Policy Makers in U.S. Should Work to Reduce Budget Deficit, Survey Shows

Lawmakers in the U.S. should aim to reduce federal spending and streamline the tax code, according to a semiannual survey by the National Association for Business Economics released today.

While two-thirds of the group’s 263-member panel said they support a more restrictive fiscal policy over the next two years, 71 percent expected no “meaningful reform,” the group said in a statement. Containing health-care costs in Medicare and Medicaid was the best way to reduce the gap, followed by comprehensive tax reform and revamping Social Security, the group said.

“The respondents expressed concern about rising fiscal deficits, and are eager for the president and Congress to curb federal spending,” the Washington-based economists’ group said in the statement.

The panel said it supported comprehensive changes to the tax code that reduce marginal tax rates while eliminating credits and deductions. More than two-thirds favored allowing expensing of investment in plant and equipment, while eliminating the deductibility of interest on corporate income tax returns, the statement said.

Sixty-two percent of panelists said the Federal Reserve’s plan to purchase up to $600 billion in Treasuries was good for the economy and most said it should continue through to its planned termination in June. Sixteen percent said the Fed’s unconventional easing policy had hurt the economy.

Seventy percent of the respondents said Fannie Mae and Freddie Mac, the two largest purchasers of mortgage debt, should “ultimately” be privatized.

Forty percent said they believed inflation posed a greater risk to the economy than deflation, while 18 percent said deflation was the primary near-term threat.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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