STORY OF THE WEEK: ADDRESSING THE DEFICIT AND TAXES

This week, the bipartisan deficit commission appointed by President Obama will move the ball forward on producing a set of legislative recommendations for tackling the deficit. Preliminary recommendations released by the commission, which is chaired by former Republican Senator Alan Simpson and former Clinton chief of staff Erskine Bowles, called for deep, across-the-board cuts, including to popular (depending on the audience) "third rail" areas such as Social Security and the military. These initial recommendations unleashed a predictable firestorm of criticism across the political spectrum. Even so, as David Broder argued this week, both sides have "sobered up" to the reality that Americans expect them to deliver something on deficit reduction. 

There is certainly some evidence that the public cares about debt- and deficit-related issues, though this should be put in proper perspective. An October Pew Research survey found the deficit ranking third (19%) behind health care (24%) and the job situation (38%) as the most important issue affecting voters' choice for Congress. Pew offered a 2^nd choice option (a rare but highly informative data point) and the ordering was the same, with the job situation (62%) and health care (53%) well above the deficit (37%) as the most important issue. A more recent AP-CNBC poll (pdf) also finds the deficit as a salient concern for respondents (69% say "important"), but this is behind the economy (90%), unemployment (82%), health care (79%), terrorism (75%), and taxes (70%).

Priorities aside, the more vexing question for policymakers is how to convert Americans' nebulous desire to reduce the deficit into concrete legislative proposals. Here, the public offers mixed and complicated guidance. By nearly a 2:1 margin (in the AP-CNBC poll above) Americans are more supportive of cutting government services (59%) than increasing taxes (30%) as a way to reduce the deficit. However, clear majorities believe both may be necessary to make a balanced budget a reality. This includes 65% who think some taxes will have to be increased and 79% who agree that government services will have to be cut.

Any consensus breaks down when we get to specifics. The most popular proposals include reducing the number of federal workers (62% favor, 25% oppose) and freezing the salaries of federal workers (59%, 32%)-both of which amount to a drop in the proverbial deficit bucket. The only other proposals tested that approach a majority of support are reducing the number of overseas military bases (54%, 34%) and eliminating the mortgage tax deduction in exchange for a lower overall tax rate (49%, 31%).

The public is split on reducing Medicare benefits (44%, 46%) and Social Security benefits (44%, 46%) for seniors with higher incomes, reducing farm subsidies by 3 billion dollars per year (41%, 40%), and reducing research on advanced military weapons systems (39%, 49%).

Majorities are opposed to efforts to reduce federal spending on homeland security (34%, 54%), freezing the non-combat pay of the military (28%, 55%), reducing personnel in the military (26%, 61%), reducing federal spending on education (25%, 67%), and eliminating the child tax credit (24%, 61%). Needless to say, it will take a good dose of political courage from legislators on both sides of the aisle to reach agreement on specific cuts.

On taxes specifically, polls have consistently shown that the public believes the tax cuts that are set to expire at the end of the year should continue for the middle class. The real battle is over whether to extend additional tax cuts to the wealthiest Americans on income over $250,000. Recent surveys find more support for the Democratic proposal (extend tax cuts on middle class income) than the Republican proposal (extend tax cuts on all income), though support for the latter is not insignificant. For example, the AP-CNBC poll cited above finds half (50%) supporting the Democratic proposal, 34% supporting the Republican proposal, and 14% supporting letting the tax cuts expire for everyone. Looking at tax cuts for high-income earners only, a recent CNN / Opinion Research poll shows that 64% percent of Americans and 61% of independents oppose extending the Bush tax cuts on income of $250,000 or more. 

Given the uncertainty of support around the deficit commission's recommendations, it appears that a deal on tax cuts will be the next opportunity for the parties to demonstrate their stated commitment to deficit reduction. The Democrats' middle class tax cuts proposal rests on fairly sturdy ground, and by favoring additional tax cuts for millionaires over deficit reduction the Republicans are putting themselves at odds with the American public. The Democrats should not shrink from this fight.

OTHER NEWS FROM THE POLLING AND POLITICAL WORLD

Compromise: A recent Marist poll of registered voters finds that 72% say Republicans should work with Democrats and President Obama to get things done. This is compared to 25% who think the GOP should stand firm on their positions even if things don't get done.

"Don't Ask, Don't Tell": A recent Pew report finds a solid majority of Americans (58%) saying they favor allowing gays and lesbians to serve openly in the armed forces. Twenty-seven percent oppose. Seventy percent of Democrats, 62% of independents, and 40% of Republicans support. Tea Party Republicans are noticeably less supportive (38% support, 48% oppose).

Military reaction: The Pentagon released results from its comprehensive assessment of "Don't Ask, Don't Tell" this week. The report included a survey of over 100,000 military personnel. The survey found that 69% said they had served with someone they believed to be gay or lesbian. Among these, 92% said that their unit's ability to work together was good or neutral. The report concluded that allowing gays and lesbians to serve openly posed a "low risk" of disruption. 

Bloomberg for Prez? A new Public Policy Polling survey finds that Michael Bloomberg has some tough sledding ahead of him should he decide to run in 2012. His favorability is upside-down (19% favorable, 38% unfavorable), and he garners just 11% of the vote in an Obama-Romney-Bloomberg matchup. Moreover, Bloomberg "would hurt Republicans...more than he'd hurt Obama." Asked who they'd support in a 2-way Obama-Romney matchup, half of Bloomberg supporters choose Romney and 21% choose Obama.

Bailouts: According to the Los Angeles times (via Political Wire), the projected cost of the $700 billion financial bailout would amount to just $25 billion.This is down from a March budget estimate that the program would ultimately cost taxpayers $109 billion.

Midterms: According to data compiled by Felicia Sonmez at The Fix, Republicans won 69% of Democratic-held House seats (51 of 78) that had either been won by John McCain in 2008 or had been picked up by Democrats in 2006 or 2008.

ALR "Beat the Pollsters" Election Pool: In the coming weeks, we will release interesting data points (and when every race is called, a winner as well) from last month's election pool. Of note: the most accurate election prognosticators were fond readers of Talking Points Memo (50 points earned, on average), the Daily Kos (50 points), Politico (50 points), Doc's Political Parlor (47 points), Political Wire (46 points), FiveThirtyEight.com (45 points), and Huffington Post (45 points).  This is among sites with over ten contestant mentions.

PUBLIC POLLING

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