SOURCE: Ewing Marion Kauffman Foundation

Ewing Marion Kauffman Foundation

February 17, 2011 06:00 ET

Leading Economics Bloggers Believe Tax Cuts Extension May Stimulate Job Growth, but Not This Year

Kauffman Foundation's First Quarterly Survey of 2011 Also Finds Bipartisan Support for Health Benefits to Be Treated as Taxable Income

KANSAS CITY, MO--(Marketwire - February 17, 2011) - After a year of increasing pessimism about the U.S. economy, the country's top economics bloggers see a bit of hope on the horizon in 2011, according to a new Ewing Marion Kauffman Foundation survey released today. Although 77 percent continue to describe the economy's overall condition as "mixed," "facing recession" or "in recession," 23 percent now believe the economy is "strong and growing" or "strong with uncertain growth" -- an increase from last quarter.

"Economics bloggers continue to see ahead of the curve," says Tim Kane, the survey's director and a senior scholar at the Kauffman Foundation. "After previously anticipating the likelihood of the sluggish recovery, bloggers this quarter suggest smart growth strategies for the coming years. They are all for entrepreneurship, but say the way to accelerate innovative businesses is by reducing barriers, not targeted government spending."

With job growth an ongoing concern, bloggers this quarter were asked why high unemployment persists. An overwhelming 95 percent agreed that uncertainty is making firms reluctant to hire. They also cited structural changes in the demand for labor and a decline in aggregate demand. Asked whether they thought the recent extension of the 2001-3 tax cuts and the Social Security tax cuts would jump-start an economic recovery and job creation, a majority (66 percent) believe that those measures would be "effective" eventually, but not during 2011.

Survey respondents also took on the issue of the 2010 health reform bill. While opinions differed about whether it should remain or be repealed, seven out of 10 economics bloggers agreed that health benefits should be treated as taxable income.

"One of the drags on economic growth is runaway health care costs, which the bloggers point out is also a wedge on job creation and wage growth," says Kane. "Ironically, the solution to that is fundamental tax reform. President Obama's deficit commission called for treating health benefits as taxable income, and the Kauffman bloggers wholeheartedly agree."

Other research highlights include:

  • 92 percent recommend that the government "reduce regulatory burdens and fees on new firm formation" rather than implementing policies that would subsidize new firm formation. This level of consensus is noteworthy given the largely nonpartisan identification of the respondents.
  • Only 10 percent of bloggers believe the economy is doing better than official statistics indicate.
  • Projecting three years ahead, economics bloggers expect global output, inflation, and interest rates to rise faster than anything else. The happy news is that two-thirds of respondents anticipate employment growth in the United States.
  • 92 percent favored trade agreements with South Korea, Colombia and Panama. A majority -- 72 percent -- also supported the adoption of recommendations from the president's deficit commission.

For this Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers (www.kauffman.org/outlook), the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave's econolog.net December 2010 rankings. The Foundation surveys the bloggers each quarter about their views of the economy, entrepreneurship and innovation.

Eight core questions and four topical questions were designed in coordination with a distinguished board of advisors, which includes:

Robert X. Cringely - I, Cringely
Laurie Harting - Palgrave's EconLog
Paul Kedrosky - Infectious Greed
Lynne Kiesling - Knowledge Problem
Donald Marron - DMarron.com
Mark Perry - Carpe Diem
Wade Roush - Xconomy.com
Allison Schrager - Free Exchange
Nick Schulz - Enterprise Blog
Yves Smith - Naked Capitalism
Alex Tabarrok - Marginal Revolution
Mark Thoma - Economist's View

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. In addition, the Foundation focuses on initiatives in the Kansas City region to advance students' math and science skills, and improve the educational achievement of urban students, including the Ewing Marion Kauffman School, a college preparatory charter school for middle and high school students set to open in 2011. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

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