Texas Insider Report: WASHINGTON D.C. The majority of National Association for Business Economics (NABE) members responding to a recent survey believe the federal
deficit should be reduced only or primarily through spending cuts. The survey found that 56 of NABE members felt that way while 37 said they favor equal parts spending cuts & tax increases.
The remaining 7 believe it should be done only or mostly through tax increases.
As for how to reduce the deficit nearly 40 said the best way would be to contain Medicare and Medicaid costs. Nearly a quarter recommended overhauling the tax system and simplifying tax rates and exemptions. About 15 said the government should enact tough spending caps and cut discretionary spending.
The latest survey by the NABE was conducted in the two weeks ending Aug. 2 the day that the Senate passed and President Obama signed legislation to cut spending by more than $2 trillion and raise the nations debt ceiling.
The agreement managed to avert a potential default but Standard & Poors downgraded U.S. credit from AAA to AA citing the political wrangling over the deal as a reason.
According to the survey of 250 economists who are members of NABE nearly 49 of those responding said the countrys fiscal policy should
be more restrictive while nearly 37 said they believe the government should do more to stimulate the economy. The remainder said fiscal policy should remain the same.
At the same time more than 70 of the people that responded said they expect U.S. fiscal policy to be more restrictive over the next two years.
In the area of U.S. monetary policy more than half of the economists surveyed said they thought it was about right while over a third said it was too stimulative.
Less than 6 said it was too restrictive. The rest did not know or didnt give an opinion.
The survey was taken before the Federal Reserve announcement that it expects to keep short-term interest rates at their current low levels into 2013.
At the same time the respondents were nearly evenly split on whether U.S. monetary policy will stay the same or be more restrictive in the future with those options getting about 42 of responses each.
Nearly 15 of those surveyed say they believe monetary policy will be more stimulative down the road.
