Economists: Congress won't fix economy
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.
"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.
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.
"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.
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