Congress recently suspended the statutory debt ceiling until late May 2013. Congress did not raise the debt ceiling to a specified limit, but allowed automatic increases in the limit by the amount required to fund US government obligations through approximately May 19th. The latest Reason-Rupe poll finds that Americans overwhelmingly oppose an increase in the debt ceiling 64 to 29 percent. Although Congress has kicked the can down the road, come May, they will have to overcome this hurdle of public opposition to raising the debt ceiling.
Running counter to the investor and political classes' belief, 62 percent of Americans do not believe failing to raise the debt ceiling would cause a major economic crisis. Only 25 percent believe a major economic crisis would ensue. Nevertheless, expectations are nuanced, with 30 percent who suspect failing to raise the debt ceiling could cause a minor economic downturn while 32 percent think it would not cause serious economic problems or could even help the economy.
Americans less concerned with the current level of government spending are more likely to support raising the debt ceiling. For instance among those who believe the federal government spends the right amount or too little, half want to raise the debt ceiling. In contrast, among those who believe federal spending is too high, 71 percent oppose raising the debt ceiling. Likewise three quarters of Americans who strongly support cutting government spending to balance the budget also oppose raising the debt ceiling. Only half agree among Americans who are less enthusiastic to cut government expenditures.
Americans who believe the federal budget deficit is an urgent problem that must be addressed now rather than when the economy gets better likely view the debt ceiling as a means to this end, with 74 percent opposing a debt ceiling increase. Conversely, among Americans who believe the deficit is a major problem but should be addressed later, 58 percent support raising the debt ceiling.
Intransigence on spending and the debt ceiling is likely drien by skepticism over government spending efficacy. Opponents of the debt ceiling increase believe the federal government wastes 50 cents out of every tax dollar it collects; supporters of the debt ceiling increase think the government wastes 40 cents out of every dollar.
Moreover, only 17 percent of Americans believe that the 39 percent per person increase in federal spending, adjusted for inflation, since the 1990s improved the quality of life in America. Among those who believe increased government spending reduced the quality of life, 77 percent oppose raising the debt ceiling. Sixty-four percent agree among those who did not perceive much of any impact. Only those who perceived an increased in quality of life favor raising the debt ceiling 50 to 39 percent.
This demonstrates that opposition to raising the debt ceiling is highly correlated with concerns over federal spending. In order for Congress to garner public support for its likely inevitable debt ceiling increase in May, they will have to demonstrate how Congress will address spending.
In the coming weeks, Congress faces three opportunities in which it can address the level of government spending. First, on March 1 the $1.2 trillion sequester carried out over the next decade will go into effect. Congress may find the sequester undesirable enough to enact other spending cuts, entitlement or tax reform proposals. Second, by March 27 Congress must authorize new spending to fund government operations as current stopgap funding measures are scheduled to expire. To avoid a government shut down, Congress may be motivated to deal with spending cuts. Third, April 15thlawmakers must agree to a budget resolution for fiscal year 2014, which can include a debt ceiling increase. If they fail to reach a resolution, salaries will be withheld until a resolution is passed.
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