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Dean Baker, Co-Director Center for Economic and Policy Research

The Economy Wreckers: A.K.A. “Deficit Hawks” Presentation to the U.S. Chamber of Commerce October 18, 2010. Dean Baker, Co-Director Center for Economic and Policy Research. The economic collapse was entirely foreseeable and preventable

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Dean Baker, Co-Director Center for Economic and Policy Research

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  1. The Economy Wreckers: A.K.A. “Deficit Hawks” Presentation to the U.S. Chamber of CommerceOctober 18, 2010 Dean Baker, Co-Director Center for Economic and Policy Research

  2. The economic collapse was entirely foreseeable and preventable • The obsession with the deficit distracted attention from the impending crisis • The current economic situation is a disaster for non-corporate America • The deficit problem was and is a broken health care system

  3. The story of the collapse was an $8 trillion housing bubble • Collapse led to a $600 billion plunge in annual consumption • Collapse led to a $600 billion plunge in annual construction • Annual S&L spending would have fallen $150-$200 billion, absent stimulus • Total shortfall in annual demand @ $1350-$1400 billion • Bubble was easy to see – unprecedented 70 percent run-up in real house prices

  4. Policymakers Missed the Bubble • deficit hysteria – fiscal wake-up tour, economic sleepwalking tour • Washington Post – hype the deficit every day, ignore the bubble • Peter Peterson -- $1 billion to hype the deficit

  5. No Consequences for Missing the Bubble – Worst Economic Disaster in 70 years • blanket amnesty: “who could have known?” • no policymakers or regulators were fired or even missed a promotion

  6. Devastated Economy • more than 25 million unemployed, underemployed or dropped out of workforce • savings of near retirees devastated – median near retiree has net worth of $180k • millions facing loss of home

  7. Black Teen Employment to Population Ratio

  8. Corporate Profits Fully Restored

  9. Continued Deficit Hysteria Obstructs Stimulus • Washington Post’s yellow journalism • Peter Peterson’s billion

  10. The Long-term Deficit Problem Is a Health Care Cost Problem

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