Economists want tax hikes, spending cuts

A vast bulk of U.S. business economists and policymakers say the federal budget deficit should not be reduced by spending cuts alone, a survey indicated Monday. Ninety-one percent said they'd prefer tax increases alone or a combination of tax increases and spending cuts as the best way of cutting the projected $1.3 trillion deficit, the National Association for Business Economics members indicated in the group's semi-annual Economic Policy Survey. Only 9 percent said recommended spending cuts alone. The 91 percent of those favoring what NABE called "a balanced approach to eventual fiscal tightening" breaks down as: -- 45 percent saying they favored cutting the deficit equally with tax increases and spending cuts, -- 31 percent saying they preferred mostly spending cuts, -- 14 percent saying they wanted mostly tax increases and -- 1 percent advocating only tax increases. President Barack Obama and Democratic lawmakers generally say they favor a combination of tax increases and spending cuts to curb the massive deficit. Republican presidential candidate Mitt Romney and GOP lawmakers generally advocate spending cuts and revamping Medicare. Most respondents to the NABE survey said they'd prefer both U.S. monetary and fiscal policy to be more stimulative in 2013, or remain just as they are, but not be more restrictive. Fiscal policy involves taxing and spending. Monetary policy involves the Federal Reserve, the money supply and interest rates. Forty-five percent of survey respondents said they wanted fiscal policy to be more stimulative in 2013, while 33 percent said wanted it more restrictive and 22 percent said it should remain unchanged. But for 2014, 54 percent said they wanted fiscal policy more restrictive, 24 percent wanted it more stimulative and 23 percent wanted it unchanged, the survey said. Eighty-seven percent of panelists said they considered the current fiscal-policy uncertainty to be holding back the U.S. economic recovery. NABE said this overwhelming belief was "perhaps the most telling result from the survey." Obama's contentious and still unresolved fiscal-policy battle with congressional Republicans has dominated much of Washington politics for the past two years. On monetary policy, 59 percent of panelists said they believed current Fed policy was "about right," 26 percent said they thought it was "too stimulative" and 14 percent said they thought it was "too restrictive." The 236 applied economists, strategists, academics and policymakers were surveyed Aug. 2-24, before the Fed's Sept. 13 announcement of a third round of stimulus, or quantitative easing, intended to bolster the economy and reduce unemployment.