Which debt plan do economists favor? Neither

In a CNNMoney survey of economists, six out of 18 favored Paul Ryan's debt reduction plan, four sided with President Obama's proposal, and eight chose neither plan.In a CNNMoney survey of economists, six out of 18 favored Paul Ryan's debt plan, four sided with President Obama's proposal, and eight chose neither. By Annalyn Censky, staff reporter


NEW YORK (CNNMoney) -- This month, leaders from both parties introduced two major plans to cut the nation's long-term debt. But economists don't like either one.

In an exclusive CNNMoney survey, eight out of 18 economists polled said they believed neither President Obama's nor Republican Paul Ryan's plans for deficit reduction are in the best interest of the nation's economy.

Another six economists sided with the Republican plan, while four supported President Obama's proposal.

"Partisan rhetoric has been extremely unproductive, and is pushing us closer to a crisis," Diane Swonk, chief economist at Mesirow Financial, said in an e-mail.

Earlier this month, Congressman Ryan proposed $6 trillion in cuts over the next 10 years, tax cuts for the wealthiest tier of Americans and radical reforms of Medicare and Medicaid.

And last week, President Obama surprised the opposition by unveiling a $4 trillion debt reduction plan, that left Medicare and Medicaid largely intact.

In the end, critics say it's not the timeframe that matters. It's how the plans keep the economy growing, in spite of spending cuts.

And neither plan seems to meet that standard.

"Each proposal falls short of achieving deficit reduction while stimulating economic growth," said Bill Watkins, executive director of the Center for Economic Research and Forecasting.

Bernard Baumohl, chief global economist with the Economic Outlook Group, who sides with Obama's plan, says he does so because Ryan's cuts are too draconian and derail important health programs.

"Terminating Medicare as it now exists and handing out vouchers instead is a non-starter," he said.

Proponents of Ryan's plan take the exact opposite stance, criticizing Obama's plan for being too soft on the growing burden of government health programs. Unless big changes are made, Medicare and Medicaid alone are predicted to account for a 36% chunk of government spending by 2020.

"The Ryan Plan more fully addresses the problems of Medicare and Medicaid and recognizes the necessity of reducing the burden on the federal budget of health care costs," said Lynn Reaser, chief economist at the Fermanian Business and Economic Institute.

Most of the economists who responded to CNNMoney's survey said they prefer a third option -- compromise.

"We need to both cut spending and raise taxes," said Michael Strauss, chief economist with Commonfund Asset Management Company.

CNNMoney's Chris Isidore contributed to this report To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,399.67 19.26 0.12%
Nasdaq 4,316.07 57.64 1.35%
S&P 500 1,904.01 17.25 0.91%
Treasuries 2.18 -0.02 -0.82%
Data as of 7:20am ET
Company Price Change % Change
Apple Inc 99.76 3.49 3.63%
Bank of America Corp... 16.26 0.00 0.00%
Pfizer Inc 27.93 0.05 0.18%
Facebook Inc 76.95 4.28 5.89%
Microsoft Corp 44.08 0.00 0.00%
Data as of Oct 20

Sections

Better-than-expected iPhone sales and record Mac sales lifted Apple in its fiscal fourth quarter. More

China's economy has clocked its worst quarter in more than five years, raising concerns over Beijing's ability to meet its own annual growth target. More

In three years, all Chicago high school students will have to take a coding course in order to graduate. More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

Detroit has 80,000 dilapidated properties and 100,000 empty lots. It's trying to get more people like Antjuan Wyatt to buy them. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.