Do the American public really want a balanced budget

Great Debates
1

Right now we are running about 300 billion dollars in deficits. Almost 10% of all tax income (3% of everyone’s paycheck) goes to paying off interest on the debt. However I don’t know if the public really wants a balanced budget.

The $317 billion deficit of 2005 is lower than the $400 billionish deficit of 2004, which is good. However to totally eliminate the deficit we either have to cut spending programs or raise taxes.

As it stands right now the average taxrate in the US is about 29-30%, meaning 29-30 cents of every dollar goes to taxes. To totally eliminate the deficit and maintain our spending we’d have to increase taxes to about 33%. That may sound bad but that isn’t much higher than taxes were under Clinton and the economy was doing well then.

Most tax money goes to a handful of things anyway (I know the deficit is a federal issue, but I don’t think people really distinguish between state, federal and local taxes). Education is about 900 billion a year (state, federal and local), healthcare is about 800 billion, social security is about 500 billion, interest on the debt is 350 billion, the military is about 430 billion and I think law enforcement and the judicial system is 100-200 billion. There is some overlap in those figures (healthcare for a soldier may be counted two times as a military and healthcare cost for example). I don’t see the public rushing to cut any of these programs. Not that I’d support that anyway, but its not like the budget is pure pork or anything.

The public have been terrorized out of paying taxes and constantly promised tax cuts, but we have also grown fond of education and healthcare as well. I doubt we’d accept major cuts to these programs.

For example, an ABC/Washington Post poll [6] conducted at the beginning of September asked: “Which of these do you think should be the top priority for any surplus money in the federal budget – cut federal income taxes, put it toward reducing the national debt, strengthen the Social Security system, or increase spending on other domestic programs such as education or health care?” The poll yielded the following results:

Education/Health 37%
Social Security 29%
Reduce Debt 19%
Cut Taxes 14%
No Opinion 1%

Is there actual evidence that the public (including myself as I’m sure I’m wrong about some of these things) has an actual idea how big the debt it, how much we pay in interest, what our tax money goes to or what our tax rate is? Are the public willing to put up with tax increases or program cuts to eliminate the debt or do most of us just not really understand the situation or what we pay in interest, how much we really pay in taxes (around 30%), or what it would take to lower spending? Considering that we are an indebted nation I don’t think the gov. can expect from us what we don’t expect from ourselves. A nation of people who run up their debts and just make the interest payments on their loans cannot be expeted to be in favor of federal budget surpluses.

At the same time, a 3% tax increase from 30-33% only adds up to an extra $125/month in taxes for an average family of 4 with a household income of 50k. It would be bad if they were barely making ends meet as it was but their children are just going to have to pay off the national debt sooner or later anyway. That stereotypical family already pays $125/month on interest on the debt, their kids will end up paying closer to $200+ a month on the debt if things don’t change. So selling a debt decrease as a way to invest in children’t future could be a good thing. Then again, that is only a $100/month tax increase for an average family, so it may not come across as a major emergency, especially in our age of 2% minimum payments on credit cards. I heard bush is considering eliminating the mortgage deduction to raise revenue of about 60 billion, so that’ll be good as the deduction generally affects the well off, who have experienced the most economic growth in the last 30 years and as a result can afford the higher tax rate the easiest. Most people don’t view a quiet elimination of a tax cut the same way they view a nouveau tax increase. Its the same result but our psychology processes the information different.

2

No, in fact a balanced budget isn’t good for the economy. The Feds should spend just a bit more- about what the increase in GDP is. In other words, it’s best for the economy to have a deficit % about equal to the increase in GDP- a few %.

However, the current deficit will bankrupt us.

Let’s get out of Iraq (a huge savings), and restore some of the taxes that GWB cut for his rich cronies- the Capital gains tax, the estate tax, etc. We also need to match the AMT to inflation- which is a “tax cut” of sorts. Get rid of a few deductions- the Misc Itemized for instance- but raise the Std Ded a bit too- thus more dudes can file the “short form”.

Cuts should be in pork and in Ag subsidies. I am also afraid that the Medicare Precription drug benefit was premature.

Small adjustments can be made in Soc Sec- raise the age a bit more (65 isn’t old anymore), make it all taxable if your AGI is over 100K, and if your AGI is over 1 Mill, maybe you’d have to give it back as sort of a “negative tax credit”. That last is likely too controversial.

3

The American Public in general couldn’t care less whether or not the US budget is balanced for any given year. It’s much to abstract a concept. Further, most people in the US don’t run a balanced budget any more themselves (gotta love easy credit!); I’d venture to say that over 75% don’t even BOTHER to budget at all (by which I mean pre-set spending targets in order to live within their means and achieve a net savings during the year).

Where the American Public gets worried is if the result of unbalanced budgets is either increased taxes or economic downturn. Of course, since they cannot comprehend all that goes into the budget, they have to rely upon someone to tell them that the increased taxes or the economic downturn were caused by an unbalanced budget.

Ever since 1980, that task has fallen to whatever party is either out of power, or is in power, but wants to make a change to spending priorities that isn’t supported by a majority of the members of Congress. :wink:

4

I think a lot of people want a balanced budget. They fall (oversimplification, here) into 3 groups. One group wants to help the poor, the sick, and the old, and they want to pay enough taxes to cover it. One group wants to cut taxes, and they want to lop off the poor, the sick, and the old. (My congressfool, Mike Pence, is Human Events Magazine’s Man of the Year for this attitude.)

The third group wants a balanced budget, but they don’t really understand what it takes to do that. They think if you keep social services, but you sell a lot of bonds to cover it, then that’s balanced. “Let my grandkids pay for it.”

5

I started working and paying taxes in 1976. By 1996 I helped pay off the deficit. Do I have to do it again? :stuck_out_tongue:

6

The vast majority of government spending does not go to helping the ‘poor, sick, and old’. At least, not all three. Most government revenue comes from the middle class, and most spending goes back to the middle class. If you want to curb government spending without hurting poor sick people or poor old people, just means-test entitlements. There’s no reason that rich old people should have free prescription drugs, medicare, and social security. There’s no reason why rich dairy farmers need subsidies, or why the government should pay to subsidize the Metropolitan Museum of Art, which is overwhelmingly visited by rich people.

The truly poor and needy were covered a long time ago. The current trend in ‘progressive’ politics is to extend government benefits to the middle class. For example, here in Alberta you now qualify for subsidized day care (almost fully paid) if you earn $75,000 per year. There’s a push on to make day care fully subsidized for everyone, regardless of income, throughout Canada.

Don’t do that. It’s a really bad idea. The universal prescription drug benefit of Bush’s was a really bad idea. Universal public health care for the aged is a really bad idea, as is universal health care for everyone.

If you limit government programs to the truly needy, not only will you be able to balance the budget with modest taxes, but you’ll have more resources to help those people. But western countries are moving away from government as a safety net and more towards government as our sugar daddy and nanny, making our lives comfortable, removing all risk, and coddling us cradle to grave. And that’s not affordable, as Europe is finding out.

7

The whole situation reminds me of Thomas Friedman’s famous anecdote about the little girl who likes brussel sprouts, but doesn’t like brussel sprouts enough to actually eat them. Sure, the average American is vaguely aware that there’s a large deficit and that we’d be better of if it were eliminated, but few people want to make that elimination their top priority. There’s no political willpower for deficit elimination.

I doubt that more than about ten percent of the public would know how much interest we pay on the deficit, or even be able to explain the relationship between interest rates and deficit spending. However, that could change if there was a serious effort made to shine a spotlight on the issue. Interest rates have risen quickly, and may rise faster if the Chinese are no longer able to buy up American debt. Further, the baby boomer retirement begins in slightly more than six years (!), so the necessity of getting spending under control is increasing.

8

I consider myself a “fiscal conservative.” But no, a budget surplus isn’t necessarily a big deal for me.

I’d like the budget to have either a low deficit or a low surplus, a low deficit isn’t any better or worse than a low surplus in my mind. The Government isn’t a corporation and it probably shouldn’t be our goal to expect profit from them. Just make sure we aren’t going too far into the red and make sure we aren’t too far in the green; because that would indicate that the people are being unjustly taxed if you have such an excess in yearly spending.

The debt also isn’t something I worry too much about, it’s something that has to be controlled but throughout history most major powers have had to carry debt.

Also, during war time all bets are off. You can’t win a war and have a healthy budget, just cannot be done and to think otherwise is foolish.

9

I would agree with this if you would include tax cuts as another thing which are foolish during a time of war.

10

I’d agree with both independently of one another.

11

??? That war and tax cuts are both foolish? No that can’t be it…

12

I’m saying me holding the position that a healthy budget is not something we should worry too much about during wartime is a position I hold independent of my position that you shouldn’t cut taxes during periods where there is an increased need for government spending (like during a war.)

You said, “I would agree with this if you would include tax cuts as another thing which are foolish during a time of war.”

I’m saying I don’t need the “if you would include tax cuts. . .” blurb as part of requiring me to accept that a healthy budget isn’t going to be an important goal during a time of warfare. I do think it is bad policy to cut taxes during a time of military action, but I don’t see why I would HAVE to believe that to believe the first thing.

13

Well it seemed to be pretty big news, and people were generally happy, after the 1994 elections when Republicans won both the House and Senate and we actually got a balanced budged that lasted until…someone calling himself a Republican won the White House.
But once we started getting into debt again, seems to me like everybody’s been divided on it based on whether they feel that the programs created or expanded by Bush are worth it or not.

Or, to simplify, people are probably more interested in the money being spent on, as they see it, what’s right. So if the President, or Congress, proposes spending billions of dollars, which will get us further in debt, if we believe in the cause, chances are, we won’t mind the fact that we’re spending more than have.

14

Paying off the debt could be a bad idea as if we just have a reasonably balanced budget or mild deficits (20 billion or so) then inflation will eat away at the national debt. By 2025 the federal budget may be as big as 5 trillion and revenues may be closer to 5 trillion as well, but GDP will be closer to 25 trillion and an 8 trillion national debt won’t be as big of a deal anymore.

All in all I don’t know if its possible for a nation of people who are in debt to want to pay taxes so their government will not have a deficit.

15

Okay, I admit I’m very uninformed about such things. But, if there was enough of a consensus to either raise taxes or reduce spending, what would be the downside up eliminating the total deficit? What is the value that outweighs the cost of the interest being paid?

When talking about reducing spending, it would be interesting to hear people say which programs that directly benefit them should be reduced or eliminated.

I can’t think of any. So, for the record, I’d be willing to see higher taxes for me (and everyone earning more than me) but only to the point of meeting current spending. Of course I’d also like to see our current expenses reduced by one war in Iraq - but that’s a different thread.

16

No, in fact a balanced budget isn’t good for the economy. The Feds should spend just a bit more- about what the increase in GDP is. In other words, it’s best for the economy to have a deficit % about equal to the increase in GDP- a few %.

How can a balanced budget NOT to be good for the economy?

17

I’m too lazy to go back and see who actually asked this, but, I agree that a balanced budget isn’t a good thing. For one, economically speaking, it tends to stagnation and deflation. That’s terrible for any economy, in any point in time. It means that the government isn’t doing anything to allow the economy to grow, in short. If you try to fix the government spending to what it has in its budget, then you will be taking out major capital away from the market. Like it or not, the government is a relevant actor in the US economy (or any capitalistic or semi-capitalistic government) in terms of capital expenditure. Without the capital, the economy will surely tank – or, we will suffer some very hard times for a very long time as we try to endure the correction.

As to the OP: I would like to see an adventurous spending government, but somehow managed to spend under budget. Then, I would like to see the government issue me a refund check (because that would make me happy). It’s a pipe dream, I know… In practice, I do try to pay income tax every year.

18

Here’s the problem: Both parties claim to want a balanced budget. But Democrats want to balance it by raising taxes. Republicans are skeptical of this, because they believe that the deficit is not a revenue collection problem, but a spending problem. And they are right. For example, in 1995 the government’s revenue was 1.4 trillion dollars. Next year it’s projected to be 2.4 trillion dollars. That’s a huge increase, and yet the deficit is larger now than it was then.

If you raise taxes, you may get a temporary reduction in the deficit. But then with all that new revenue, politicians will find a way to spend more. They’ll continue to spend until all the money is gone and the deficit is high enough that pressure builds to slow spending. If you doubled the government’s revenue tomorrow, my prediction is that the budget would be balanced for a few years, but maybe 10 or 15 years from now we’d be talking about the horrible deficit, and the government would be twice the size.

That’s why Republicans oppose raising taxes to pay for deficits. On the other hand, every time the Republicans propose cutting anything, the Democrats go apeshit and start yammering about how poor people are going to starve in the streets. So you can’t raise taxes, and you can’t cut spending, and in the meantime both parties have a vested interest in bringing home the pork to their constituents. So the size of government slowly increases, and deficits push the limits of what’s politically palatable.

19

I have to disagree that Americans simply don’t care, or are just too dumb or lazy to understand it. Just look at the Perot campaign in 1992 - that’s what his entire platform was about, his entire campaign was an exercise in sensitization to the problem combined with chiding the major parties for treating the deficit and debt as “the crazy aunt locked in the attic”. His own personal idiosyncrasies cost him the lead he had once held as a result of his efforts, but he had the same effect that third party candidates almost always do, of getting a popular issue coopted by one of the majors. Clinton took the problem seriously and, despite unanimous opposition by the GOP (whose loyalists now claim credit, while claiming the Democrats are “going apeshit and yammering” - that’s a real help here, **Sammy ** :rolleyes:), got the necessary measures through Congress.

If it isn’t getting top play right now, there are certainly a number of other issues competing for attention, combined with an understanding that it isn’t going to change as long as a spendthrift party has sole control of power. You’re all making a serious mistake by blaming poor leadership on an apathetic citizenry.

20

Not trying to be difficult here, just wanting to know. How does a balanced budget lead to stagnation and deflation? Which market gets less capital from whom when the government stops borrowing?

We need deficits because we can’t trust our elected officials to avoid bigger deficits? Pretty cynical, but probably the best arguement for deficits I’ve heard yet.