CNNMoney Poll: Economists Don't Expect Congress to Fix Economy

Thursday, 19 Apr 2012 07:22 AM

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There are plenty of ideas and blueprints out there over how to fix the U.S. economy, although Congress would rather bicker over them instead of putting one into action, a CNNMoney polls finds.

A CNNMoney survey of economists finds most don't expect Congress to pass any kind of economic assistance soon, and only a third of the 16 responding expect any congressional action in 2013, after the election.

Only one expects the country's lawmakers to agree on economic reform policy and voting into action in a lame-duck session after the election but before the end of the year.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

Nothing will happen before the election, the poll finds.

"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 do something, CNNMoney adds.

Tax reform would be nice but it's not going to happen.

"Comprehensive tax reform would be great, but highly unlikely," says David Wyss, a fellow at Brown University.

Since the downturn, the Federal Reserve has worked to stimulate the economy via monetary policy tools including interest-rate cuts and injecting liquidity into the economy by buying bonds from banks, a measure known as quantitative easing that seeks price stability and increased hiring.

Some say it's up to Congress and the White House to take charge by tackling deficits and spending and overhauling tax codes.

However, that would involve political parties coming to agreement, which has proved to be difficult in the past, as evidenced by the brinkmanship over the 2011 debt ceiling impasse that nearly threw the country into default and resulted in a downgrade from the Standard & Poor's ratings agency.

Before year's end, the U.S. will face the expiration of tax cuts affecting all taxpayers, automatic budget cuts, while the debt ceiling will take center stage again, policies that will need compromise from the White House and both parties in Congress.

Long-term challenges remain as well, such as improvements to education systems in the U.S. and elsewhere to better train the leaders of tomorrow, noted market observers say.

"Central bank actions cannot deal with these issues. Simply put, these institutions do not have the instruments or expertise to deal with the challenges of labor training and retooling," Mohamed El-Erian, CEO of Pimco, the world's largest bond fund, said in a recent lecture before the Federal Reserve Bank of St. Louis.

"Where the global economy goes from here will depend less on the actions of central banks and more on whether others, including other government agencies and private sector participants that have the ability to act but lack sufficient willingness to do so, finally step up to the plate."

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable



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