THE TIMES POLL : Tax Reductions Are Not Americans’ Top Priority

At a time when Washington is rushing to enact a package of election-year tax relief, most Americans say they would rather use the post-Cold War “peace dividend” to boost domestic spending or reduce the deficit instead of financing tax cuts, according to a new Times Poll.

While Americans remain largely pessimistic about the economy, the nationwide poll found little evidence of a mounting grass-roots tax revolt that might pressure Congress to rush through the kind of anti-recession tax cuts advocated by President Bush and key Democrats.

Instead, the poll suggests that many Americans share a deep-seated concern over the nation’s chronic, long-term economic problems--particularly the federal deficit, which is expected to soar to nearly $400 billion this year.

“I don’t live on debt, I don’t like debt in my life, so I think taxes should stay where they are so we can lower the deficit,” said Michael Wheat, a used car dealer in Allegan, Mich., who participated in the survey and agreed to be interviewed afterward.

The new poll findings come as Congress begins consideration of the President’s economic growth package, which includes a mix of tax cuts for businesses and individuals, while Democrats on the House Ways and Means Committee rush to develop their own tax relief plan.

Despite the flurry of tax-cutting activity on Capitol Hill, the Times’ survey suggests that Washington may have misread the depth of the public’s support for a quick effort to lower taxes. For example, when asked which issues should be discussed in this year’s presidential race, 33% cite the economy generally, 28% say unemployment and 21% say health care, but only 6% mention taxes.

The survey found that tax cuts have popular appeal, particularly when they are linked to the middle class. When respondents were given a list of things they thought would improve the economy, a tax cut for “average Americans” was mentioned second only to tougher restrictions on trade with Japan among six specific policy options.

Yet when asked what Washington should do with the peace dividend produced by declining defense spending, only 22% said the savings should be used to finance a tax cut. By contrast, 35% said the money should be used to boost spending on domestic programs, while 33% said it should go directly for deficit reduction.

The Times’ survey, based on interviews of 1,776 adults across the country between Jan. 31 and Feb. 3, has a margin of error of plus or minus 3 percentage points.

John Brennan, director of The Times Poll, noted that participants in several surveys conducted since late 1989 have expressed mixed feelings about the best use of funds freed up by declining defense budgets, with no option receiving a clear-cut majority.

“There is no consensus in the country about what to do with the peace dividend,” Brennan said. “Congress is divided because the public is divided.”

The latest findings involving the health of the economy suggest a more clear-cut policy response, Brennan said. “If Bush and Congress are interested in increasing consumer confidence, they’re going to have to do something about the fears of unemployment, the perception that unemployment is rampant and that people’s jobs are at stake,” he said. “This seems to be much more important than some kind of tax relief.”

The latest poll found that only 21% of those surveyed believe the economy will be better three months from now than it is today, and only 20% believe the unemployment picture will brighten during the same period. Those figures represent a slight upturn in consumer sentiment since the last Times Poll in November.

But now that the White House and Congress have begun work on a tax bill designed to pull the nation out of the longest recession since World War II, the poll findings and follow-up interviews suggest that many Americans are having second thoughts about Washington’s ability to act responsibly.

The latest poll found that 66% of those surveyed disapprove of Bush’s handling of the economy, and only 12% express confidence in Congress, one of the lowest readings in two decades.

“The deficit is out of hand, and I’m concerned about the country some day collapsing through overspending,” said Joseph Giordano, a 56-year-old retired school teacher in Sheffield, Pa. “As much as I’d like a tax cut, I think the money should go to budget balancing. It’s not worth it to come in a political year and say you’re going to cut taxes a little bit. Our problems are education, the ability of our industries to compete, and you’re not going to improve that with just a few hundred dollars (in tax relief).”

Giordano’s assessment reflects the sentiments expressed by many economists who fear that the political Establishment may be sacrificing the nation’s long-term interests, such as deficit reduction, in an effort to assuage short-term anxieties about the economy and the perennial desire for tax relief.

Many experts say the federal deficit represents the biggest single threat to America’s long-term prosperity because it puts upward pressure on interest rates and siphons off savings that otherwise would be available for more productive investments.

In fairness, the original economic growth plan outlined by the President in his State of the Union address called for using $50 billion in additional Pentagon budget cuts over five years to reduce the deficit. Bush proposed financing tax cuts by other means, including accounting adjustments and reductions in the future growth of mandatory spending programs.

Yet Bush’s financing measures have been widely criticized by private economists, congressional Democrats and even some Republicans, who argue that they represent bookkeeping tricks or that they would require politically unrealistic policy shifts.

As a result, most analysts believe that any significant tax reduction will have to be offset by savings from the Pentagon budget, which is expected to shrink dramatically in the wake of the Soviet Union’s collapse. In fact, leading Democrats say they want to make much deeper cuts in defense spending than the President is proposing and use the savings either to boost spending on domestic programs or finance more broad-based tax cuts.

The latest poll findings seem to corroborate earlier survey results indicating that taxes do not rank that high on most Americans’ economic priority lists. Of those surveyed in November, for example, 32% identified unemployment as the nation’s most pressing economic problem, 10% said foreign trade and 8% cited the deficit. Only 3% mentioned taxes.

Participants in the latest poll who agreed to be interviewed seemed skeptical about the ability of a politically divided federal government to craft economic policies that make sense.

“There is too much politicking and bickering, and nothing ever gets done,” complained Kenneth Peterson, 39, who works for a trade publishing firm in Eugene, Ore. “It would be a common-sense approach just to reduce the deficit.”

The latest survey also suggested that public sentiment about the proper direction of domestic policy does not necessarily coincide with the conservative Republican agenda that has dominated the political system over the past decade.

The survey asked respondents whether they would be more worried by a Republican President who supported cutting social programs and favoring the rich or a Democratic President who wanted to raise taxes and favor special interest groups. Fifty-four percent said they would be more worried by the Republican agenda, while 26% said they would be more concerned by the Democratic position.

HOW THE POLL WAS CONDUCTED

The Los Angeles Times Poll interviewed 1,776 adult Americans nationwide, by telephone, from Jan. 31 to Feb. 3. Telephone numbers were chosen from a list that includes all telephone exchanges in the United States. Random-digit dialing techniques were used to ensure that both listed and unlisted households had an opportunity to be contacted. Results were adjusted slightly to conform with census figures on variables such as sex, race and national origin, age, education and household size. The margin of sampling error for percentages based on the total sample is plus or minus 3 percentage points; the error margin for subgroups may be somewhat higher. Poll results can also be influenced by other factors such as the wording of questions and the order in which questions are presented.