Posted by WARREN MOSLER on August 22nd, 2011
Spending cuts have higher multiples, but in any case it’s all beside the point.
The problem is the deficit is too small, not too large.
After the post S&P downgrade discussions, where all agree the US govt ‘prints the dollar’
the argument that there could be a Greek like financial crisis has quietly vanished.
The only remaining case against the deficit,
which no one is making,
for obvious reasons,
is that inflation from ‘overspending’ is too high, and even higher levels of unemployment are needed to fight inflation.
August 22 (AP) — The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.
The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases.
As for how to reduce the deficit, nearly 40 percent 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 percent 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 nation’s debt ceiling.
The agreement managed to avert a potential default, but Standard & Poor’s 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 percent of those responding said the country’s fiscal policy should be more restrictive, while nearly 37 percent 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 percent of the people that responded said they expect U.S. fiscal policy to be more restrictive over the next two years.