Posted by WARREN MOSLER on 13th January 2011
The Tea Party leadership needs to read ‘The 7 Deadly Innocent Frauds of Economic Policy’ and go public on the need for a higher debt ceiling and a larger federal deficit, before they do even more damage to the US economy:
By Andy Sullivan and Richard Cowan
December 25 (Reuters) — The U.S. public overwhelmingly opposes raising the country’s debt limit even though failure to do so could hurt America’s international standing and push up borrowing costs, according to a Reuters/Ipsos poll released on Wednesday.
Some 71 percent of those surveyed oppose increasing the borrowing authority, the focus of a brewing political battle over federal spending. Only 18 percent support an increase.
The poll underscores the tough task ahead for U.S. lawmakers as the debt nears its current ceiling of $14.3 trillion. Treasury Secretary Timothy Geithner last week warned that a failure to raise the borrowing limit in the coming months could lead to “catastrophic economic consequences.”
Brian Riedl, the lead budget analyst at the conservative Heritage Foundation, said the poll findings put “a lot more pressure on those who want to raise the debt limit to make a convincing argument to a very skeptical public.”
Republicans, who won control of the House of Representatives in November on a promise to scale back government, hope to pair any debt-ceiling hike with a commitment from President Barack Obama to reduce long-term spending.
Republicans have vowed to slash $60 billion from the budget as soon as March, but many of those cuts are not likely to be popular with the public.
The United States posted an $80 billion budget deficit in December. The government has now posted a budget deficit for 27 straight months, the longest streak on record.
A deal to extend tax cuts this year that was approved by Congress in December is expected to put a hole of more than $800 billion in the deficit over the next decade.
Obama wants broader tax reforms although it will be hard to get them through a divided Congress in the next two years. His administration is exploring ways to boost tax incentives for corporate investments, Geithner said.
WHAT TO CUT?
While the public apparently does not want Washington to keep borrowing more and more, it appears to lack a clear idea of how to cut spending.
“You get nervous,” Riedl said. “There is some contradiction: Historically the public wants a balanced budget but doesn’t show a lot of enthusiasm toward the policies to get us there.”
Only 24 percent say the country can afford to cut back on education spending, a likely Republican target, and 21 percent support cuts to law enforcement.
With the United States fighting wars in Afghanistan and Iraq, 51 percent supported cutbacks to military spending.
Less than half, 45 percent, support an expected Republican effort to pare enforcement of environmental laws.
Some 53 percent support cutting the budgets of financial regulators like the Securities and Exchange Commission, in spite of the widespread consensus that a lax regulatory atmosphere contributed to the financial crisis of 2007-2009.
And 47 percent support cutbacks to national parks, which were shuttered for several weeks during the budget battles of 1995 and 1996.
Expensive benefit programs that account for nearly half of all federal spending enjoy widespread support, the poll found. Only 20 percent supported paring Social Security retirement benefits while a mere 23 supported cutbacks to the Medicare health-insurance program.
Some Democrats say that tax increases, especially on the wealthy, have to be part of any serious effort to control deficits, coupled with better enforcement of tax laws or streamlining those laws.
Some 73 percent support scaling back foreign aid and 65 percent support cutting back on tax collection — two very small lines in the massive federal budget ledger.
The poll of 1,021 U.S. adults was conducted between Friday and Monday. It has a margin of error of plus or minus 3.1 percentage points.