Threat of Fiscal Disaster Not as Dire as Filmmakers Claim
IOUSA point-of-view misleading and one-sided
For Immediate Release: October 22, 2008
Contact: Alan Barber, (202) 293-5380 x115
WASHINGTON, D.C. – Amid the turmoil and confusion of the current financial crisis, the new film, IOUSA, tells a story of America’s addiction to debt that will force the nation off a fiscal cliff. And while there is some cause for concern, a new report by the Center for Economic and Policy Research (CEPR) points out that many of the claims in the movie are misleading and out of context and could lead the public to make ill-informed policy decisions.
“While there are serious economic issues the nation needs to be concerned about, the views presented in IOUSA are misleading and one-sided.” said Dean Baker, an author of the report and Co-Director of CEPR. “The fact that ballooning health care costs are at the heart of our budget problem, not a Social Security program that will remain fully solvent through 2049 as implied in the movie, are just two examples of the mis-statements found in the film.”
The report, “IOUSA Not OK: An Analysis of the Deficit Disaster Story in the Film IOUSA,” lists seven points crucial to looking at the topics discussed in IOUSA. In keeping with CEPR’s mission statement of helping to inform the public on economic issues affecting their choices on policy issues, the study features a minute-by-minute viewer's guide of the film to highlight potentially misleading assertions in the movie.
The seven key facts in the CEPR study include:
· The national debt is not a generational transfer
· The budget deficit is not what causes the trade deficit
· The economic reality is that a large trade deficit means that we must have a large budget deficit, extremely low private savings or some combination of the two
· The stock and housing bubbles are the main cause of the nation’s low savings rate
· During times of economic weakness, deficit spending helps the economy grow
· Rising health care costs are at the core of the federal budget deficit problem
· Social Security will remain fully funded through 2049
“The American public has a right to know the whole story behind our current economic conditions so that we’re not railroaded into making bad policy choices,” Baker continued. “Unfortunately, IOUSA gives less than a full accounting of the issues at play.”
The study also points out several of the people positively portrayed as fiscal champions in the film who, in actuality, played a part in the nation’s current economic problems. Of the more prominently featured ‘heroes’ in the film, Alan Greenspan let the asset bubbles in the stock and housing markets grow unchecked and played an active role in the deregulation of credit default swaps. As well, Peter Peterson, an investment banker famous for the statement that he would give back his Social Security check amassed a huge fortune in part via the “fund managers’ tax break” which allowed him to pay a substantially lower tax rate than teachers and fire fighters.
The report concludes with a viewer’s guide pointing out the fallacies presented in the film. Each inaccurate or misleading statement is followed by a full explanation and correction.