WASHINGTON (Reuters) - A sound plan is needed to reduce the budget deficit over the next 10 years, but wholesale government spending cuts should not be the core of the program, according to a new survey of economists.
The National Association for Business Economics’ poll of 196 members found more than 70 percent opposed the full implementation of $85 billion in federal budget cuts known as the “sequester” that were set to start taking hold last Friday.
The International Monetary Fund last week warned that the spending cuts, if fully implemented, could shave at least 0.5 percentage point off gross domestic product this year.
“A significant majority of panelists was opposed to full budget sequestration,” NABE policy survey committee chairman Jay Bryson said in a statement.
“However, there was nearly unanimous agreement that some form of deficit reduction should be enacted over the next 10 years,” said Bryson, who is also a senior economist at Wells Fargo Securities.
Economists favored spending cuts to reduce the deficit over the long-term, with most respondents indicating that cuts should be focused primarily on entitlement programs - Social Security retirement and Medicare healthcare.
About one-third of respondents who supported cutting the deficit also favored an equal mix of spending cuts and tax increases. That compared to 45 percent in the previous survey.
Only 12 percent believed the deficit should be reduced “mostly” by raising taxes. Less than one percent believed that the budget gap could be reduced “only” through higher taxes.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama