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SPECIAL REPORT: Proposals to Fix the American Economy
Report

SPECIAL REPORT: Proposals to Fix the American Economy

PRINCETON, N.J. -- One of Gallup's core missions is to measure and understand the attitudes of the American public on key policy issues of the day. In pursuit of that goal, Gallup recently began cataloging Americans' attitudes about specific proposals to fix the economy, focusing on the percentage of the public who rate each of a series of such proposals as potentially "very effective" in improving the United States economy.

The need for greater clarity and understanding of economic issues is clear, given that these issues continue to top the list of problems Americans believe are the most important facing the nation. Gallup's Economic Confidence Index, which had been on a path to recovery after the Great Recession, has been declining all year. Improving the economy is a major focal point of the presidential campaigns now in full bloom. Beyond the pledges and promises of the presidential hopefuls, politicians, public servants, academics, researchers, commentators and others continue to offer measures that would, in their view, give new life to the American economy.

There is little agreement as to which of these proposed measures would be most effective at actually improving the economy. The American people can provide valuable input to help make that determination. The economy is played out, for the most part, through the lives of Americans, and their views on what would or would not improve its functioning can provide important insights as policymakers focus on potential new economic strategies.

The initial list of proposals Gallup tested with the public was based on a review of the ideas put forth by the two major political parties. The compilation of proposals also included suggestions and input from economists, academics and economic and political observers, along with the public's suggestions for fixing the economy. Some of the tested proposals would be small adjustments to the nation's economic system, while others would have a wider impact. Some are common prescriptions offered by politicians; others are more obscure. But at least some political or economic entities think all of them -- at least in theory -- have the potential to improve the economy.

The initial round of measurement, conducted June 4-14, included brief statements of 47 proposed ideas, described in basic terms that Americans are most likely to hear from those who advance them. Gallup asked Americans to rate how effective they thought each proposal would be at improving the U.S. economy, from "very effective" to "not effective at all." More proposals will be tested as presidential candidates, economists, elected officials and others articulate their economic ideas in the weeks and months ahead.

The complete list of proposals -- ranked based on the percentage of Americans rating each as "very effective" -- appears in the table below.

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Americans give widely varying reactions to the proposals, with the percentage saying that each would be "very effective" at improving the economy ranging from 64% at the high end to 19% at the bottom. The average "very effective" rating Americans give these 47 proposals is 38%.

From a broad perspective, Americans react most positively to the effectiveness of a set of proposals that score at the 50% "very effective" level or higher. These include two specific proposals to provide equal pay for equal work for women and better job training for veterans. The public also sees a high level of effectiveness in proposals that would improve the financial situation for small businesses, reduce federal government spending, improve schools and education, provide more educational opportunities at the community college level, force a balanced federal budget, create manufacturing jobs and fix Social Security.

Previous research has shown that Americans today have more confidence in small business than in any other U.S. institution except for the military, and the current results make it clear that programs designed to help small businesses resonate with the public. Previous research also has shown that keeping jobs from going overseas has been the most frequently volunteered response when Americans are asked what they would suggest be done to improve the jobs situation in this country. This makes it no surprise that the public likes the idea of government programs designed to do just that.

The concept of equal pay for equal work appears to be a clear winner with the public, as does the idea of reforming Social Security -- even as, or perhaps because, a significant percentage of younger workers doubt that they will benefit from the program. Half of Americans also appear to endorse the potential effectiveness of the idea of expanding college opportunities as a way to improve the economy.

At the other end of the spectrum, Americans are least positive about the effectiveness of seven proposals that are more than one standard deviation below the mean, and that score 26% "very effective" or lower. These include increasing the power of labor unions, decreasing federal spending on defense and the military, strengthening right-to-work laws and passing new trade or tariff laws that would make it more expensive to import goods into the U.S. Also at the bottom of the list are reducing corporate tax rates for businesses, changing immigration policies to allow low-skill workers to more easily live in the country and reducing the capital gains tax rate.

The list includes different ways of approaching several broad economic areas:

  • Labor unions. Americans in general do not think changes related to labor unions -- either those that increase their power or attempt to decrease it -- would be highly effective at improving the economy. The general concept of increasing the power of labor unions scores dead last on the list. Thus, while other research shows that Americans in general approve of labor unions, these results indicate that the clear majority of the public is not convinced that increasing unions' power in the American workplace would be effective at improving the economy. At the same time, the proposal to strengthen right-to-work laws, making it illegal to require workers to join unions at their place of employment, is not seen as effective either, coming in third from the bottom.
  • Military and defense spending. The list includes two separate proposals related to defense spending -- one to increase such spending and the other to decrease it. Americans do not think that either of these would be effective at improving the U.S. economy, with a 22% "very effective" rating for the idea of decreasing defense spending (second from the bottom of the list) and a 27% rating for the opposite idea of increasing defense and military spending.
  • Taxes. A number of the proposals deal with taxes in one way or another. In general, Americans think that tweaking the tax code to help specific groups -- such as small businesses, companies teaching workers new skills and lower-income households -- would be effective, although none of these top the list. Additionally, ideas about simplifying the entire tax code and reducing everyone's tax rates do relatively well. On the other hand, reducing corporate taxes for businesses and reducing the capital gains tax rate are both near the bottom in terms of perceived effectiveness. Increasing income taxes on upper-income households is seen as significantly less effective compared with decreasing taxes on lower-income households, but Americans give the latter only midrange effectiveness.
  • Government spending. The general idea of reducing federal government spending is near the top of the list as one of the proposals Americans believe would be most effective at improving the U.S. economy. The related idea of requiring a balanced federal budget also is near the top of the list. Other proposals that more specifically call for increased government spending for specific programs produce varying results. Obviously, while Americans deem the generic idea of cutting government spending as potentially quite effective at improving the economy, they also -- in somewhat contradictory fashion -- react positively to proposals to spend additional money on several more specific programs, such as spending more money to improve U.S. schools and to improve infrastructure.
  • Immigration. The immigration proposals tested in this research all deal with changes that would offer certain types of workers a better opportunity to enter the country or to stay in the country, including highly skilled and less skilled workers. The relatively negative reaction to three different specifications of this process shows that Americans do not see this type of change in immigration policies as an effective way overall to improve the economy. There are many other proposals related to immigration not tested in the current research.

Making Use of the Public's Views of the Effectiveness of Economic Proposals: Testing a Presidential Candidate's Proposals

This is the political season, and a time when all presidential candidates in one way or another talk about what they would do to improve the U.S. economy. One prominent presidential candidate, Hillary Clinton, gave a long, much-anticipated speech outlining her economic agenda -- with very specific proposals -- on July 13 in New York City. This speech provides us with an excellent opportunity to see how a candidate's proposals can be tested against the actual views of the American public.

Twenty-one of Clinton's proposals are similar to at least one item in the Gallup database, thus providing a broad estimate of how these proposals play with the public. Gallup will make the same types of comparisons with the economic proposals of other candidates as their campaigns progress.

The table below displays the Clinton proposals that have an approximate match with the Gallup-tested proposals, along with the perceived effectiveness of each of these matched ideas. In some instances, the match between the way Clinton phrased her idea and the tested proposal is not perfect, but all such matches deal with the same broad areas.

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Perhaps inevitably given the length of her list, some of Clinton's economic proposals match up with ideas that Americans on a relative basis believe would be very effective at improving the economy. However, some of her other proposals are among those that the public is least likely to believe would be very effective.

The comparison suggests that Clinton would be on the firmest ground with her proposals to ensure that women receive equal pay for equal work, to provide college education for all who want it, to stand behind small businesses, to create new U.S. manufacturing jobs and to support efforts to reform Social Security.

Other Clinton proposals run the risk of creating a dubious or negative reaction from the American public. As seen previously, Americans have the least faith in programs that would increase the power of labor unions, install new trade agreements or reform immigration in ways that would allow either highly skilled or low-skilled workers to stay and work in the United States.

Still other ideas Clinton put forth can be matched with proposals garnering neither the highest nor the lowest levels of public support. Some proposals in this group get close to majority support, including the idea of increased funding for preschool education and providing tax credits for businesses training workers to acquire new skills. Others are supported by well under four in 10 Americans, including the idea of inducing companies to offer employee profit-sharing programs, eliminating capital gains taxes on small businesses and putting in place new rules expanding the number of employees eligible for overtime pay.

One finding is that several broad economic proposals play differently with the American public depending on how they are operationalized. For example, Clinton's claim that she would be the "small-business president" matches well with a proposal to make it easier for small businesses to get loans, but less well with the proposal to reduce regulations on small businesses and to cut capital gains taxes for these businesses.

In general, Clinton's proposal to reach new trade agreements does not play well when matched with the idea of enhancing trade agreements or increasing tariffs to make it more expensive to import goods into this country. However, the former does slightly better than the latter.

Clinton in her speech called for comprehensive immigration reform. This is, as previously noted, a very broad area, and she did not offer specifics. Research shows that increased border security evokes positive responses from the public, and that the public generally approves of plans to deal with undocumented immigrants in this country. The three proposals in the Gallup sequence all had to do with changes in immigration processes that would allow certain types of workers either to remain in or to enter the country, and were tested because they most directly relate to the labor force and the economy. None of these did well on a relative basis.

The proposal to empower entrepreneurs fares about the same whether it is operationalized to Americans as a tax incentive to start new businesses or as a proposal to reduce federal regulations on small businesses.

Focusing on the nation's infrastructure does about the same whether it involves developing federal, state and private partnerships to invest in the nation's infrastructure, or spending more federal money on infrastructure.

Final Word

Most of the proposals tested in this process represent ideas that, in practice, would be quite complex in their operationalization, and would no doubt have consequences and nuances unknown even to economists and those who advocate them. The tested proposals are shorthand summaries of these complex, underlying policy changes, representative of the way most people will hear about them. The public's reaction to each proposal thus helps illustrate the general feeling of the public toward the idea, a reaction that could change if the proposal became a subject of serious public debate. The process of using shorthand summaries has the advantage of allowing different aspects of broad concepts dealing with certain areas to be tested individually, helping develop a more fine-tuned understanding of what it is about certain economic policies that produces more strongly positive or negative reactions.

Going forward, Gallup will expand the economic database to reflect new ideas and proposals put forth by politicians and economists. Gallup will also report on how well these proposals match with the economic platforms of other presidential candidates as the campaign season progresses.

Frank Newport, Ph.D., is a Gallup senior scientist. He is the author of Polling Matters: Why Leaders Must Listen to the Wisdom of the People and God Is Alive and Well. Twitter: @Frank_Newport
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