A majority of business economists view the US government’s tax and spending policy as moving too aggressively to stimulate economic growth, setting up a potential increase in the deficit in the coming years, a survey shows.
The view emerged from the latest economic policy survey by the National Association for Business Economics, which polled 211 members at companies and industry groups.
The survey by the professional association for business economists, academics and others who use economics in the workplace, was released yesterday.
The 52 percent of economists who consider the government’s fiscal policy as “too stimulative” compares with only 20 percent in August last year, in the previous economic policy survey.
This time, 37 percent of respondents judged tax and spending policy as “about right,” down from 46 percent in August.
By contrast, the economists are more supportive of the Federal Reserve’s interest rate policy: More than six in 10 have pegged it as “about right.” That is the highest percentage in eight years, the association said.
“Overall, the [survey] panel expects the deficit to grow as a percentage of the economy in the longer term,” association vice president Kevin Swift, chief economist of the American Chemistry Council, said in a statement.
The association’s economists, reflecting the prevailing view of the corporate US, continue to have a strong preference for more conservative fiscal policy in the long run.
The US$1.5 trillion Republican tax-cutting legislation signed into law late last year provides steep cuts for corporations and wealthy Americans while offering more modest reductions for most low and middle-income families and individuals.
Coupled with a US$400 billion bipartisan budget agreement enacted this month, it has raised the possibility of greater inflation. That could make the Fed more likely to tighten credit.
Experts have said — and the new budget proposal acknowledges for the first time — that the massive tax overhaul likely will add billions to the deficit and not “pay for itself” with economic growth and higher revenues.
The federal spending plan unveiled earlier this month contains trillion-dollar deficits.
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