Economy

Americans Oppose Income Redistribution to Fix Economy

Half say the government is doing too much, 43% too little to solve country's problems

PRINCETON, NJ -- When given a choice about how government should address the numerous economic difficulties facing today's consumer, Americans overwhelmingly -- by 84% to 13% -- prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans.

Lack of Support for Wealth Redistribution Spans Political Party, Income Groups

Americans' lack of support for redistributing wealth to fix the economy spans political parties: Republicans (by 90% to 9%) prefer that the government focus on improving the economy, as do independents (by 85% to 13%) and Democrats (by 77% to 19%). This sentiment also extends across income groups: upper-income Americans prefer that the government focus on improving the economy and jobs by 88% to 10%, concurring with middle-income (83% to 16%) and lower-income (78% to 17%) Americans.

Half of Americans Think Government Is Doing Too Much, Not Too Little

A separate question finds Americans more likely to believe government is doing too many things that should be left to individuals and businesses (50%) as opposed to saying government should do more to solve the country's problems (43%). This broad question is not directed specifically at the economy, but reinforces the general idea that many Americans are leery of too much direct government intervention in fixing the country's problems.

This philosophical issue appears to divide Americans by both political party and income groups. Republicans think the government is currently doing too much, by 72% to 24%; independents are split, with 47% saying the government is doing too much and 44% saying it is not doing enough; and Democrats say the government needs to do more by 58% to 36%.

Upper- income (57% to 38%) and middle-income (54% to 40%) Americans tend to agree that the government is doing too much, while those with lower incomes tend to say the government should do more (by 55% to 36%).

Commentary

With Barack Obama suggesting a variety of tax increases for upper-income Americans and John McCain opposing them, one might assume that Americans' minimal support for government getting into wealth redistribution to help the economy would favor McCain. Although the margins are much smaller when it comes to the idea that government is doing too much as opposed to too little to solve the country's problems, this issue would also seem to favor McCain.

However, the situation gets somewhat more complicated when income and wealth redistribution are mixed with more specific efforts to stimulate the economy. Consider the current tax rebates. They represent a clear case of income redistribution because they are phased out for upper-income taxpayers. Still, they also have had a stimulative effect on the economy, and they received overwhelming support across political lines when they passed in February.

Now Obama has proposed another economic stimulus package and a permanent $1,000 income-tax cut for lower- and middle-income taxpayers. The idea seems to be that the government can't do much about surging food and energy prices -- but it can cushion the blow of these price increases on those who can least afford them by sending lower- and middle-income Americans cash payments and providing them with a tax reduction. Obama would fund these payments by increasing taxes on higher-income Americans.

One presumed advantage of this proposed government approach to rising food and energy prices is that it allows the free markets to work. Prices are then left to drive the adjustments the U.S. economy will have to make to manage the new reality of much higher global commodity costs. And while the benefits of these payments will not be based on how much higher food and energy costs affect an individual consumer, thereby creating additional inequities, they will favor those who conserve. For example, those who get government payments and do not own a car will be proportionally better off than those who do own a car and travel significant distances to work.

However, the downside is the income and wealth redistribution aspects of this process. While, in the abstract, many Americans believe that the wealthy do not pay enough taxes, the forced-choice question reported on here shows that there is a strong feeling that taxing one group to give the money to another is not the favored approach to fixing the economy.

In sum, free-market advocates can take considerable solace in Americans' overwhelming belief that the government should not focus on redistributing income and wealth, but on improving the overall economy. And, to a lesser degree, Americans also believe government continues to do too much -- not too little -- to solve the nation's problems. On the other hand, the economic turbulence of 2008 could end up getting government into significant new income and wealth redistribution programs unless the Treasury and the Federal Reserve act soon to stabilize and reduce today's unmanageable food and energy price increases.

Survey Methods

Results are based on telephone interviews with 1,625 national adults, aged 18 and older, conducted June 15-19, 2008. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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