NABE Economists Concerned About Rising Deficits, Favor a “Balanced” Approach that Mixes Spending Cuts with Revenue Increases

The NABE August 2011 Economic Policy Survey presents the consensus of a panel of 250 members of the National Association for Business Economics. Conducted semiannually, this survey was taken between July 19 and August 2, 2011.This is one of three surveys conducted by NABE. The other two are the NABE Outlook Survey and the NABE Industry Survey. Chad Moutray, National Association of Manufacturers (Chair); Robert Fry, DuPont; Lynn Reaser, Point Loma Nazarene University; Emily Sanchez, American Chemistry Council; and Robert Yerex, Salient Analytics, conducted the analysis for this report. Survey responses were tabulated by Point Loma Nazarene University.

The National Association for Business Economics recently surveyed its members on a number of policy issues. Please note that these responses were given in the two weeks prior to the passage of compromise legislation to raise the federal debt ceiling. As such, deficit reduction was a central point of conversation, with viewpoints on both sides.

Survey respondents split almost evenly on whether current fiscal policy at the time the survey was conducted was too stimulative, too restrictive, or just about right. At the same time, about half of survey respondents indicated they would prefer fiscal policy to be more restrictive over the next two years, while a large majority said it expects fiscal policy to be more restrictive.

Most panelists believe that Congress should attempt to reduce the federal budget deficit through a combination of spending cuts and tax increases. More than half (56.1%) favor reducing the deficit only or mostly through spending cuts rather than only or mostly through tax increases (6.8%). The remaining 37.1% favor equal parts spending cuts and tax increases.

Nearly 40 percent of survey respondents believe that containing health care costs in Medicare and Medicaid is likely to be the most successful aspect of a deficit-reduction plan. A comprehensive tax reform plan that raises slightly more revenue than the current tax system also received significant support, cited by a quarter of the survey panel.

A slight majority of panelists thinks current monetary policy is “about right.” Still, a significant minority believes it is too stimulative. Note that these results were taken before the Federal Reserve Board announced its intentions to keep interest rates low through mid-2013. The panel was evenly split as to whether it would prefer monetary policy to remain unchanged or to be more restrictive over the next 12 months. Most panelists expect short-term interest rates to rise less than half a percentage point over the next 12 months.

In response to a series of miscellaneous policy questions, NABE panelists expressed support for free trade agreements with Colombia, Panama, and South Korea, and opposition to the National Labor Relations Board’s recent complaint against Boeing regarding the location of a new factory in South Carolina.

Summary | Fiscal Policy and Debt Reduction | Miscellaneous Policy Questions | Monetary Policy | European Debt Situation
Print Version (PDF)| Questions (PDF) | Tabulations (XLS)