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70% Say Default is Bad for Economy, 56% Say Failure to Cut Spending is Worse

Monday, June 20, 2011

Voters strongly agree that failing to raise the federal government’s debt ceiling is bad for the economy. But most see a failure to make big cuts in government spending as a bigger long- and short-term threat than the government defaulting on the federal debt.

A new Rasmussen Reports national telephone survey finds that 70% of Likely U.S. Voters think it would be bad for the economy if the debt ceiling is not raised and the federal government defaults on some of its loan obligations. Just 7% disagree and think it would be good for the economy. Eleven percent (11%) feel a government default will have no impact, and another 11% are not sure. (To see survey question wording, click here.)

But 56% of voters see more short-term economic danger in failing to significantly cut federal spending than in a government default on the federal debt. Thirty-four percent (34%) disagree and believe a default is worse.

Looking to the longer-term, 63% say failure to significantly cut spending is more dangerous than defaulting on the federal debt. Just 28% hold the opposite view.

The formal debt ceiling currently allows the federal government to borrow just over $14 trillion. To fund the current operations of government will require raising that limit to just over $16 trillion. Republicans in Congress are resisting calls for an increase in the debt ceiling unless it is tied to significant cuts in federal spending.

The debt ceiling comprises only a small portion of the actual liabilities of the federal government. Unfunded liabilities for a variety of programs bring the total government debt to over $100 trillion.

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The survey of 1,000 Likely Voters was conducted on June 16-17, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.


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