- Few are aware that America may be on the brink of a financial meltdown. I.O.U.S.A. explores the country's shocking current fiscal condition and ways to avoid a national economic disaster.
- I.O.U.S.A. examines the rapidly growing national debt and its consequences for the United States and its citizens. As the Baby Boomer generation prepares to retire, will there even be any Social Security benefits left to collect? Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions. Throughout history, the American government has found it nearly impossible to spend only what has been raised through taxes. The film blends interviews with both average American taxpayers and government officials to demystify the nation's financial practices and policies. The film follows U.S. Comptroller General David Walker as he crisscrosses the country explaining America's unsustainable fiscal policies to its citizens. The film interweaves archival footage and economic data to paint a profile of America's current economic situation. The film also proffers potential financial scenarios and propose solutions about how to recreate a fiscally sound nation for future generations.—Anonymous
- In February 2007, the United States federal debt stood at $8.7 trillion, more than doubling over the term of George W. Bush's presidency. The situation will only get worse over time with known future spending such as payment of social security to the baby boom generation. The issues? The United States has had a history of consumption, spending more than it has available, especially during war years, most specifically during World War II and the Iraq conflict of the 21st century. There is also a history of non saving, both by the government and by individuals which leads to lack of investment moneys. And in the new global economy, the United States has the highest trade deficit in the world, reliant on other countries, especially China which holds more than half of the United States' treasury bonds. Overriding these issues is a lack of political leadership, politicians who really don't seem to know how to get the country out of this financial hole.—Huggo
- The film follows Bixby and Walker who describe systematically four serious deficits shaping the U.S. economy: budget, savings, the balance of payments, and leadership. As of the early 2008 release of the film they had created a national debt of over $9.6 trillion, $30,000 for each American. President starting from Ronald Reagan have warned about the impending debt crises, but never done anything about it. Archival footage included in the documentary features Humphrey Bogart, Bing Crosby, Stephen Colbert, Sue Herrera, Steve Kroft, Chris Parnell, Peter G. Peterson, Donald Rumsfeld, Tim Russert, Brian Williams, as well as footage of ten former U.S. presidents: Franklin Delano Roosevelt, Dwight D. Eisenhower, John F. Kennedy, Richard Nixon, Gerald Ford, Jimmy Carter, Ronald Reagan, George Bush, Bill Clinton, and George W. Bush.
In February 2007, the United States federal debt stood at $8.7 trillion (GDP of $13.5 Tr. 64% of GDP), more than doubling over the term of George W. Bush's presidency. The situation will only get worse over time with known future spending such as payment of social security to the baby boom generation. The issues? The United States has had a history of consumption, spending more than it has available, especially during war years, most specifically during World War II and the Iraq conflict of the 21st century. David Walker was the controller general of the USA in 2007. He goes on tours all over the country and talks specifically on the main effects of the fiscal profligacy.
There is also a history of non-saving, both by the government and by individuals which leads to lack of investment moneys. And in the new global economy, the United States has the highest trade deficit in the world, reliant on other countries, especially China which holds more than half of the United States' treasury bonds. Overriding these issues is a lack of political leadership, politicians who really don't seem to know how to get the country out of this financial hole.
The budget deficit section highlights the 53 trillion dollars in unfunded benefits (Medicare, Medicaid and social security) that will come due and can only be paid by tripling taxes or cutting all government spending except for that to those programs. US debt was $75 MM on the day it was founded. It went to 0 in 1835 (the only time in US history). Then civil war and WW I upped the deficit to 35% of GDP in 1919. Great depression pushed it to 44% in 1929. WW 2 pushed the debt to 112% of GDP in 1945 ($200 Bn). Debt got down to 33% of GDP in 1970's. 1980's saw Reaganomics which proposed lower tax rates for higher tax revenues. in 1988 debt reached $2.6 Tr. $4 Tr in 1990 (64% of GDP). US was now addicted to debt. In 2007 the Spending was $610 Bn in social security, $330 Bn in Medicare, $204 Bn in Medicaid, $607bn Military, $936 Bn everything else, $ 244Bn interest on debt. Income was $2.5 Tr, so a deficit of $410 Bn.
In 10 years, baby boomers will retire, and social security will demand a lot more money. Debts will rise. by 2030, social security, Medicare and Medicaid will comprise 75% of the federal budget. The debt will have to be paid off by future generations via higher taxes or lower spending. The government has a large spending program and a shrinking tax program. The topic is shunned by the media and the public (politicians are telling the people that they can have lower taxes and higher security). In the Clinton era, USA reverted to balanced budgets and by 2001, US debt was 57% of GDP. From 1998 the US federal govt was running surpluses.
The savings deficit is created by individuals living beyond their means and accumulating personal debt instead of savings. As a nation US spends more than it saves and has a negative savings rate. Most people don't have any savings. National savings rate dropped from 12.4% of GDP in 1960's to -2.9% in 2000's. US treasury has printed money, which leads to inflation and reduces the value of money. Fed has to stimulate Economic growth and reduce inflation. Stagflation is when you have inflation with a stagnant economy. Now the Fed can drop rates as Inflation will increase further and can't increase rates as economy will take a hit. In 1979, Paul Volker increased Fed rates from 10% to 20%, to bring inflation under control and move the economy out of stagnation. Greenspan cut interest rates in the 90's and made wall street happy. But Ben Bernanke took over in 2000's and won't toe the wall street line on interest rate cuts. Wall street was angry, and Bernanke was fired. Rate cuts are back.
The balance of payments problem is the trade deficit caused by the U.S. importing more than it exports, especially from China, draining money and goods from its economy. China has the greatest trade surplus in the world while the USA has the largest trade deficit in the world ($817 Bn, dead last on the list). Imports are 17% of the GDP. Eventually, US will run out of money and will need to sell assets to pay for debt. At that point, foreign governments will own large swathes of the US economy. Due to the low savings rate, increasingly the debt is being owned by foreign countries (45% currently). China owns the largest amount of US debt ($ 477 Bn). US is killing its own industrial base in favor of India and China. In the 1960's Britain went to war with Egypt over control of Suez Canal. Russians supported the Egyptians, and US failed to persuade UK to step down (they wanted to avoid military action). so, US threatened to sell off UK debt thereby destroying the British currency. UK withdrew from the Suez Canal.
The leadership deficit is the lack of civic or political leaders willing to make it clear Americans must cut government spending, pay more taxes, save more of their personal income and use less imported materials. Each US family now owes the Federal Govt $90K and rising fast. George Bush Jr double foreign debt in 6 years (to $2 Tr). In his tenure US borrowed 65% of all money worldwide. He passed huge tax cuts in 2000 and spent hundreds of billions on the wars in Iraq and Afghanistan. The dollar took a dive, as US also cut interest rates to record lows. Cheap money fueled the mortgage market. From 2000 to 2004, debt increases from $5.6 Tr to $7.4 Tr. Bush is re-elected. Debt goes from 54% to 66% of GDP during the Bush era. George Bush fired his treasury secretary when he argued against tax cuts in his first term. the 53 trillion dollars in unfunded benefits include $11 Tr of liabilities, $7 Tr is social security, $ 26 Tr in Medicaid A, B, $8 Tr in Medicare D and $1 Tr miscellaneous. Taxes will need to go from 20.5% to 42% to fund these pending liabilities. By 2040 Debt to GDP will be 244% and will sky rocket after that.
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