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Economists want more stimulus next year, spending cuts in 2014

A survey of economists showed that most would prefer fiscal policy to stay the same or be more stimulative next year.
(Francine Orr / Los Angeles Times)

Most economists want the federal government to stay the guillotine on spending until 2014, with an overwhelming majority saying that uncertainty about fiscal policy is holding back the economic recovery.

More than two-thirds of economists surveyed by the National Assn. of Business Economics said they want fiscal policy to remain the same or be more stimulative next year.

Most said that payroll tax cuts should be extended through 2013, but three-quarters said the cuts shouldn’t be made permanent.  

More than half of the 236 economists surveyed said the government should start tightening the budget the year after, according to the report Monday.

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Short term interest rates in the U.S. will remain about the same over the next 12 months, according to most respondents. The study, which was conducted before the Federal Reserve’s Federal Open Market Committee announced its most recent round of quantitative easing, found just one quarter of economists backing such stimulus action.

Down the line, dealing with the national deficit should involve a mix of tax hikes and spending cuts, according to 90% of respondents. Either way, nearly as many economists say that the recovery is suffering because fiscal policy isn’t set in stone.

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