Perception, Reality, and the Fiscal Cliff

The Beef Angle

Public opinion explains, in part, why politicians are increasingly likely to push the country over the fiscal cliff next week.

Published on: December 26, 2012

If perception is reality, then the rich aren't doing their "fair share," and should pay more taxes to subsidize more social programs administered by the federal government. Skeptical? Just ask super-pollster Scott Rasmussen.

In a series of polls over the past couple of weeks, Rasmussen Reports has consistently shown that the average American holds a variety of seemingly conflicting views on the current state of fiscal affairs in the U.S. It is this apparent cognitive dissonance that, perhaps, helps explain why Congress and President Obama are inching ever closer to pushing the country over the fiscal cliff.

"Half of all Americans want more government action to deal with the economy. But the action they are looking for is to cut government spending," Rasmussen reported Dec. 14. "Overall, 73% of likely voters nationwide believe the federal government should cut spending rather than increase it in reacting to the nation’s current economic problems."

Be that as it may, "One-in-three likely U.S. voters (34%) now prefer a larger government with more services and higher taxes to one with fewer services and lower taxes," the pollster found in a separate survey just one week prior. "That's up 10 points from a month ago and the highest level of support for bigger government in over six years of regular surveying."

In other words, while a broad majority of Americans say "It's the spending, stupid," a growing portion of the electorate is perfectly happy to pay more to receive more... or, rather, want others to pay more in their stead.

One week before Christmas, Rasmussen learned that while 59% of likely voters think that simply levying large tax hikes for millionaires won't be enough to avert fiscal calamity, 52% favor reducing or eliminating tax deductions for "wealthy Americans," potentially those making as little as $250,000 per year (little in this case being a relative term). 

Digging deeper in Rasmussen's data, it becomes more apparent that the average American does not fully grasp the workings of the U.S. economy and the impacts of changes in fiscal and tax policies. Just 46% of likely voters agree that Americans are overtaxed, with 12% "unsure." Meanwhile, 56% say the economy isn't "fair" to the Middle Class, and half of voters think it is fair to lower-income Americans. Overall, Americans are evenly divided as to the "fairness" of the economy.

The best explanation for the great divide on how Americans view the economy is that fewer and fewer voters view themselves as fiscally conservative:

"A new Rasmussen Reports national telephone survey [Dec. 6-7] finds that only 37% of likely U.S. voters now say they are conservative when it comes to fiscal issues such as taxes and government spending," Rasmussen reported earlier this month. "That’s the first time that number has dipped below 40% in surveys dating back to November 2007. Thirty-nine percent (39%) consider themselves fiscally moderate. One-in-five (20%) now say they are fiscally liberal. That's up from 11% in January and the highest finding to date."

What is clear, however, is that the battle over how to avoid crashing over the cliff has been summarily bad for the Republican party, and in particular for Speaker of the House John Boehner. The Ohio Republican has unseated House Minority Leader Nancy Pelosi as the most unpopular major Congressional leader, a distinction the California Democrat has held for several years.

Rasmussen found that 51% of likely voters view Boehner unfavorably, while 50% feel that way about Pelosi. Just 31% have a favorable opinion of the Speaker, compared to 37% who look favorably on his liberal counterpart.

While 62% of voters favored Boehner's aborted "Plan B" to extend the Bush tax cuts for everyone making less than $1 million per year, Rasmussen notes that Boehner and the Republicans are ultimately losing in the court of public opinion.

"That's true even though raising taxes on millionaires is supported by 62% of voters nationwide. Boehner's plan fails to accomplish the speaker's goal of showing that Republicans are willing to raise taxes on the rich, however," Rasmussen wrote in his weekly commentary analyzing the polls. "Why? Because 59% of voters also want to see taxes raised on those who earn more than $250,000 a year. In other words, the president can continue his rhetoric unchanged, and people still will side with Obama over Boehner."

The bottom line is that President Obama succeeded in making the fiscal cliff debate about "fairness" rather than facts, about "economic justice" rather than sound public policy. Rasmussen explains that Obama succeeded in convincing the public that anyone making more than $250,000 per year qualifies as "rich," and that those folks should pay more taxes. It was the biggest plank in his campaign platform, and it stuck.

Think about it: the overwhelming majority of Americans - 98% - makes less than $250k. So by demonizing those folks as wealthy, essentially by making profit and wealth something to be reviled rather than worked toward, the Obama campaign has framed the debate in such a way that only the heartless can possibly think those folks should not pay more taxes.

It's almost un-American today to think that the wealthy already pay their "fair share."

"Republicans have a choice to make," Rasmussen concluded. "They can continue opposing all tax hikes and attempt to make the case that it's the fair thing to do. If they take that approach, voters in the middle will tune out all other GOP talking points about the need for spending cuts and entitlement reform. Or they can let taxes go up on the president's terms and earn a chance to make the case for spending cuts and entitlement reform from a stronger position.    

"Both approaches are risky. That's what happens when you have a bad hand to play. But Boehner's plan is worse than either option because it further erodes support from the party's base without gaining any ground in the middle."

While the data and associated implications are sobering enough on their face, the sad truth is that in economic terms, the discussion may be academic. Without action on the fiscal cliff - which now appears increasingly unlikely in the next 7 days - 70% of likely voters think a recession is inevitable.

Even with a deal, 54% think a recession is coming just the same.

A generation ago, Ronald Reagan dragged the nation out of the fiscal disaster known as the Carter Administration by succssfully arguing that government was the problem, not the solution. Three decades later, another great communicator is successfully arguing just the opposite... The question remains, will Obama's oratorical success lead the country out of economic calamity, or just the opposite.