The Question of What Americans Want Fiscal Policy to Be Has Been Answered...
When you ask Americans if they want to cut projected growth in Medicare, Social Security, and Medicaid spending in order to avoid tax increases, they say "no." When you ask Americans if they want to cut defense and foreign aid spending to avoid tax increases, they say "yes." When you ask Americans if they want to cut spending to avoid tax increases, they say "yes"--but that is because they are confused about how much of the government budget is defense and foreign aid as opposed to Medicare, Medicaid, and Seocial Security.
Thus I think that Doug Elmendorf is wrong when he says and David Leonhardt is wrong when he endorses the claim that:
The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.
You can create the appearance of such a disconnect, but only if you ask questions while working carefully to avoid telling the voters just what their taxes are going to be spent on.
David Leonhardt:
The Deficit We Want: It’s a comforting story, to be sure. It holds the promise of a painless solution, because it suggests that the country’s huge looming deficits are not really our fault. Instead, they seem to stem from weak-willed politicians, wasteful government programs that do not benefit us and tax avoidance by people we have never met. In truth, the coming deficits are a result, above all, of the fact that most Americans are scheduled to receive far more in Medicare benefits than they have paid in Medicare taxes. Conservative and liberal economists agree on this point. After Medicare on the list of big, growing budget items come Social Security and the military. The three programs are roughly as popular as tax increases are unpopular – which is precisely why solving the deficit problem will be so difficult.
The new Times/CBS News poll highlights the problem... when given a straight-up choice between broad spending cuts and tax increases, Americans say they would prefer to reduce the deficit mostly through less spending.... [but] would people rather eliminate Medicare’s shortfall through reduced Medicare benefits or higher taxes? The percentages then switch, becoming nearly a mirror image of what they had been. Some 64 percent of respondents preferred tax increases, while 24 percent chose Medicare cuts. The same is true of Social Security: 63 percent for higher taxes, 25 percent for reduced benefits.
Herein lies the political problem. We want to cut spending. We just don’t want to cut the benefits that the spending pays for. “The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans,” Doug Elmendorf, the director of the Congressional Budget Office, has said, “and the tax revenues that people are willing to send to the government to finance those services.”...
The crucial question today is, simply: Would you rather have your taxes increased or your Medicare and Social Security benefits reduced? “All of the above” is a reasonable answer. “None of the above” is not.
If there any politicians who can get us to accept this reality, they haven’t done so yet.
