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Posted by on Aug 11, 2011 in Economy, Politics | 16 comments

CNN Poll: Majority Want Tax Increase for Wealthy and Deep Spending Cuts

The new special Congressional super committee could pose additional political risks for one of the political parties: the one that overreaches first. The reason: a new CNN poll shows that the majority of Americans want a mix of decisions — in effect a compromise:

Most Americans want a special congressional committee tasked with drafting a long-term solution to the nation’s mounting federal deficits to include tax hikes for the wealthy and businesses and deep cuts in domestic spending, according to a new national survey.

So can:

  • the Republicans agree to some form of tax hikes? It doesn’t sound that way given the just-announced GOP appointments to the committee.
  • the Democrats agree to deep spending cuts — truly DEEP? Again, it is iffy given those who were appointed by Harry Reid, although perhaps a little less iffy than Republicans who signed the no tax pledge agreeing to taxes.

  • A CNN/ORC International Poll released Wednesday also indicates that the public doesn’t want the super committee to propose major changes to Social Security and Medicare or increase taxes on middle class and lower-income Americans.

    This could mean GOPers could be at odds with most Americans on these issues as well.

    Under the debt ceiling deal passed by Congress and signed by President Barack Obama last week, a panel of 12 legislators – six Democrats and six Republicans, equally divided between the House and Senate – will be created to try to work out $1.5 trillion in deficit reduction after an initial round of more than $900 billion in spending cuts.

    If the committee fails to reach agreement or Congress fails to pass whatever package it recommends, a trigger mechanism will enact further across-the-board cuts in government spending, including for the military.

    According to the poll, 63 percent say the super committee should call for increased taxes on higher-income Americans and businesses, with 36 percent disagreeing. And by a 57 to 40 percent margin they say the committee’s deficit reduction proposal should include major cuts in domestic spending.

    But cuts in defense spending get a mixed review: Forty-seven percent would like the committee to include major cuts in military spending, with 53 percent saying no to such cuts.

    Nearly two-thirds say no to major changes to Social Security and Medicare. And nearly nine in ten don’t want any increase in taxes on middle class and lower income Americans.

    “Republicans and Democrats disagree on the need for cuts in domestic and military spending, as well as tax increases for higher-income Americans, but they do agree that the committee should stay away from tax hikes for the middle class and major changes to Social Security and Medicare,” says CNN Polling Director Keating Holland.

    According to the survey, only a third say that taxes on wealthy people should be kept low because higher-income Americans help create jobs, with 62 percent saying that taxes on the wealthy should be high so the government can use the money for programs to help lower-income Americans.

    On balance?

    It seems likely that:
    *there will be no or little compromise on the part of the committee due to demands on each side and political constraints.
    *political dominant Tea Party Republicans will continue to irk some segments of America but due to the way they have out political muscled and outmaneuvered Democrats they will likely continue to be the ones calling the shots in this ongoing political drama and in the Republican Party itself.

    That might not happen if Barack Obama transforms his political style and is far more assertive.

    But, then as my grandmother used to say: “If, if..If I had wheels I’d be a trolley car.”

    UPDATE: Republican Bruce Bartlett notes HERE that 23 polls say people support higher taxes to reduce the deficit.

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    Copyright 2011 The Moderate Voice
    • EEllis

      So the majority of people want someone else to pay? Big shock

    • hollytandy

      Yeap. In fact, did you know that Currently, many insurance companies do not allow adult children to remain on their parents’ plan once they reach 19. Companies cannot do that any more. Search onilne for “Penny Health” and you can insure your kids if you are in the same boat.

    • DLS

      Free goodies at others’ (“society’s” and “the rich’s”) expense?

      Yep — they want real reform, badly needed reform compromised.

      They want reformers to compromise themselves, in the correct use of that word in this case, as in “to sell their souls[ and reform].”

      We’re seeing all kinds of dishonest, evasive, euphemistic language these days that tries to make the people in the wrong look good, and hopefully to suckers, right: “balanced,” “compromise,” “shared sacrifice,” the long-misued “fairness,” and “revenues” in place of “taxes” and “tax increases,” naturally. They’re weasels avoiding correct and honest language because they’re reluctant to face the correct and honest responses.

    • Allen

      Republicans are doing what they always do, say no to everything unless they’ve proposed it.

      Compromise will have to take the form of putting a Republican label on Democrat creativity, because there sure as hell won’t be any rational thought beyond “starve grandma to death” coming out of the GOP.

    • TheMagicalSkyFather

      Hmm so if you like the spending cuts why do you hate on the herd for tax increase?

      If you cant swallow that maybe we should just end any discussions at this point. I have tired of one way streets.

    • JeffP

      DLS,

      I have really enjoyed reading your posts. I thought your tax revision explanation was a well-laid-out proposal, along with the suggestions of entitlement reform, and I still need to study it more. I need to learn more about the criticisms of a flat tax, but so much of it sounded like an excellent attempt and explanation at true reform.

      I also appreciate so much the willingness to address reform, because it is needed by all parties involved.

      The only thing I am curious to hear about, from posters who believe that this is all about punishing the rich or unfairly taxing the wealthy is,

      1) is it believable, or desirable, or morally acceptable that 80% of the wealth is owned by 20% of the population, and if so

      2) does that or will that endanger our democracy (or what’s passing for democracy,) and

      3) is there legitimacy in the belief that that wealth was “earned,” or that the concentration of that wealth reflects some rare talents or some meritorious state of being where this increasing concentration is somehow deserved? I’m just asking…

      4) is the argument about increases in taxes made because it would make investment disappear, or that the economy would crash? if so, where is historical evidence of this?
      And the flip side is, why didn’t Bush’s tax cuts grow the economy?

      I’m really not asking in a sarcastic way, and I am just trying to understand the sentiment of “other people’s money” in the context of our national dilemma.

      We’re the richest nation in the history of nations, and our government is flat broke, our infrastructure is in need of massive repair, and we’re at each other’s throats so much of the time that our political system is broken, maybe beyond repair.

      I’m sorry to ask so many questions but I really want to understand these arguments.

    • @JeffP
      I’m not DLS, but I’d like to respond.
      1,2 & 3) No, the top 20% probably shouldn’t own 80%. The wealth gap has grown with the size of the government, and I don’t believe that’s a coincidence. Until QE1 and QE2, for instance, all money created has gone to the banks to be loaned out. They’re earning rent on something that they didn’t make. Farm subsidies go mostly to the top 1%. Low interest rates have very successfully encouraged debt at all levels.

      If we want to fix the wealth gap, stop causing it. If that’s not possible, then the same powers will stop you at the tax level.

      4) Tax policy and spending policy have both been driven by Keynesian thinking. When depression economics got us into this mess, they aren’t going to get us out. That’s why neither the Bush cuts nor the far larger amounts in stimuli, bailouts, and deficit spending have had the desired effects. Keynesian economics has been pushed over its limits.

    • TheMagicalSkyFather

      Prof-Oddly not following actual Keynsianism is what got us here. We are supposed to save when times are good and spend when times are bad. We have actually spent when times are bad and spent twice as much when times are good. Dont blame Keynes for our inability to save anything.

    • JeffP

      Prof,
      thank you for answering, it does mean something to me that there can be some agreement that wealth distribution is problematic, at best.

      I also think I understand that it may directly correlate to the corporate lobbying that drives policy, indeed often writes policy. This is where I believe our democracy is endangered, not a civilian-served government but a corporate-served government.

      This is where I wonder if I’m understanding DLS more and more about reform.

      And when I hear that we need to be more corporate-friendly I ask
      1) what have corporations done for our economy or jobs situation over the last decade-plus and
      2) should I be suspicious when I hear about the need to be more corporation-friendly when I suspect corporation lobbyists are writing policy in Washington?

      And I agree with the sentiment that the taxpayers have assumed the risk (ie bailout–too big to fail) taken by the banks with sub-prime issues, etc, etc (while they have put themselves in the position to reap the gamble-rewards.)

      I just wonder if the answer to that is “less government.” If fundamentally, or at least in theory, the government is supposed to be of the people (not corporations or banks,) and by and for the people (as some sort of a protective, people-driven response to power and control of wealth/policy.) Is there a role for legitimate regulation? Or have regulators been bought out too?

    • @JeffP
      A government does not have to be large to be effective, quite the opposite, in fact.

      We’ve got to deal with reality. The government is run by politicians. Politicians need money to get elected. The money comes from special interests. The money that the special interests get, comes either directly or indirectly from the government. It’s a positive feedback loop.

      The reality is that the government is protecting the rich, not hurting them. That’s the end point that all governments throughout history have come to. All attempts to stop that, from communism to our own very libertarian constitution, have failed thus far.

      Face that truth head-on, and we’ve got something to work with.

    • @MSF
      Fair enough. The pseudo/paleo/neo-Keynesians got us here. I don’t know if anyone who calls themselves Keynesians believe in that “saving during good times” bit anymore.

    • TheMagicalSkyFather

      For Keyensianism to really work we need a minimum tax rate and pols that think beyond 4 years…my guess is that you see two fatal flaws that I do as well.

      I just get angry when people throw mud at Keynes for a perfectly valid and rational theory just to shift blame from pols that want to cut taxes or balloon spending to get votes(or in the Reagan era version both at the same time).

    • JeffP:

      The flaw in your approach is DLS simply can’t be understood. Devote your time elsewhere, maybe there are Gordian knots needing untying or something …

    • For Keynesianism to work, we need politicians to be able to tax more than they spend during good times, and programs that don’t grow faster than inflation.

      Having a majority of people want these things would also help.

    • DLS

      Jeff P. wrote:

      I have really enjoyed reading your posts. I thought your tax revision explanation was a well-laid-out proposal, along with the suggestions of entitlement reform, and I still need to study it more. I need to learn more about the criticisms of a flat tax, but so much of it sounded like an excellent attempt and explanation at true reform.

      I also appreciate so much the willingness to address reform, because it is needed by all parties involved.

      The only thing I am curious to hear about, from posters who believe that this is all about punishing the rich or unfairly taxing the wealthy is,

      I have said that so often, and in fact usually, it is punitive in nature, as so many of the comments by advocates routinely demonstrate, as well as their envy and notably their resentment.

      It often and in fact can be said confidently usually is about punishing the “rich,” and forcing them to pay more (i.e, take more from them in taxes), out of envy and resentment (notably resentment whenever they are cast or cast themselves in an ugly light).

      I have some time to do some answering…

      1) is it believable, or desirable, or morally acceptable that 80% of the wealth is owned by 20% of the population,

      It is if the wealth was rightly earned by the population or if it was the result of voluntary (and non-harmful) action, obviously.

      Also obvious is that nobody is saying that always is so, or is intrinsically so. The burden of proof is on those who disagree (there’s plenty of basis for disagreement), and I disagree with that wealth disparity being naturally “proper.” (In fact, I’ve studied and written more than any liberal — probably no liberal has made any comment at all on this site yet — on the subject of wealth, not only income, and that someday we may well have a wealth tax.)

      Plenty of literature is out there on tax policy. It includes books by MIT Press that typically are liberal. They love to misuse the word “fairness” while objecting to the common word to refer to those with high income (typical works are on income taxation) as the “successful.” (These days we encounter “job creators,” for example.)

      One of the MIT Press books even tries to examine the concept of fairness as well as the use of “fairness” regarding taxation in general, and common views about progressive income taxation, in an entire chapter devoted to “fairness,” and uses examples (I recall vividly) to try to impart the distinction between what is earned by one’s own efforts and what is plain luck (i.e., unearned) or made possible by others, don’t forget. Mining and fishing were among example descriptions chosen to illustrate this, I believe.

      I should try to look that book up — my old copy is in a box in storage in Michigan currently. (I’m in New Mexico and looking for it physically is out of the question.)

      and if so

      2) does that or will that endanger our democracy (or what’s passing for democracy,)

      It could, potentially, by substituting corruption or other misuse of power inherent in higher income or wealth for democracy. On the other hand, many harsh measures to force (make compulsory, rather than voluntary) income or wealth redistribution, notably in a punitive manner toward those with more, might be argued to be democratic if a majority votes for it, but others would object, and certainly the means would be wrong — and two wrongs don’t make a right, plus the means that are wrong are the real subject in and of itself here.

      and

      3) is there legitimacy in the belief that that wealth was “earned,” or that the concentration of that wealth reflects some rare talents or some meritorious state of being where this increasing concentration is somehow deserved? I’m just asking…

      Sometimes it’s luck (including inheritance, or the abused concept of various forms of “privilege” at birth or during upbringing — at least one book advocating a radical new economic policy, giving everybody $80,000 at adulthood, includes a “privilege tax” to fund the scheme). Often it isn’t but is achieved through effort and good rather than bad judgment, or choices, etc.

      I’d refer back to what I wrote about what the tax policy book by the MIT Press said. Mining, fishing…luck versus effort.

      4) is the argument about increases in taxes made because it would make investment disappear, or that the economy would crash? if so, where is historical evidence of this?

      An increase in income taxes, notably increasing the marginal rate and even more, being progressive in the tax incidence, is an obvious disincentive to earn more income. Tax something or otherwise “punish” it, you get less of it. (Subsidize it or otherwise “reward” it, you get more of it, as a rule.) Note that inflation drove people years ago into higher tax brackets (with progressive income taxes) through no effort (or fault) of their own. It was well agreed except by some on the far Left (such as Pete Stark, the U.S. Representative from California) that this was wrong and should be corrected.

      And the flip side is, why didn’t Bush’s tax cuts grow the economy?

      Removing disincentives may or may not have an “incentive” effect, though we see it usually does. Sometimes it doesn’t. Note that such things don’t happen all by themselves but there may be other things affecting economic decisions. Yes, this includes pain greed. It also may include fear, such as in the deflationary state in Japan (and an aging Japan), where people wanted to save; we saw the same thing after late 2008 here, were some were saving or paying down debt rather than doing the spending so many ignorantly expected and demanded.

      Well, with many people the tax cuts didn’t cause growth. I know someone in St. Louis who talked to me about it (we had plenty in common; among other things she is a physics prof there). Not only did she loathe Bush, but she has relatives and their families, some of which are wealthy, and she told me that at the time, there was no big need to greatly reduce taxes, just some lingering resentment at Clinton’s tax increases; many of them, she told me, laughed about what was being officially said about what to them was an unrequested gift. They hadn’t plan to boost production or hire more people, and they subsequently didn’t.

      But these things are exceptions to the normal way things work. It’s just worth noting that the normal response (spending by consumers, hiring or boosting production by business) won’t happen if the sentiment is not there or there is fear that precludes it, etc..

      I’m really not asking in a sarcastic way, and I am just trying to understand the sentiment of “other people’s money” in the context of our national dilemma.

      Taxes aren’t just your money, but others’ as well (or “society’s”), and many people act as though they believe others will (and often do) pay for what they want. There’s also a related problem with general funds that is illustrated by a single check at a restaurant for a group; if each isn’t charged their own cost but there’s a single bill (often vaguely paid for by “others”), skimping is foregone and it’s time for chateaubriand and fine wine. (from another book I bought long ago, about Washington’s gluttony)

      We’re the richest nation in the history of nations, and our government is flat broke, our infrastructure is in need of massive repair, and we’re at each other’s throats so much of the time that our political system is broken, maybe beyond repair.

      Well, many of us know it’s normally wrong, but we gave people in Washington the chance to do what they want, spend hugely, for a “stimulus” program (which many thought was related to a timely rediscovered love of Keynesianism), and they failed. I had wanted to see things like infrastructure projects, repairing deficient bridges, uprating transmission facilities (for electric power), and even helping to remedy substandard housing and other things in the older eastern US (including insulation, too, for energy conservation). Nope. It was too much desired to do same old stuff, and wrongly use the funds to pay for ongoing state and local government operations instead of doing new stuff or repairing or restoring old, broken stuff. Why give them another chance now? And besides, we’re running out of money now. (It’s silly to expect to misspend money for wars here at home if the wars end — the “peace dividend” should go back to the taxpayers if not used to pay down debt, which wouldn’t be a bad idea now.)

      I’m sorry to ask so many questions but I really want to understand these arguments.

      No problem. As you can see, they’re easy to understand (or at least they should be — some may not be able to understand them and it would then seem other, even many other, things as well, though they may just be upset because they don’t like it).

      Incidentally, it shouldn’t be done, but I’ve also thought of more progressive tax ideas (such as if I were in a group that had to come to an agreement that would involve something more progressive than should be, because of whatever circumstances). One of them involves having the exemption for each person at around $25,000 and having a rise up to as much as 50% tax rate at $250,000. That’s of interest among other things not only because it’s about what the low-medium and medium-high income thresholds are in my view, but that they conform to the “ten times rule” that maximum wage advocate Pizzigati has specified in some of his work (including his book about it).

      http://www.amazon.com/Maximum-Wage-Common-Sense-Prescription-Revitalizing/dp/0945257457

      More interestingly, one thing that needs to be done is to determine how much total taxable income is at each income value or level. Now, the biggest total amounts are in the middle, where the number of earners still is large but the incomes are much more than at lower income amounts or levels. Anyone who does this (or reads reports or articles about it) knows that those at the top have astronomical incomes, but there are so few of them that there isn’t that much money there. That’s no doubt why the true high-income threshold of $250,000 first mentioned by Obama in 2008 was reduced subsequently to $150,000, and then $100,000 if I recall correctly. This shouldn’t be surprising to anybody who understands that’s necessary in order to raise substantial revenue. (“Not enough rich to tax”)

      * * *

      Jeff, I believe the book I acquired by MIT Press long ago (an older edition!) was “Taxing Ourselves.” It was meant to be a layperson’s book that didn’t skimp on the details but was meant for easier, faster reading than typical political books about the subject. (It was a different approach than Aaron at Brookings’s perennial book on taxes.) Yes — this MIT Press book does have that whole chapter devoted to “fairness” — this is it.

      http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=11424

      As far as wealth disparity, which dwarfs income disparity, here is Wolff, who long as wanted wealth taxation.

      http://www.amazon.com/Top-Heavy-Increasing-Inequality-America/dp/1565846656

    • JeffP

      DLS,
      thank you for your reply. It takes time and effort to put down the thoughts and relay the reasons for opinion.

      I’ve got my homework now. In the months/years ahead I’m sure we’ll come back to these thoughts but for now thank you for your reply and efforts.

      Have safe travels in New Mexico–

      Jeff

      PS The wealth-inequality book you reference me to looks interesting, got good reviews and I’ll read it soon. It was timely, as I think people are beginning to ask those questions more frequently, not only here but all over the world; I saw that it’s a huge problem even in Israel, made headline news at NBC. I wondered if you have read it or think it’s correct in analysis?

      I’ll catch up with you in future posts…

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