Economists: Congress won't fix
economy
By Chris Isidore@CNNMoneyApril 18, 2012: 5:20 AM ET
A survey of economists found most don't expect Congress to take action to help the economy.
NEW YORK (CNNMoney) -- Economists have lots of ideas about what can be done to help
jumpstart the still weak economy, but they don't expect Congress to enact any of them any time
soon.
A survey of economists by CNNMoney found most don't expect Congress to pass any kind of
economic assistance anytime in the foreseeable future. Only about a third of the 16 who
responded to the survey expect some kind of action early in 2013, after the election. Just one
expects action in a lame-duck session after the election but before the end of the year. None of
them expect action before the election.
Comment
"Two weeks after a sudden freeze in hell," is when Bill Watkins, of the Center for Economic
Research and Forecasting at Cal Lutheran University, expects Congress to ride to the rescue.
Watkins and his colleagues are the most concerned of those surveyed about the recent
weakness in a number of economic readings, including much weaker-than-expected job
growth in the March jobs report. They were the only ones who checked the very concerned box.
Another five economists said they were somewhat concerned, but six said they were only a little
concerned, and four said they were not concerned at all.
Policies they would like to see passed include comprehensive tax reform, which was endorsed
nearly unanimously. Those surveyed were allowed to endorse as many options as they thought
would help the economy.
America's biggest tax breaks
Tax reform would likely lower tax rates for both corporations and individuals, but eliminate many
deductions and loopholes. The concept has been endorsed by everyone from President Obama
to his likely Republican opponent Mitt Romney, but working out the details in a partisan
atmosphere strikes economists as out of reach.
"Comprehensive tax reform would be great, but highly unlikely," said David Wyss, a fellow at
Brown University.
Also getting the support of most economists is some extension of the Bush tax cuts, although
they split on whether it should be for all taxpayers or if the extension should exclude high-income
taxpayers.
Another third support another extension of the partial payroll tax holiday that has been in effect
since the start of 2011 and runs through the end of this year.
"The pace of economic growth is too tepid to allow for the simultaneous expiration of the tax
policies at the end of 2012," said Sean Snaith, economics professor at the University of Central
Florida.
The survey also found 40% support repealing the health care reform and about a quarter would
like to repeal the Dodd-Frank financial services reform.
"The uncertainty imparted on the economy by both Dodd-Frank and health care reforms are black
clouds over the private sector and they both need to be reworked into more moderate forms,"
said Snaith.
Some believe that the economy will be better off if Congress does as little as possible.
How Congress is killing the recovery
"There was a time in this recent period where the economy benefited from the assistance of
government actions, but now it is time for the government sector to resume its place on the
sidelines," said Russell Price of Ameriprise Financial. Price would like to see an extension of the
tax cuts for all but upper income households along with comprehensive tax reform.
The economists surveyed forecast only modest growth and hiring for the rest of this year.