The Housing Crash Recession and the Case for a Third Stimulus

Publication Date:

Publisher: Center for Economic and Policy Research

Author(s): Dean Baker

Research Area: Banking and finance

Keywords: Health insurance; Employee benefits; Home ownership

Type: Report

Coverage: United States

Abstract:

This paper makes the case for a third stimulus package to in the face of economic indicators signaling that the economy is in a deeper downturn than was expected based on previous projections. Specifically, the report calls for an employer tax-credit for extending health care coverage and another per worker employer tax credit for increasing paid time off from work. The author also makes the case for a housing policy centered on the stabilization of prices in non-bubble and deflated markets rather than applying the same efforts on markets that remain at bubble inflated levels. Finally, the paper argues that the dollar must be allowed to fall in order to adjust trade imbalances that are compounding the U.S. economic crisis caused by the collapse of the housing market.