FTI Consulting DATE: 12 /4 /12. Allstate/National Journal Heartland Monitor XV Key Findings

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1 Strategic Cmmunicatins MEMORANDUM TO: FROM: Allstate FTI Cnsulting DATE: 12 /4 /12 RE: Allstate/Natinal Jurnal Heartland Mnitr XV Key Findings This memrandum utlines key findings frm the natinally representative survey cnducted Nvember 25 December 1, 2012 amng N=1,000 American adults reached via landline and cell phne. The margin f errr fr N=1,000 is +/ The survey investigates Americans perceptins f the ecnmy and the gvernment s perfrmance n key issues; it assigns pririties in the t d list fr elected fficials; and, it examines Americans cncerns abut hw imprtant plicy issues impact their lives and their persnal financial situatin. OVERVIEW Less than ne mnth remved frm the htly cntested presidential electin, Americans have the pprtunity t assess the cnditin f the cuntry and lk ahead t the next fur years. This survey, the 15 th quarterly pll in the Heartland Mnitr series, reveals sme intriguing cntradictins in pinin amng the American public. Fr the furth survey in a rw, the Right Directin metric has increased and it is nw at its highest level since ur first pll in April President Obama enjys his highest jb apprval rating in years. A wide majrity f Americans believe the cuntry will vercme its current challenges and mst believe the ecnmy will imprve ver the next year and als by the end f President Obama s secnd term. Hwever, Americans sense f the directin f their persnal financial situatin tk an unexpected step back, led largely by Republicans wh are likely unhappy abut the electin result. Americans als dubt whether plicymakers will be able t wrk tgether mre than they have in the past, mst believe their taxes will increase ver the next fur years, and there s cnsiderable dubt abut the budget situatin imprving. Americans say that the mst imprtant issue fr plicymakers shuld be addressing the debt and the budget deficit, but they balk at the idea f cutting the debt thrugh a cmbinatin f tax increases and spending cuts. Ultimately, Americans want slutins t the cuntry s budget wes, but they are highly prtective f entitlement prgrams and they endrse cntinued public investment in infrastructure. These results speak t the significant challenges faced by plicymakers as they address nt nly the immediate task f aviding the fiscal cliff, but als a lng t d list ver the next tw t fur years. The American public is cautiusly ptimistic abut the directin f the cuntry, but they re als skeptical f Washingtn s ability t wrk tgether effectively and address the natin s challenges.

2 Strategic Cmmunicatins KEY FINDINGS Americans are mre psitive abut the directin f the cuntry and abut President Obama than they ve been in quite sme time. Hwever, they re still cnflicted abut the impact f Obama s plicies. 41% believe the cuntry is heading in the right directin, while 50% believe things are ff n the wrng track. This is the highest right directin number we ve seen since ur first Heartland Mnitr pll in April Right Directin has nw imprved fur surveys in a rw, indicating that the psitive swing may be abut mre than just pst-electin enthusiasm. Demcrats are the mst ptimistic, with 77% believing the cuntry is headed in the right directin, up frm 71% in December. Independents increased mdestly frm 26% t 32%, while Republicans nly inched frm 7% t 9%. Nt surprisingly, Obama vters (76% Right Directin) have a much different take n the cuntry s directin than Rmney vters (92% Wrng Track). Hispanic ptimism increased frm 41% in September t 58%, while whites became slightly mre psitive (frm 29% t 32%) and African- Americans remained relatively cnsistent in their views (frm 71% t 70%). At 54%, President Obama s jb apprval is up five pints frm September (49%) and at its high pint since the secnd Heartland Mnitr in July 2009 (56%). Hwever, the President is still a very plarizing figure. 93% f Demcrats apprve f the jb he s ding, while 87% f Republicans disapprve. Independents are nearly evenly split (48%-46%). A majrity f whites (54%) disapprve f the jb he s ding, while African-Americans (84%) and Hispanics (78%) give him a strng endrsement. As we saw in the electin results, there s a sizable gender gap in Obama s numbers. 58% f wmen apprve f the President cmpared t 49% f men. When cnsidering gender, ethnicity and educatin, cllege educated white wmen are the nly grup f whites with whm Obama has a psitive jb apprval (51%). A majrity f cllege educated white men (60%) and nn-cllege educated white men (59%) disapprve, while a plurality (49%) f nn-cllege educated white wmen disapprve. Americans are in wide agreement n their dislike f Cngress. 72% disapprve f the jb Cngress is ding, while nly ne-in-five (21%) apprves. This is cnsistent acrss party lines. 2

3 Strategic Cmmunicatins When it cmes t develping slutins t the cuntry s ecnmic prblems, the President has his biggest advantage ver Republicans in Cngress since September % trust President Obama, while 32% trust Republicans in Cngress. Americans are still split n whether the Obama administratin s actins will increase pprtunity fr peple like them t get ahead, decrease pprtunity, r have n impact. Cnsistent with ur September pll, 36% believe Obama s plicies will increase pprtunities. This sentiment remains at a high mark in ur research since January % believe his plicies will decrease pprtunities and 25% believe they will have n impact. African-Americans (63%) and Hispanics (56%) believe his plicies will increase pprtunities. Only 28% f whites agree, with similar numbers amng whites acrss educatin and gender levels. 42% f whites believe Obama s plicies will decrease pprtunities fr them. Amng the 47% f Americans wh see themselves as the cre Middle Class, 33% believe Obama s plicies will increase pprtunities fr them t get ahead and 35% believe his plicies will decrease pprtunities.. The President has a very slight advantage amng Americans when it cmes t the verall impact f his ecnmic plicies. 47% believe his plicies helped avid an even wrse crisis and are laying the fundatin fr recvery, while 44% believe his plicies ran up a recrd deficit and failed t end the recessin r slw jb lss. The sense that Obama s plicies have helped avid a crisis and are leading t recvery has steadily increased ver the nine times we ve asked this questin since September Back in August 2010, just 39% felt this way, while 48% believed his plicies had a negative impact. As n ther questins abut the President, there are stark differences between whites and nn-whites and between Republicans and Demcrats. Americans are generally ptimistic abut the directin f the ecnmy and their persnal finances. Hwever, lking ahead ver the next fur years, there are sme dubts abut whether the cuntry s fiscal challenges will imprve. And, there is strng evidence t suggest that the Presidential electin results have caused sme t wrry abut their financial future. 44% expect the ecnmy t imprve ver the next 12 mnths, while 31% believe it will becme wrse and 22% expect it t stay abut the same as it is. There is undubtedly a plitical aspect t this pinin. 75% f Demcrats and 74% f Obama vters believe the ecnmy will imprve ver the next year while 63% f Republicans and 66% f Rmney vters think it will get wrse. 3

4 Strategic Cmmunicatins Lking ahead t the end f Obama s secnd term, by that pint, 51% believe the cuntry s ecnmy will imprve and just 27% believe it will becme wrse. Regarding their persnal financial situatin, Americans are the least cnfident they ve been in mre than a year. This is ntable because it cntradicts the imprving Right Directin sentiment and flies in the face f many psitive ecnmic indicatrs. 39% believe their persnal financial situatin will imprve ver the next year, while 36% think it will stay the same and 22% think it will becme wrse. The 22% wrse number is up frm 13% in September and the highest we ve measured since 23% in March The increase in persnal financial cncern is being driven largely by Republicans. In September, 30% believed their finances wuld imprve ver the next year and 21% thught they wuld becme wrse. In this pll, just 15% think their finances will imprve while 44% believe they will becme wrse. Just 36% believe that by the end f Obama s next term, the ecnmic wellbeing f Middle Class Americans will imprve, 31% believe it will get wrse, and 32% think it will stay abut the same as it is nw. 36% believe the gap in incme between the rich and everyne else will increase ver the next fur years, while 46% think it will stay the same and 15% believe it will decrease. 62% think their taxes will increase by the end f Obama s secnd term, including 76% f thse in $100k+ husehlds and 62% f thse wh cnsider themselves Middle Class. 51% believe that verall gvernment spending will increase, with 17% believing it will decrease. 26% think that gvernment spending n prgrams that help peple like yu will increase, 24% think it will decrease and 46% think it will remain unchanged. Just 34% think that by the end f Obama s secnd term, the cuntry s budget deficit and debt situatin will imprve and 41% think it will get wrse. 23% think it will stay abut the same. 4

5 Strategic Cmmunicatins Lking ahead t the next fur years, Americans expect bth sides t make cmprmises t get mre dne thugh they are nt sld n the reality f this happening. Regardless f the actins f plicymakers, they ultimately believe that the cuntry s prblems can be vercme as Americans have always dne in the past. Regardless f wh they supprted in the recent electin, Americans expect bth parties in Washingtn t wrk tgether and make cmprmises t get mre dne, even if it means bending n sme plicies and preferences. 59% f Obama vters think that he shuld cmprmise with Republicans in Cngress as ppsed t remaining firm in his views. 54% f Rmney vters want Republicans in Cngress t cmprmise with President Obama and Cngressinal Demcrats. Less than half (43%) think it s likely that ver the next fur years the President and Cngress will wrk tgether mre than they did in the previus fur. 45% believe things will be abut the same between the President and Cngress and 10% think there will be less cperatin. Still, cnsidering the challenges facing the cuntry, including the deficit and debt, the slw recvery, high unemplyment and deep plitical divide, a strng majrity f Americans believe the cuntry will vercme these challenges as it has in the past with ther prblems. 67% believe that Americans will vercme these challenges in the freseeable future, just like we ve dne with ther majr challenges thrughut ur histry. 31% think that Americans are facing a unique set f challenges that are s serius that we might nt be able t vercme them. This belief in Americans ability t vercme challenges crsses party lines, with 54% f Republicans jining 62% f Independents and 85% f Demcrats. When it cmes t prescribing a t-d list fr elected fficials in Washingtn, Americans are clear abut their desire fr Cngress and the President t tackle the cuntry s debt and deficit. Hwever, shedding light n the difficult task facing plicymakers, the data indicates that Americans als want cntinued public investment t stimulate the ecnmy and they are highly prtective f entitlement prgrams. Interestingly, when given the chice between tw pssible appraches fr gverning, 55% think that President Obama shuld take a visinary apprach, fcusing n lng-term gals fr the future. 40% believe he shuld fcus n a practical apprach t addressing ur near-term challenges. Republicans are alne in favring a near-term practical apprach (52%), while majrities f Independents (52%) and Demcrats (65%) prefer a mre lng-term visinary apprach. 5

6 Strategic Cmmunicatins As we ve seen in previus Heartland Mnitr plls, Americans are split rughly in thirds n the prper rle f the federal gvernment in the ecnmy. 37% believe that gvernment is nt the slutin, but the prblem; 28% wuld like t see an active rle fr gvernment in the ecnmy but lack trust in their ability t d s effectively; 31% believe the gvernment must play an active rle in ensuring the ecnmy wrks fr peple like me. When cnsidering the mst pressing ecnmic issue facing the United States tday, jbs and unemplyment tp the list with 30%, fllwed by spending (19%) and the deficit (15%) and wages nt keeping up with prices (11%). 9% chse the fiscal cliff as the mst pressing issue. Just 6% chse taxes as the mst pressing issue. A majrity f Demcrats (51%) is cncerned abut jbs r wages while mre than half f Republicans (54%) wrry abut spending r the deficit. In terms f a larger pririty list fr elected fficials in Washingtn t address, the single highest-rated pririty is the budget deficit and the natinal debt. Hwever, several ther issues rank cmparatively high, several f which culd ptentially be at dds with addressing the budget, depending n the level f spending assciated with addressing each issue. Issue pririties ranked by mean scre (10=high pririty) 8.4 The budget deficit and natinal debt 8.2 The status f Scial Security and Medicare 8.1 The availability f gd-paying jbs 8.0 The educatin system, including cst and wrkfrce preparedness 7.9 The cst f health care 7.9 The tax system 7.5 The retirement system 7.5 Inflatin and the rising csts f basic necessities 7.5 Natinal defense and the war n terrrism 7.4 Ecnmic cmpetitiveness with the rest f the wrld 7.2 The cst f energy 7.1 The cnditin f rads, bridges, electricity supplies and cmmunicatin systems 6.6 The status f illegal immigrants 6.3 The state f the husing market 6

7 Strategic Cmmunicatins When asking Americans t rate their persnal cncern n issues facing their family, issues related t retirement, entitlement prgrams, and health care sit at the tp f the list, fllwed by jb security, educatin, and prices f necessities. Persnal cncerns ranked by mean scre (10=extremely cncerned) 8.1 The cntinued availability f Scial Security and Medicare 8.0 Being able t retire cmfrtably 7.8 The cst f health care and prescriptin drugs 7.6 Jb security and maintaining steady emplyment fr yu and yur family 7.6 The price f gasline, il, electricity, and natural gas. 7.5 Being able t affrd educatin r training fr yu r yur children that will lead t a gd jb 7.3 Being able t pay fr basic necessities 7.2 The level f taxes yu pay 7.2 Yur family s safety frm war and terrrism 7.0 The safety f lcal rads, bridges, and the reliability f electricity and cmmunicatin systems 6.7 The value f yur hme and yur ability t buy and sell a hme 6.3 Illegal immigrants wrking fr lwer wages and using gvernment services 5.7 The amunt f debt yu currently hld and being able t pay it dwn 4.2 The pssibility that yur jb culd be mved verseas When asked t chse between three actins fr helping t imprve the ecnmy ver the next cuple f years, Americans favr effrts t grw the ecnmy first thrugh public investment (43%) and next thrugh tax cuts (29%). Reducing the deficit thrugh tax increases and cuts t public services is the third and least favred ptin (22%). The highest supprt fr an aggressive deficit-reductin prgram f tax increases and spending cuts cmes frm thse in high incme husehlds f $100k+, 38% f whm apprve f this apprach. In terms f lnger-term prgrams t imprve the cuntry, the tp pririty fr Americans is a brad imprvement in the educatin system. First r Secnd Chice fr Imprving the Cuntry ver Years 47% Making educatin mre affrdable, accessible and relevant t tday s jb market 34% Prmting American manufacturing and industrial innvatin 34% Prviding incentives t help peple start their wn businesses 28% Reducing the trade deficit by increasing exprts and decreasing imprts 23% Eliminating the federal budget deficit thrugh tax increases and spending cuts 23% Increasing US energy security thrugh prductin, alternatives, and efficiency 7

8 Strategic Cmmunicatins Americans are f tw minds n taxes, believing that bth increasing taxes and reducing taxes will be effective at reducing the deficit and cutting the natinal debt. Americans d nt believe that reducing spending n Scial Security and Medicare will be effective. Perceived Effectiveness at Reducing the Deficit and Cutting Debt 76% Increasing taxes n American families wh make $250k+ 73% Reducing taxes and regulatins t spur ecnmic grwth 54% Reducing spending n the military and natinal defense 53% Increasing taxes n all Americans 51% Reducing spending n prgrams that benefit the pr, like welfare and Medicaid 34% Reducing spending n prgrams that benefit the elderly, like Scial Security and Medicare. Overall, Americans believe the federal gvernment will be effective n a number f different ecnmic and plicy gals except fr lwering the deficit. Perceived Effectiveness f the Federal Gvernment n Issues 65% Ensuring the lng-term future f SS and Medicare 64% Creating jbs 64% Imprving the public educatin system 63% Grwing the ecnmy 57% Creating a business envirnment that allws fr innvatin 48% Lwering the federal deficit On specific issues, Americans expressed mixed pinins n the rle f the federal gvernment in husing plicy, health care, higher educatin funding, and retirement investment and savings. Americans are mre unified in their pinins abut entitlement refrm, infrastructure spending and prtecting and encuraging American industry. On husing plicy, ur findings clsely match Heartland X (March 2011), where we fund an even split ver whether the federal gvernment shuld cntinue prgrams that encurage hme wnership r scale back thse prgrams. On this survey, 49% believe that federal prgrams shuld be cntinued, while 47% believe they shuld be scaled back. These prgrams see higher supprt amng lwer-incme husehlds and minrity grups. Americans are split n the best way t make cllege mre affrdable. 47% believe the gvernment shuld spend mre n financial aid, while 44% believe the slutin is penalizing schls wh raise tuitin t quickly. By a wide margin, Americans believe that the better path t imprving ur glbal cmpetitiveness in educatin is t fcus n fundamentals in K % believe that cmpetitiveness can be imprved thrugh this fcus while 34% think the better path is fcusing n making cllege mre accessible and affrdable. 62% f Americans prefer the current system f Scial Security and Medicare, even despite the rising csts, while just 34% want t see a restructuring f these prgrams t place less strain n the budget by including the private sectr. 8

9 Strategic Cmmunicatins Americans are split evenly int thirds regarding health care. 34% believe that refrms will d t much t change the system, lwering the quality f care. 32% believe that refrms wn t g far enugh, leading t increased csts and declining access. 31% endrse the refrms, believing they will imprve the system. Regarding retirement, by an eight-pint margin (52%-44%), Americans believe that a better path t retirement is persnal investments in a 401(k), rather than depending n pensin prgrams frm emplyers r gvernment. On the glbal ecnmy, this survey demnstrates mre f a prtectinist attitude tward trade than we ve seen previusly. 46% favr a system f prtectin thrugh tariffs, penalizing utsurcing, limiting legal immigratin and limiting the flw f mney acrss brders. 30% favr a system f identifying, prmting, and investing in industries that can best cmpete glbally. 20% believe the US shuld pursue a mre pen and free-trade mdel with mre immigratin and increased internatinal investment. Ntably, Republicans are the mst prtectinists f all parties, with 51% favring the system f tariffs and limits n legal immigrants and investment. Regarding infrastructure, 54% f Americans believe that imprving rads, bridges, buildings and the cuntry s energy and cmmunicatins system shuld be led by federal and state gvernment. 43% think the private sectr shuld take the lead. When asked t assess the changing ppulatin f the United States, specifically the grwth f the Hispanic ppulatin, Americans appear mre cmfrtable with these changes than they were just 18 mnths ag. In May 2011 n ur Heartland IX Wrld natin pll, we fund that less than half (42%) f Americans were cmfrtable with the changing ppulatin f the United States, believing that these changes were cnsistent with the traditin f welcming peple f all backgrunds and that immigrant and minrity ppulatins have always cntributed t America. Mre Americans (50%) were f the pinin that these trends were trubling, happening t fast and causing changes t the character and values f the US at a time f ecnmic truble. We ve seen a significant reversal n this mst recent survey. 53% are nw cmfrtable with the changes and 42% believe they are trubling and happening t quickly. This increased level f cmfrt has ccurred amng whites (frm 39% t 49%), African-Americans (frm 45% t 59%), and Hispanics (frm 60% t 66%). By party, Republicans level f cmfrt increased frm 30% t 37%, Demcrats frm 50% t 68%, and Independents frm 44% t 50%. 9

10 Strategic Cmmunicatins A majrity f cllege-educated whites (62%) say they re cmfrtable with the changes, cmpared t 37% f nn-cllege educated whites. Americans believe that these changes will lead t mre glbal ecnmic cmpetiveness fr the US (57%) and mre equality between peple f different ethnic and racial backgrunds (62%). Hwever, mst als believe that this will lead t a mre divided plitical system (64%), mre f an incme gap (63%), and 40% believe this will lead t less pprtunity fr their family. 10