Tuesday, Aug. 17, 2004 | 9:03 a.m.
WASHINGTON -- Terrorism has replaced weak employment growth and the ballooning budget deficit as the biggest immediate threat to the economy, the National Association for Business Economics said today.
The NABE said that terrorism and defense issues were picked by 40 percent of its survey panel as the biggest short-term threat facing the economy, well ahead of government spending and the deficit, which was selected by 23 percent of the 117 NABE members surveyed.
"Terrorism produces the greatest short-term risk to the economy, and that's where NABE's members believe the next president should spend most of his effort," said Duncan Meldrum, president of NABE and chief economist for Air Products and Chemicals Inc.
In response to a separate question on the top priorities for the next administration, the NABE survey respondents said the next president should devote 25 percent of his time to the Middle East and terrorism.
In second place, the survey group recommended 17 percent of the next president's time and energy be devoted to the budget deficit, which is projected to hit a record $445 billion this year.
"The time has come to tackle reducing the federal deficit, now that it's no longer needed to stimulate the economy," Meldrum said
The deficit needs to be brought under control primarily by cutting government spending, in the view of 51 percent of the NABE group while 32 percent said tax increases should be emphasized.
On the spending side, cutting farm subsidies was favored by 50 percent of the panel while 21 percent recommended reductions in overall government spending and 11 percent said efforts were needed to trim government health care costs.
Both President Bush and his Democratic challenger, Sen. John Kerry, have pledged to cut the deficit in half over the next five years although both campaigns contend that the opponent's budget numbers do not add up.
Meldrum said in addition to tackling the deficit, the NABE panel's priorities for the next president were dominated by concerns about the rising cost of caring for an aging population.
The panel suggested that the next president needed to spend 16 percent of his time on health care reform and 14 percent on overhauling Social Security to prepare for the impending retirement of the baby boomers.
Energy policy should occupy 11 percent of the next president's time followed by trade policy at 8 percent and education at 6 percent of his time, according to the NABE survey.
In the last NABE policy survey in March, only 19 percent of those surveyed had selected terrorism as the top risk to the economy. In that survey, dealing with the deficit and weak job growth tied for the top spot, selected by 25 percent of panel members.
But the 40 percent in the current survey who cited terrorism and defense as the greatest risk was the highest showing for this category since 41 percent picked it in March 2003, around the U.S. invasion of Iraq.
The current survey was conducted between July 23 and Aug. 5, a period dominated by news coverage of the Sept. 11 commission's report and the upgrading of a terror warning against financial institutions in New York City, Washington and Newark, N.J.