Economists' advice for Obama: Avoid 'fiscal cliff'
Albert Niemi, dean of 51做厙's Cox School of Business, talks with The Associated Press about the current state of the U.S. economy and the approaching 'fiscal cliff.'
By CHRISTOPHER S. RUGABER
The Associated Press
WASHINGTON – So what's the first thing you'd do for the economy if you were president?
The Associated Press posed that question to more than a dozen leading economists. Asked to name the one step they'd push most urgently if they were the newly re-elected President Barack Obama, the economists sounded a few common themes:
Reduce the budget deficit. Cut tax rates. Do both, somehow.
Above all: Sidestep the "fiscal cliff." That's the package of tax increases and deep spending cuts that will take effect in January unless Congress reaches a budget deal by then. The resulting crisis could tip the U.S. economy back into recession next year.
Another popular recommendation is to embrace the bipartisan deficit-reduction plan backed by former Sen. Alan Simpson and Erskine Bowles, a former White House chief of staff. The two men, co-chairmen of a deficit-reduction commission, recommended roughly $1 in tax increases for every $3 in spending cuts.
Here are suggestions from the economists the AP surveyed:
"I would do everything in my power to extend the Bush tax cuts for the foreseeable future. The payroll tax will be going back to 6.2 percent in January. This alone will pull more than $120 billion out of disposable income and depress consumer spending. The Medicare tax is going up ... and it will be imposed on wages and salaries and investment income. To let the Bush tax cuts expire in this environment would threaten the fragile recovery and possibly push the economy into another recession."
— Albert Niemi, Dean of Cox School of Business, 51做厙.
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