WASHINGTON - Business economists believe the federal budget deficit poses a greater threat to the U.S. economy than imports, inflation, oil prices or even terrorists, according to a survey released yesterday by a group that itself has been victimized by terrorists.
The National Association for Business Economics said that as recently as August, 40 percent of its members viewed terrorism as the No. 1 short-term threat to the world's largest economy.
But the 172 economists polled in early March dropped terrorism to second place, giving it 24 percent of the vote. Now, 27 percent of respondents say the top threat is government spending and fiscal deficits.
For this particular group, that's saying a lot.
On Sept. 11, 2001, the association was meeting at the Marriott hotel inside New York's World Trade Center. When terrorists flew a plane into the tower above them, the economists fled. All survived.
Diane Swonk, chief economist with Mesirow Financial in Chicago, is a former NABE president - the very one who booked the meeting for the World Trade Center. She was there when the bodies and debris began raining down.
More than three years later, the intense fear of terrorism "is receding," she said. "Many of us survived 9/11 together and what we are realizing is that we did recover," both as individuals and as participants in a remarkable economy.
In those grim weeks immediately after the attack, many economists questioned whether financial markets and consumer confidence could spring back. Swonk said they see now that the U.S. economy is so large and flexible that it can work around even an immense attack.
"We were better able to absorb a body blow than we realized," she said. "We know now that we can be attacked and our world doesn't stop."
Swonk was among those who ranked the budget deficit ahead of terrorism on her worry list.
While the country might be able to cope with a huge attack, $3-a-gallon gas and Chinese imports, the economists fear it may not be able to overcome budget ineptitude.
The White House and Congress are promising to rein in the deficit, which hit a record $413 billion in the fiscal year that ended Sept. 30. But the latest figures are not encouraging. In February, the Treasury ran a record monthly deficit of $113.9 billion, up from a $96.7 billion shortfall in February a year ago.
Such numbers prompted 76 percent of respondents to say fiscal policy is too loose. Nearly a third said they expect deficits to increase. Just 9 percent said Social Security is "in crisis," but 69 percent believe it has serious problems that should be fixed now. The economists rated the odds of Congress passing a major overhaul of the federal program at only 36 percent over the next two years.