I.O.U.S.A.
Posted on April 7, 2009 at 8:00 am
Two guys who are super-smart and super-rich, Warren Buffet and Pete Peterson and one guy who is just super-smart, former Comptroller General of the United States David Walker have a message for Americans — don’t spend money you don’t have.
Think of Maxed Out
Using the now-familiar combination of folksy faux-archival educational movies, person-on-the-street interviews with completely clueless citizens (“I thought the US was lending money to other countries,” one says when asked about the size of our debt), bad news from a lot of very erudite talking heads and some really, really scary charts, “IOUSA” tells us that while we have been lowering taxes and increasing benefits we have been pushing onto our children and grandchildren the fastest-growing debt load in history. We finance this by selling our debt securities to countries that can afford them, like China. Foreign interests hold more than half of U.S. debt. China owns more than $500 billion worth. So does Japan. The movie says that the inability of Great Britain to defend the Suez Canal in 1956 was in part due to its vulnerability caused by post-WWII debt. It is certain that having countries like China, Japan ($583.3 billion), and the oil exporting countries ($170.4 billion) holding our I.O.U.’s puts a worrisome burden on our ability to engage in diplomatic negotiations.
Most troubling is that the Enron-like accounting that hides the real debt level for political expediency. Just as Enron used “special purpose entities” to keep its debts off the balance sheet, the government does not include Social Security and the costs of other benefit programs in its financial statement. The entitlement programs currently in place will bankrupt the system when the baby boomers start receiving benefits.
It is difficult to make a dry and disturbing subject like budget deficits seem interesting and vital. There are no cuddly polar bears trying to hold on to shrinking ice caps or visceral individual stories like those in Michael Moore’s movies. But this movie makes a devastating case for the consequence of our current “rob Peter to pay Paul” budgetary shell game. It is like fiscal musical chairs; when the music stops, there will be no place to sit.
America has redefined the rules and shown the world new possibilities since our beginning. Now we face the direst challenge in our history — to reverse what has always been the inevitable cycle of history and create sustained growth and prosperity. This movie asks the important questions and makes it clear that it is we who must answer them.
For the past few years, I have felt that the deficit is the single greatest problem facing this country because it undermines / will undermine our ability to pay for all other things. Longer-term foresight and cooperation are needed by political leaders.
Any idea if this movie will be released in theaters?
Can’t wait see this this one. Please fix the typo; “trillions” should be “billions” in your discussion of treasury securities. I know numbers this big are hard to grasp, but billions is scary enough; trillions would be game over. Otherwise keep up the good work.
You’re right, John — China has $503 billion (not trillion) of our treasury securities. Thanks and I have corrected the error. China is selling some of those securities, by the way. They sold $3 billion in May, the first time they have decreased their holding.
Brian, the movie is already playing in some theaters. To find out more about its release schedule, check out the website, where you can get on a list for email updates. I agree with both of you about the seriousness of this problem and really appreciate your taking the time to comment. We are much too close to game over.
It’s astonishing that at this late date, the idiots in Washington are paying for a war solely by borrowing from our grandchildren. The hypocrisy and the intellectual dishonesty are stunning. I hope that the medium of movies can finally penetrate the consciousness of all those die-hard Bush / Cheney supporters out there.
I only saw that there would be one showing Aug 21. Any other way to see this that any readers here know about?
From their website:
“Fathom and Roadside Attractions present I.O.U.S.A.: Live with Warren Buffett, Pete Peterson & Dave Walker in an exclusive one night event in select movie theatres nationwide on Thursday, August 21st. This event will include the critically-acclaimed documentary, I.O.U.S.A., and a LIVE discussion about America’s economic crisis and what we can do to change course.
This one night event will be shown LIVE at 8:00pm ET / 7:00pm CT / 6:00pm MT / and tape delayed at 7:30pm PT.”
The Bush admin has sure done their part to mess us up but of course Congress has the purse strings and are no better, really. In a Democracy that is moving toward the lowest common denominator, I expect any President these days will have quite a challenge balancing the budget. Bush had 9-11, Katrina, tremendous flows of illegal aliens and two wars in the Middle East to blow money on. He and congress just bit off more than the American public could chew. It is said that democracy can not survive, as over time, everyone realizes that they want to be on the receiving end and not the ever increasing paying end. We elect those that promise us the most for the least effort. In 2008 if a candidate stood up and said we are going to pay now to get this mess straightened out then they wouldn’t have made it past Iowa. In business we have revenues and expenses, same as government. Either we increase revenue and lower expenses or some combination thereof or we go out of business. USA needs more job creation and making it more desirable for those with access to capital agreeable to creating jobs right here in the USA. Therefore lower taxes on capital gains structured properly is great. It was wasteful and very costly to remove capital gains taxes on a personal residence. Tie lower capital gains rates directly to job creation in AMERICA for AMERICAN citizens. It is time to now increase the taxes on earned income for all above the minimum level ($40k or higher) depending on the state. Our government adjust maximum loan amounts by state so why not federal income taxes. Tax the hell out of companies that hire illegals. Even with reasonable tax increases the government must make real progress on the expense side. Our federal government has lost their way; it NOW has to tone down its expenses. Create a more encouraging environment for employers to create jobs, not more on the dole, choose our wars more carefully, and lower our SS payment growth while removing the tax penalty for our elderly that work. Our federal government must get out of state affairs. Protect our country yes, encourage the development of alternative energy while opening the oil pumps to buy us time, be a lender of last resort, help those that are physically unable to work, encourage a friendly business environment to put the rest of us to work and tax us fairly. If we see the federal government showing some control in its spending then we can more easily accept doing our part to help their revenue. Whether the government admits it or not we look to them for direction in our personal life. If all we see is a short sighted me-me-me, overspend and borrow what do we do? What is the message? Spend now; the future is someone else’s problem. The greatest Ponzi scheme of all time, called the USA federal government, is coming to a close. The GREATEST depression and/or worse of all time is coming as sure as the sun comes up in the east. If you kinda agree, then live below your means, lower your housing and car expenses, put 5% or more of your money in silver and gold coins, avoid living in areas with high concentrations of illegals, prepare to be able to economically fend for yourself. Big Brother is going to get desperate soon.