Last week, the President’s debt commission held its kick-off meeting. The National Commission on Fiscal Responsibility and Reform, a group of 18 lawmakers and policy experts, has been tasked with proposing a solution to the mounting financial crisis facing the United States government.
As we show in our 2010 Budget Chart Book, federal spending is on track to skyrocket as the population ages and more Americans become eligible for entitlement benefits, which include Medicare and Social Security. Together, entitlement programs represent a $46 trillion long-term unfunded liability. If this situation is ignored, entitlement spending will eventually consume the entire federal budget, crowding out spending on either domestic priorities, such as education and transportation, as well as defense spending.
There is a general consensus across party lines that something must be done to reverse this fiscal outlook. The debate lies in what to do. Advocates of big government and increased spending embrace higher taxes, such as a value-added tax, to control federal spending. On the other side are those who think the federal spending has grown too large already, and that spending is currently out of control. Increasing taxes further than their already-high rates would cripple economic growth.
Heritage falls in the second category and according to a recent poll from Rasmussen, so do the American people. Rasmussen reports that 69 percent of Americans oppose higher taxes as a mode to reduce the deficits. And when it comes to how we got into this mess in the first place, 83 percent of Americans say the size of the deficit is due to politicians’ unwillingness to cut spending, not due to a need for more taxes.
In 2009, The Tax Foundation conducted a poll asking whether Americans would be willing to pay their share of the federal deficit, which amounted to $8,798, in order to balance the budget—81 percent said no. This sentiment appears to be enduring, regardless of the sum: in March of 2006 and 2007, the same question was asked using instead $2470 or $1,789, respectively. In March 2006, 79 percent said they would not be willing to do this. In March 2007, 76 percent of respondents answered the same way.
When asked by Harris Interactive in March 2007 if it was necessary to increase taxes in order to decrease the deficit, 71 percent of Americans said that it was not. This is in keeping with what the historical averages of taxation and spending show: as Heritage’s budget expert Brian Riedl explains, “…as deficits expand by 5.9 percent of the economy, nearly 90 percent of the growth will come from higher-than-average spending, and just over 10 percent from lower-than-average revenues.”
The stance of the American people is crystal clear, and as in most cases, they are spot-on. To reduce the deficit, the debt commission should look at ways to reduce spending, not increase taxes.
