lot discussion about how to stimulate the struggling economy, over 57 percent of Americans say reducing government spending will "mostly help" the economy, according to a new national Reason-Rupe Public Opinion Survey of 1,200 adults. Just 21 percent believe cutting spending will "mostly harm" the economy.

When analyzing the reasons that consumers aren't spending money, economists should note that the public is bracing for tax increases. Nearly 69 percent of voters expect their taxes to go up in the next five years and only 6 percent expect their taxes to go down. Over 32 percent say they expect their taxes to increase "a lot" in the next five years and more than 36 percent anticipate their taxes will increase "a little." 

If taxes do go up, Americans don't trust that the new revenue will be used to reduce the national debt.  When asked what they expect Congress would do with money generated by tax increases, 62 percent of Americans say Congress would spend that money on new programs. Only 27 percent of taxpayers believe Congress would actually use the money to pay down the national debt.

Taxpayers are also worried about Congress' inability to balance the federal budget. Over 77 percent of Americans say the federal government needs a spending cap that prevents it from spending more than it takes in during a fiscal year.  Ninety-one percent of Republicans, 75 percent of independents and 66 percent of Democrats favor a federal spending cap. Support for a constitutional amendment requiring a balanced federal budget is somewhat lower, but still strong, at 69 percent.

When asked about the best way to reduce the national debt, 37 percent of voters believe reducing federal spending without increasing taxes is the best policy. Another 20 percent say they favor mainly decreasing spending along with some tax increases. Over 24 percent say an equal emphasis on spending cuts and tax increases is the right approach.  Just 7 percent favor relying exclusively on tax increases to reduce the national debt, and 8 percent say they favor mostly tax increases combined with some spending reductions.

The Reason-Rupe poll sheds light on how difficult fixing the federal budget's structural problems will be and shows that choice is going to be the key to any future entitlement reforms. Over 54 percent of Americans favor allowing workers to opt-out of Social Security if they choose to rely on their own retirement savings.  And 56 percent support allowing workers to opt-out of Medicare if they choose to pay for their own health care in retirement.

Adding choices will be vital to any reform efforts because there are strong sentiments against other reforms. Sixty-seven percent oppose raising Social Security's retirement age above the current age of 65; 57 percent of taxpayers are against cutting their current or future Social Security benefits to help balance the federal budget; and 51 percent are against cutting their current or future Medicare benefits  to help balance the budget.

However, this picture changes sharply if the people who oppose Social Security or Medicare cuts are assured of receiving benefits that are at least equal to the amount they pay into the entitlement programs.  In that scenario, the number of people willing to accept Social Security benefit reductions grows to 61 percent, and 59 percent would accept cuts in Medicare.

Full Poll Online

The complete Reason-Rupe survey is online here (pdf).

This Reason-Rupe poll, conducted August 9-18, 2011, surveyed a random, national sample of 1,200 adults by telephone (790 on landlines, 410 on cell phones). The results have a margin of error of plus or minus 3 percentage points. The poll was conducted for Reason Foundation by NSON Opinion Strategy.

This is part of a series of Reason-Rupe public opinion surveys dedicated to exploring what Americans really think about government and major issues.  This Reason Foundation project is made possible thanks to the generous support of the Arthur N. Rupe Foundation.