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Nonpartisan group warns against economic stimulus.

A nonpartisan group of business leaders issued a study that warned against actions to stimulate the economy that are not compatible with raising long-term economic growth.

The study, Restoring Prosperity: Budget Choices for Economic Growth, said that actions that increase the Federal budget deficit in the long-term or promote consumption rather than investment pose a 'great risk".

The study was released December 3rd by the Committee for Economic Development, a national, nonprofit, nonpartisan economic policy group whose 250 trustees are business and education leaders.

The study offered five principles to guide any short term stimulus program:

* Stimulus programs must be temporary or receive guaranteed funding in their legislation to prevent an increase in the deficit.

* A single program should be legislated to provide stimulus and long-term deficit reduction measures.

* Deficit reduction should be phased in on a time table consistent with economic recovery.

* Stimulus should emphasize private and public investments not consumption. The study expresses support for an investment tax credit for the sake of long-term growth.

* Public expenditures should rinse the nation's future productive capacity in the areas of education, worker training, physical infrastructure, and the U.S. science and technology base.

"We believe that our economic wounds are in large part self- inflicted and that reasonable economic expectations can be fulfilled if policy makers and citizens alike face up to the hard economic facts and remedies presented in this policy statement," the study said.

To ensure investment in growth initiatives, the study Called for more stable tax codes and tax policies that included among other items credits for incremental investments in equipment, research and experimentation, and a gradual reduction of the mortgage interest subsidy. The study also. called for adjustments to grant formulas and the use of user fees to ensure that public capital is appropriately related to economic costs.

Five Principles

The study offered five principles to guide any short term stimulus program:

* Stimulus programs must be temporary or receive guaranteed funding in their legislation to prevent an increase in deficit.

* A single program should legislated to provide stimulus and long-term deficit reduction measures.

* Deficit reduction should be phased in on a time table consistent will, economic recovery.

* Stimulus should emhasize private and public investments not consumption. The study expresses support tot on investment tax credit for the sake of long-term growth.

* Public expenditures should raise the nation's future productive capacity in the areas of education, worker training, physical infrastructure, and the U.S. science and technology base.
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Title Annotation:includes related information on five economic principles
Author:Barreto, Julio
Publication:Nation's Cities Weekly
Date:Jan 4, 1993
Words:411
Previous Article:1993 preview of municipal issues.
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