Americans on the Federal Budget

(Sept. 2000)

Conclusion

Constructing a budget for a nation as large and varied and with as many commitments as the US is obviously a challenging task. The process itself is complex, cumbersome and often highly politicized. The end product of the competing interests and difficult trade-offs can be seen as the fiscal representation of national values. Unfortunately, while there is no doubt that individual policymakers are influenced in various ways and to different extents by public attitudes, it appears that the budget process results in decisions that diverge from the priorities of the public they represent.

The most glaring difference between public preferences and budget realities is in the area of defense spending. Given information about distribution of the budget, there seems to be a strong consensus that the US spends too much on defense at the expense of other priorities. Participants in the focus groups expressed surprise at the size of US defense expenditures. In this budget survey, two out of three cut the defense budget when they saw it in the context of all discretionary spending. They reduced money allocated to defense by nearly one-fourth on average.

At the same time, the public favors increasing spending on more cooperative forms of international engagement. Funding for the United Nations and UN peacekeeping was more than tripled, the State Department got a small boost and humanitarian and economic aid was increased slightly. This is consistent with other research showing that the public rejects the idea of the US as a global military hegemon and prefers that US defense capabilities be sized to the assumption that the US will primarily be acting in a multilateral fashion.

A large portion of the money shifted from the defense budget was diverted into ‘human capital’ investments. Education was increased by nearly half and job training and medical research were more than doubled. Increases for infrastructure -- the environment, space and science, and transportation, were more modest. Emphasis on these human capital priorities reflects a strong desire to use more federal resources to make investments in people, perhaps reflecting a view that this kind of spending is most likely to provide important social benefits for current and future generations.

A focus on the future is strongly evident in the public’s decisions about the budget surpluses. When taken together, a very strong majority of surplus funds from the discretionary budget and from Social Security payroll taxes were dedicated to strengthening Social Security and Medicare or paying down the national debt. Only about three out of every ten surplus dollars went toward tax relief or were returned to the budget for spending on new programs. In contrast to the old saw about the public being shortsighted and enamored with tax cuts and instant gratification, this research shows the public to be clearly focused on long-term priorities.

The impact of years of living with government deficits and rising national debt may also be an important driver of attitudes when it comes to budgetary issues. When respondents are asked to consider the best way to pay back the Social Security Trust Fund so it will be able to pay benefits to future retirees, there is an overwhelming preference for doing this by cutting future spending, rather than by increasing income taxes or taking on new debt.

The ultimate goal of budget making is -- or should be -- to reflect national values and respond to public priorities. If the public’s desires are forefront, future budgets will include judicious reductions in defense spending coupled with more support for the United Nations, greater investment in human capital at home and continued commitment to meeting long-term needs and reducing the national debt.