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PACE survey finds most Americans prefer smaller federal tax cut, more school and state aid

– A clear majority of Americans, worried over deepening cuts in school budgets, now prefers a smaller federal tax cut blended with education aid for the states, according to a new survey by independent researchers at the University of California, Berkeley, and Stanford University.

"As parents and all Americans read about their neighborhood schools laying off teachers and college tuitions rising, they are looking for a balanced economic initiative," said Emlei Kuboyama, a legal scholar at UC Berkeley who co-directed the survey by Policy Analysis of California Education (PACE), a research center based at UC Berkeley and Stanford University.

Polling earlier this month revealed a public divided between President Bush's desire to cut taxes further rather than reducing the federal deficit. The new PACE study is the first to focus on how Americans are weighing the Bush proposal against growing worries over shrinking education budgets.

Public opinion is firming up as the president's tax-cut campaign unfolds and the national debate over taxes, the deficit, and state aid intensifies. Moderate Republicans in the Senate, allied with Democrats, have pared backed Bush's initial proposal and, earlier this month, added $20 billion in aid to state governments.

All states but Vermont must balance their annual budgets. Most are considering deep spending cuts, tax hikes, or both. Under Bush's proposal, states could lose up to $8 billion if taxes on dividends were reduced, according to the Brookings Institution.

The PACE survey found that by more than a 2-to-1 margin, a representative sample of Americans said that "providing aid to state governments to help them avoid cutting services or raising taxes" should be a higher priority for Washington than "passing a large tax cut."

Sixty-seven percent also said they preferred "a smaller tax cut and increased federal aid to states to help maintain funding for public schools," while 25 percent said they desire "the full $550 billion tax cut proposed by President Bush." Most large demographic groups now prefer modest tax relief mixed with a stronger dose of fiscal relief for the states. Even the nation's grassroots Republicans are statistically tied on the issue, with 46 percent supporting Bush's proposal versus 43 percent urging aid to states.

A gender gap of 12 percent has emerged over this contentious choice between another round of tax cuts or maintaining public services, with 21 percent of all women surveyed supporting the full tax cut, compared to 33 percent of men, according to the survey.

Less than a third of the nation's most affluent adults support Bush's present proposal, even though they would benefit most. Over two-fifths, instead, would rather see Washington backstop local school budgets.

The findings are consistent with one question in last week's New York Times/CBS poll that uncovered deep public concern over the states' fiscal plight. In that survey, 56 percent of those polled reported that state budget problems were "very serious," from their viewpoint.

Education remains the public's second highest concern, after the need to create more jobs and stimulate the economy. Aggregate state budget deficits add up to $68 billion, according to the National Conference of State Legislatures.

The survey found that many citizens - 64 percent - also support federal aid to states "to help reduce the need to raise college tuitions." This compares to 28 percent who prefer Bush's tax cut instead. Support for university aid is strongest in the Northeast and is weakest in the West. Yet, the PACE data found that no more than one-third of all adults surveyed in any region of the country prefer the Bush tax cut.

The university team commissioned the survey, which was conducted between May 8-13 by Peter D. Hart Research Associates, based in Washington, D.C. A total of 1,003 adults were interviewed. This sample size ensured that, in 95 of 100 trials, the results would be within three percentage points, plus or minus, of reported averages.