Winning the Battle for Revenue and Investments HART RESEARCH A S O T E C I Winning the Battle for Revenue and Investments Nationwide Survey Among 1,009 2012 Voters Conducted October 25-30, 2013; M.O.E. +/-3.1% for 11028 Jan 2013 – 10840

Overview of Findings A debate framed in terms of how much to cut federal spending means playing on Republicans’ turf. Avoid this trap by going on offense on tax fairness: increasing revenue from the wealthy and corporations. Voters reject a cuts-only approach to the budget, and strongly support revenue from wealthy/corporations. Public says replace at least half of sequester cuts by closing corporate tax loopholes and ending tax breaks for wealthy. Voters want job creation in budget equation, not singular focus on deficit.  But public still desires deficit reduction and limiting spending. Little public support for reducing high-end or corporate tax rates as part of tax reform. 

Democrats Enjoy Modest Advantage at Beginning of Budget Talks In whom do you have more confidence to have the right approach in trying to reach a budget agreement dealing with government spending and taxes? All voters Confidence in Democrats 76% 24% 3% 81% 4% 26% Confidence in GOP 4% 28% 73% 2% 22% Democrats Independents Republicans Generic House Vote: Democrat Republican Swing voters 39% 33% Q.4 Much more 23% Much more 21% More confidence in Democrats More confidence in Republicans

Which budget plan do you prefer? Public Wants a Mix of Revenue and Spending Cuts, Not a Cuts-Only Budget Which budget plan do you prefer? Budget that increases tax revenue from the wealthy and corporations and also cuts spending +17 Budget that cuts spending, with no tax increases Q.7ab

Which budget plan do you prefer? Public Wants a Mix of Revenue and Spending Cuts, Not a Cuts-Only Budget Which budget plan do you prefer? Revenue/ Cuts 56% 74% 57% 33% 23% 45% 27% 40% Cuts Only 39% 21% 38% 61% 73% 47% 69% 52% Revenue/ Cuts 67% 69% 59% 54% 50% 61% 55% 58% 62% 49% 55% 63% Cuts Only 27% 27% 32% 38% 46% 32% 40% 38% 35% 45% 39% 33% All voters Democrats Independents Republicans Republicans: Tea Party Non-Tea Party Men Women 2014 swing voters Moderates Sen. Battleground States Red State/Dem Senator Men Women White non-college grads White college grads Northeast South Midwest West Q.7a col 168

In each pair, which budget plan do you prefer? Voters Want Budget to Raise Revenue from Wealthy and Corporations – Especially by Closing Loopholes In each pair, which budget plan do you prefer? Budget that increases tax revenue from the wealthy and corporations +22 Budget that does not increase taxes on any American Budget that closes corporate tax loopholes and limits tax breaks for the wealthy Q.7ab +39 Budget that does not increase taxes on any American

Americans Want Congress to Focus on Both Jobs and the Deficit, Not Deficit Alone Which better describes the budget priorities you would like Congress to follow? Focus on strengthening the economy and creating jobs, while also tackling our deficit responsibly +40 Focus on getting our budget deficit under control and bringing down the national debt Q.5ab

Voters Want the Sequester Reduced, But Not Cancelled In the coming year, the automatic spending cuts will reduce domestic and military spending by $110 billion if Congress takes no action. Which is the best way for Congress to deal with these automatic spending cuts? All voters Initial View of Automatic Spending Cuts/Sequester Familiar with/favorable 22% Familiar with/unfavorable 29% Not sure/not familiar with 49% Q.9, 8AB Allow full spending cuts to take effect Reduce spending cuts somewhat Cancel spending cuts

Framing the Debate: Stopping Budget Cuts vs. Increasing Spending In each pair, which budget plan do you prefer? Budget that keeps federal spending at the current level A budget that cuts federal spending on programs like education and medical research by $50 billion +29 A budget that increases federal spending on programs like education and medical research by $50 billion Q.7ab -18 Budget that keeps federal spending at the current level

Which Sequester Cuts Most Worry the Public? Which one or two of these spending cuts concern you the most? Education Military College loans/ tuition assistance Food safety Medical research Nutrition programs Job training Bigger Concern about Sequester Service cuts 44% 55% 41% 33% 800,000 jobs 31% 30% 34% Q.13ab All Voters Democrats Independents Republicans

Voters Favor Replacing Automatic Cuts with Revenue In each pair, which approach for dealing with the automatic spending cuts do you prefer? Reduce the spending cuts by 50% and replace them with new tax revenue from the wealthy and corporations +26 Allow the full spending cuts to take effect Cancel the spending cuts and replace them with new tax revenue from the wealthy and corporations Q.10ab, 12ac +16 Allow the full spending cuts to take effect

Overwhelming Opposition to Entitlement Cuts Which approach for dealing with the automatic spending cuts do you prefer? Avoid spending cuts this year, paid for by reducing spending on Medicare and Social Security in future years -24 Allow the full spending cuts to take effect To replace sequester: 70% prefer revenue, 12% prefer cuts in SS/Medicare. 85% oppose asking seniors to pay more for Medicare. 83% oppose cutting Medicaid health coverage. 67% oppose reducing Social Security COLA. Call “entitlements” by their real name: Voters favor cutting “spending on entitlements” by 17 points, but oppose cuts in "spending on Social Security and Medicare" by 65 points. Q.11a

Strong Support for Progressive Revenue Measures Strongly approve Somewhat approve Close tax loopholes to ensure corporations pay equally on foreign profits Buffett Rule: minimum 30% rate on millionaires End loophole for corporate meals/entertainment End loophole letting Wall St hedge fund mgrs pay lower rate than middle class Close loophole to avoid taxes by shifting income to offshore tax havens End special tax breaks for oil and gas companies 79%* 71% 69% 68% 62% Q.20ab 62% *70% oppose lowering the tax rate U.S. corporations pay on foreign profits.

Use Tax Reform Revenue for Public Investment and Deficit Reduction, not Rate Cuts How should tax revenue from closing corporate loopholes and limiting deductions for wealthy be used? With which statement about corporate tax reform do you agree more? 55% Democrats: "It's time to stop corporate tax dodging and invest in the U.S. again. If we close tax loopholes for corporations that ship profits and jobs offshore, we can raise billions of dollars to invest in America--making classrooms less crowded, improving roads and bridges, and making us energy independent." Republicans: "We need a corporate tax system that ensures our companies can compete against foreign companies on a level playing field. Our tax system needs to be changed so that companies bring their overseas earnings back home to create jobs and invest in American workers.  Reduce the budget deficit and make public investments Reduce budget deficit and make new investments 35% Q.21, 22b Reduce tax rates on corporations Reduce tax rates on corporations/wealthy

Democratic Message on Revenue and Services Wins Budget Debate With which statement on the budget and taxes do you agree more? DEMOCRATS: "It's wrong to balance the budget on the backs of the middle class by relying only on cuts to vital programs such as medical research and education. Instead of cutting cancer research, we should require millionaires to pay a tax rate as high as the middle class pays. Instead of cutting funding for schools, let's end tax breaks for corporations that send American jobs offshore. If we ask the rich and big corporations to pay their fair share of taxes, we can be fiscally responsible and protect the middle class." REPUBLICANS: "The best way to get our economy growing again and create jobs is to reduce federal spending and bring down the budget deficit. We must not continue the irresponsible and unsustainable spending that has left us with a $17 trillion debt that threatens the future for our children and grandchildren. And the last thing we need is further tax hikes that will kill jobs and hurt our economy--we don't have a deficit problem because we tax too little, we have it because we spend too much." 53% +13 40% Agree much more 35% Q.14cd Agree much more 27% Democrats Republicans

Democratic Message on Revenue, Jobs, and Services Wins Budget Debate With which statement on the budget and taxes do you agree more? DEMOCRATS: "Our highest priority is to create the conditions for job creation, economic growth, and prosperity built from the middle-out, not the top down. We should replace harmful automatic spending cuts with smart, balanced deficit reduction, while making essential investments in education, job training, and infrastructure to create jobs for the American people. And we should ask the wealthy and large corporations to pay their fair share of taxes, rather than hurt our communities by cutting healthcare, education, and public safety." REPUBLICANS: "The best way to get our economy growing again and create jobs is to reduce federal spending and bring down the budget deficit. We must not continue the irresponsible and unsustainable spending that has left us with a seventeen trillion dollar debt that threatens the future for our children and grandchildren. And the last thing we need is further tax hikes that will kill jobs and hurt our economy--we don't have a deficit problem because taxes are too low, we have it because the government spends too much." 54% +13 41% Agree much more 35% Q.14ab Agree much more 29% Democrats Republicans

Democrats’ Margin is Narrower in Debate Over Sequester Alone With which statement do you agree more on automatic spending cuts? DEMOCRATS say the automatic spending cuts are hurting our economy by forcing cuts in education, medical research, and job training. Economists say these cuts will cost us eight hundred thousand jobs. We should replace these automatic cuts with a balanced plan of responsible spending cuts and new revenue from the wealthy and big corporations. REPUBLICANS say the bipartisan budget caps were an important first step toward reducing wasteful spending and lowering the deficit, which is the best way to grow our economy and create jobs. Congress should keep the promise it made to limit spending, rather than bust the caps with new spending we can't afford. +8 (29% agree much more) (29% agree much more) Q.11a Democrats Republicans

Strongest Democratic Messages Focus on Tax/Spending Tradeoffs Very Convincing Reason to Support Democrats’ Budget Priorities 55% 54% 50% 48% We should end tax breaks for companies that ship jobs and profits offshore, and level the playing field for small businesses that create jobs in America. We should close tax loopholes for large corporations that ship jobs offshore, and instead use that money to invest in jobs in America by improving our roads and bridges and rebuilding manufacturing. Instead of cutting education funding for our children, we should ask millionaires to pay at least as high a tax rate as their secretaries. It's better to end huge tax subsidies to oil and gas companies making record profits than to make seniors pay more for Medicare. Weaker messages: 1) We’ve already cut $1.9 trillion and reduced deficit by half, so time to focus on jobs not just deficit (29%); 2) We need a balanced approach to deficit reduction, so for every $1 in cuts should be $1 in revenue (28%). Q16ab

Very Serious Concern about Republicans’ Budget Priorities Strongest Criticisms of GOP Hit Refusal to Raise Revenue from Wealthy/Corporations Very Serious Concern about Republicans’ Budget Priorities 55% 54% 53% 50% 49% We need leaders to compromise to avoid another crisis, but nearly every Republican in Congress has signed an irresponsible pledge promising that they will never vote to raise even one penny of revenue by closing tax loopholes for the wealthy and big corporations. Republicans in Congress are proposing irresponsible new tax cuts for the wealthy and corporations, while putting the entire burden of deficit reduction on the backs of the middle class and vulnerable families. Republicans in Congress favor giving more tax breaks to the wealthiest Americans and large corporations, while demanding cuts in services our families depend on, like college loans, nutrition assistance for seniors, and Head Start. Republicans in Congress are breaking their promise to seniors by pushing to end the Medicare guarantee and replace it with a voucher plan that shifts costs to seniors. Republicans in Congress are protecting tax breaks for companies that ship jobs offshore, taking jobs away from American workers and hurting our communities. Q18ab

Budget Debate Strengthens Democrats’ Position In whom do you have more confidence to have the right approach in trying to reach a budget agreement dealing with government spending and taxes? Initial View Post-Messaging View +16 among swing voters 44% +11 +6 39% 33% 33% Q.4, 19ab Much more 31% Much more 23% Much more 23% Much more 21% More confidence in Democrats More confidence in GOP More confidence in Democrats More confidence in GOP

Republicans Have Much More to Fear Than Democrats from Tax Issue Which one of these is the best reason to consider supporting the Republicans’ budget proposal? Which one of these is your biggest concern about the Democrats' budget proposal? Reduces federal spending Brings down budget deficit Doesn’t increase taxes on anyone Increases federal spending Doesn’t do enough to reduce deficit Raises taxes Q.3b, 15, 17 On taxes, voters are more concerned that the Republicans will go too far in protecting tax breaks for the wealthy and large corporations (44%) than that the Democrats will go to far in raising taxes (35%).

Message Conclusions Raising revenue from wealthy/corporations is very popular -- GOP refusal to consider it reveals them as barrier to a solution. Strong tax tradeoff messages (e.g. schools vs. Buffett rule) are powerful, especially if closing loopholes. Establish context as threat of automatic cuts, especially in education. Democrats are preventing irresponsible cuts, not increasing spending. Hitting the GOP:  Irresponsible Pushing new tax breaks & loopholes for wealthy/corporations Refuse to raise even one penny of revenue by closing loopholes Balancing budget on backs of middle class

Recommended Core Budget Message It's wrong to put the entire burden of deficit reduction on the backs of the middle class. Republicans are proposing to cut Social Security and Medicare, but at the same time they refuse to consider raising even one penny of revenue by closing corporate tax loopholes or ending tax breaks for the wealthy. Let's ask millionaires to pay at least as high a tax rate as their secretaries, instead of cutting education, Social Security, and Medicaid. We should close tax loopholes for corporations that ship jobs offshore, and use that money to invest in jobs in America by improving our roads and bridges. If we ask the rich and big corporations to pay their fair share of taxes, we can be fiscally responsible and protect the middle class.

Winning the Battle for Revenue and Investments HART RESEARCH A S O T E C I Winning the Battle for Revenue and Investments Nationwide Survey Among 1,009 2012 Voters Conducted October 25-30, 2013; M.O.E. +/-3.1% for 11028 Jan 2013 – 10840