Tags: Fiscal Cliff | Gallup | confidence | waning

Gallup Poll: Americans' Confidence in Fiscal Cliff Deal Waning

Wednesday, 26 Dec 2012 12:06 PM

Fewer Americans these days have faith the White House and Congress will steer the economy away from the year-end fiscal cliff, a recessionary combination of tax hikes and spending cuts taking effect at the same time in January.

The nonpartisan Congressional Budget Office has said failure to avoid the cliff outright could contract the economy by 0.5 percent in 2013, and while more Americans feel President Barack Obama and Congress will strike a budget deal before Jan. 1 than do those who do not think a deal will be struck, the number of optimists is on the decline.

A Gallup poll conducted Dec. 21-22 finds that 50 percent of Americans believe policymakers will strike a deal, while 48 percent were doubtful.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

Just three weeks ago, 58 percent were confident a deal would be reached before Jan. 1, while 39 percent were doubtful.

Republicans in the U.S. House of Representatives canceled plans to vote on a budget proposal put forth by House Speaker John Boehner, R-Ohio, widely known as Plan B, that called for tax hikes on those with incomes over $1 million, well above a White House plan that would hike taxes on those with incomes topping $400,000.

Disagreements within the political parties themselves are eroding broader faith in the government to avoid the fiscal cliff.

“Last week brought some signs that President Obama and congressional Republicans might have been close to reaching a budget agreement, but those largely vanished Thursday after House Republicans canceled a vote on the ‘Plan B’ tax bill, and leaders on each side started pointing fingers at the other for pushing the country closer to the fiscal cliff,” Gallup stated.

“Given these events, Americans’ optimism that a budget compromise will be reached before New Year’s dropped to 50 percent, the lowest yet seen. Still, this edges out the 48 percent who say a compromise is unlikely, suggesting Americans expect that the president and Congress will not let the worst-case scenario play out, but will instead use the few days remaining to hammer out a solution.”

Should Jan. 1 come and go without a deal, deep cuts to government spending would take time to take effect as would a slew of tax hikes, though many economists say nerves would grow increasingly edgier.

Plus U.S. economic growth could suffer as households and businesses forgo spending due to tax uncertainty as time drags on.

“It’s still possible they will work something out by the end of the year, but the probability seems reasonably high that we may go into January with no agreement,” said Dean Maki, chief U.S. economist at Barclays Capital, according to The New York Times.

“But the longer this goes on, the more nervous I get about first-quarter growth. If negotiations were to linger into March, then the first quarter could be much weaker.”

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

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