Published September 27, 2012
Let's get this straight: Economists think our government should raise taxes and cut spending. They think the Federal Reserve should crank back its free-money policies. They think all of this should happen, oh, um, ah, eventually. And then they think: Gosh darn it. Do you know what's holding back our economic recovery? Uncertainty in Washington. We sure wish we knew when they were going to do something.
The National Association for Business Economics, or NABE, surveyed 236 of its members and found:
"There is overwhelming support among NABE members for a balanced approach to eventual fiscal tightening," reads the survey, released Monday. "The vast majority of panelists feels that uncertainty about fiscal policy is holding back the pace of economic recovery."
This is an organization that bills itself as "the premier professional association for business economists and others who use economics in the workplace." It boasts that since 1959, it has attracted the most prominent figures in economics, business, and academia.
These are our thinkers. And you can bet that if they have drunk uncles, they are thinking: Yeah, he should quit drinking, I overwhelmingly support that eventually, but not now because he is still buying the rounds.
We have had two major wars, skyrocketing health-care costs, a recession and four years of historically high unemployment. The U.S. government borrows 40 cents of every dollar it spends. Digits on National Debt Clock are spinning wildly after hitting the $16 trillion mark. And "eventual" spending cuts and tax increases is the best idea our economists have?
Of those surveyed:
--45% called for more fiscal stimulus spending in 2013 and 22% said it should remain at the level it is now. Only 33% said it should be more restrained. Looking out further, 54% said it should be more restrained in 2014 .. as in tomorrow, tomorrow, tomorrow.
--45% said that when we finally do get around to cutting the deficit, we should do it with both tax increases and spending cuts. The second-largest block, 31%, said it should be done only with spending cuts, as in don't tax me. I'm an economist.
--87% said uncertainty about fiscal policy is holding back the recovery. But what uncertainty? Most economists and politicians seem to agree that whatever we do, we should do it later. It doesn't get any more certain than that. Just ask your drunk uncle.
--59% said the Fed's monetary policy was "just about right." Only 14% call it "too restrictive." But the survey was undertaken before Sept. 13, when the Fed launched a third round of quantitative easing, or QE3. This is a plan for the Fed to buy an additional $40 billion a month in mortgage-backed securities, and it has no end date. This means that Fed needn't care one widget what these economists think the next time they are surveyed. QE3 is forever, and that's just about right.
--53% called the Fed's QEs a success. (Easy to say until the economy eats your job.)
--More than 60% said that inflation will remain near the Fed's 2% target, despite its relentless pursuit of the 0% loan. (I guess it is the new paradigm: Printing more money equals lower inflation.)
It is one thing when politicians say we must cut the deficit without raising taxes or cutting spending any time soon. They have to get elected. Plus, the fact that so many of them are pathological liars and ideologues with dangerously low IQs has been enshrined our collective anthology of Washington cliches. Economists, on the other hand, fancy themselves trained scientists. They are supposed to be honest, objective and smart.
Somehow, the survey didn't ask the most relevant question. What happens if the Fed keeps ratcheting up its balance sheet to the tune of trillions of dollars, and Washington keeps borrowing trillions more, and after all those trillions, our economy still doesn't create enough jobs?
I'll take a wild guess at the answer: 99.9% of economists don't want to think about it.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at firstname.lastname@example.org or tellittoal.com)