Panel Finds Public Disconnect Regarding U.S. Fiscal Policy

Economic experts pointed to a disconnect between the public's understanding of the nation's financial predicament and steps that must be taken to ensure its stability.
by | October 17, 2011 AT 3:00 PM

In a panel discussion that followed the release of the 10th Allstate/National Journal Heartland Monitor Poll, economic experts pointed to a disconnect between the American public's understanding of the nation's long-term financial predicament and the necessary steps that must be taken to ensure the country's fiscal stability.

Most notably, Medicare, Medicaid and Social Security are the biggest obstacles to resolving the federal budget deficit in the long-term, said panelist Alice Rivlin, senior fellow at the Economic Studies program at the Brookings Institution. Yet, the Heartland Monitor poll found that only 19 percent of Americans named the rising cost of Social Security and Medicare as their first or second reason for the growing federal deficit.

According to the poll, Americans sent mixed signals themselves about how they believe Washington should put its fiscal house in order. For one question asking what policies public officials should embrace, a plan to close the deficit by both raising taxes and cutting funding for programs like Medicaid received only 20 percent of the vote. A plurality of 40 percent said the government should increase spending by investing in infrastructure and education, even if it involves increased taxes to finance that renewed spending.

Yet in another question about government spending, 56 percent said the economy is more likely to recover if the government reduces spending without raising taxes.

Recent economic hardships might have lead to a fundamental reshaping of the American public's perceptions regarding debt on a personal and government level, said nationally syndicated finance columnist Terry Savage during the panel discussion. Forty-seven percent of poll respondents said the economic downturn had encouraged them to pay off as much debt as possible and avoid taking on new debt, even if that meant cutting spending. Sixty percent agreed with an analogy that compared the federal government to a household, meaning it should invest and save for future needs and emergencies, and otherwise live within its means by spending less and paying off its debts.

"As a result of this crisis, we have come to a very important change in America," Savage said. "We are redefining prosperity from acquiring things to having financial security, the sense of peace of mind about where your finances are."