Senator Ron Johnson, R-Wis., Argues that Democrats “take credit for a good economy” but “do not take the blame when their tax increases cause long-term damage”.
The March 2020 Economic Policy survey by the National Association for Business Economics (NABE) found that almost half of respondents believe the Federal Reserve could tighten its monetary policy by the end of 2022. The survey, conducted between February 22 and 5 March, is a summary of the responses from the 205 members of NABE.
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The Federal Reserve has been targeting a range of 0.0% -0.25% for the federal funds rate since March 15, 2020. The overwhelming majority of respondents (88%) expect the next move in the US rate target. federal funds will be a rate hike, while 3% anticipate that the next move will be a rate cut – implying that the Fed would aim for a negative federal fund rate.
About 46% of NABE members surveyed believe that the Federal Reserve will increase the target for federal funds by 2022, while 12% say that later this year. Approximately 28% believe that interest rates will be increased in 2023 and 12% believe that the increase will occur after 2023.
About 72% of respondents expect the upper end of the Fed fund rate target range to remain at 0.25%, or even fall further, by the end of the year 2021. Only 3% of respondents expect the top of the Fed’s target range is 0.75% or more by the end of 2021, while 47% of members expect a target of 0.75% or more by the end of 2022. Almost a third of respondents (30% ) seeks a target of 0.25% or less to persist until 2022.
Almost three-quarters of respondents to the NABE survey, or 72%, believe that the current stance of US monetary policy is “almost certain”. About one in four respondents (26%) see the Fed’s current policy as “very stimulating”, compared with the 20% who support this view in the August poll, while 2% say it is “very restrictive”.
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When it comes to fiscal policy, 41% of respondents think the current fiscal policy is “right”, modestly above the 37% who supported this opinion in the August 2020 survey. Thirty-four percent of respondents indicate that current policy it is very stimulating, compared to 17% last August. About 25% of respondents believe that the current policy is very restrictive, compared to 45% in the previous survey.
Approximately one third of respondents (38%) believe that the main objective of current fiscal policy should be to stimulate more robust economic growth in the medium to long term, while another 31% believe that the main objective should be to stimulate growth as quickly as possible .
About 8% of respondents believe that current fiscal policy should focus primarily on addressing income inequality, while 7% believe that deficit and debt reduction should be the main focus. About 64% of respondents are in favor of adopting structural policies to support stronger economic growth, while more than a third of each favors the increase in tax revenues (38%) and the exercise of greater expenditure restraint (37 %). Sixteen percent believe that other actions should be taken, while 8% believe that no policy changes should be made.
The majority of respondents (67%) believe that coordination between fiscal and monetary policies is desirable, compared with 27% who say they are not.
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Regarding the assessment of Congress’ fiscal response to the pandemic, 37% of respondents rated the response as insufficient, slightly below 40% in the August 2020 NABE survey, while 33% rated the response as adequate also slightly below 37% in previous research. About 18% of respondents believe that Congress’ fiscal response is excessive, up from 11% in the August poll. It should be noted that the survey was carried out while the American Rescue Plan was being analyzed in Congress and that all responses were presented before the legislation was enacted.
Survey respondents differ when it comes to the ideal way for Congress to increase revenues. Approximately 55% of respondents are in favor of a broad-based energy or carbon tax (the same portion of the August survey), while 36% support an increase in corporate tax rates. Almost a third of respondents (29%) are in favor of increasing contributions to Social Security and / or Medicare. Almost the same proportion of respondents supports the enactment of a wealth tax (27%) or an increase in individual income tax rates (25%).
Respondents are also divided on what the Biden government’s top three political priorities should be for their first year in office. Almost half of the panelists (46%) consider combating COVID-19 a priority, followed by 40% who cite the promotion of economic recovery. About 38% of respondents suggest that investment in infrastructure is a priority, a significant increase compared to no respondent who ranked it among the top three priorities in the August survey. The next significant issues most frequently cited are addressing climate change (30%), health policy (25%) and immigration (22%).