I.O.U.S.A. the Movie - A Review One Year Later

by Xin Lu on 15 September 2009 15 comments

I.O.U.S.A. is a documentary film released in late 2008 by the Peter G. Peterson Foundation that focuses on the national debt of the United States. I finally watched it this weekend and I am glad that I did. Although this review is one year late, I think the topics addressed in I.O.U.S.A. are even more important now for the Americans who despise debt.

The two main characters in the film are David Walker of the Peter G. Peterson Foundation and Bob Bixby of the Concord Coalition. David Walker served as the Comptroller General of the United States and head of the Government Accountability Office (GAO) for ten years. The GAO is a part of the legislative branch of the government responsible for auditing the vast federal budget of the United States for waste and inefficiency so Walker is extremely qualified to speak about government spending. In the film he partnered up with Bob Bixby and a couple other foundations to run Financial Wakeup Tours around the country that educated people about the national debt and deficit spending. These two men are obviously passionate about their cause, but what I found a bit sad was that they were almost like modern Cassandras because it seemed that very few people were listening. For example, Bixby was interviewed by a local news station at a Financial Wakeup Tour, but that story did not make the news at all.

The film gave a quick history of how the United States racked up so much debt, and also gave a summary of the four major deficits America is facing now. The four deficits were named as the federal budget deficit, the savings deficit, the trade deficit, and leadership deficit. These were all explained in an easily understandable manner.

The federal budget deficit is caused by the government spending beyond its means. This year the federal budget deficit is an astronomical $1.6 trillion.

The savings deficit is caused by American households living beyond their means. This has been very obvious in the past couple years as easy credit drove savings rates to negative territory. However, savings rates seem to be heading back up this year so perhaps people are starting to see the problem with debt.

The trade deficit was explained by Warren Buffet in the movie and he talked about "Squanderville" and "Thriftville." The basic gist is that America imports much more goods than it exports, and although this could last a while it cannot last forever.

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Finally, the leadership deficit seems to be the worst problem of all. Most politicians get elected on platforms of tax cuts and public spending, and that just pushes the deficits higher and higher.

Some of the film's content was a little prophetic. One man said that it would take a crisis for Americans to change their ways, and perhaps that is happening now. At the time of the filming the national debt was up to around $9 trillion. The end of the film stated that the national debt would be $10 trillion in 2009, and I am sure that sounded a bit alarmist then. However the fact is that the national debt is now 11.8 trillion and increasing at the rate of $100 million a month. According to the Treasury, the current debt ceiling of $12.1 trillion may be reached in mid October and Congress would have to raise the ceiling again soon. I think it is amazing and frightening how much the national debt has grown in just one single year.

I liked this film very much because it was very educational and strictly non-partisan. The national debt is something every American resident should care about because it does affect each individual's financial health. The United States will need to start to live within its means by cutting spending and/or increasing revenue and it does not seem like that is happening because everyone wants more public spending and less taxes. The final point of the film is that people need to vote with the national debt in mind, because it is immoral to spend the money of future generations.

You can watch a 30 minute version of I.O.U.S.A. online, or watch it through instant play on Netflix. It is also available on DVD (affiliate link).

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Guest's picture
marie

My intermediate accounting professor showed us the 30 minute video and I had thoroughly enjoyed it. Really made me understand how bad the America economy was. I could not believe what they said about the negative savings rate.

Guest's picture
valletta

After being unemployed for the last two years (ouch!) I start my new job (at my old great employer, company named for a fruit :) next week and my husband and I have committed to paying off our debts within one year while bossting savings in 401k and IRA. After one year we will live on one salary and save/invest the rest. Since we were able to live off savings these last two years, very frugally, we should be able to live off one salary without much pain. It's been a very tough two years, a situation we NEVER would have imagined.
I vow to always have an emergency fund of one year's expenses going forward.

Guest's picture
amargeson

Keep in mind that deficit spending must occur during recessions and depressions unless we want the recessions and depressions to be more severe and protracted.

I agree that generally speaking deficits are bad, but now is not the time to be focusing on deficit reduction and paying down the national debt. It's unfortunately the time to drive it up more.

Guest's picture

It’s a really informative (eye-opening) documentary about America's financial crisis. It starts with a general premise that many average American like us really don’t know about federal deficit and goes on explaining causes that lead to this trillions of dollar debt.

Guest's picture
RBAROSS

The only way that the US will stop living on a deficit at the federal level is if Congress passes a law saying they must have a balanced budget like each individual state does. The sad thing is, is the 2010 federal budget has 62% going to the military. We need to stop going to war other places and defend ourselves on our own land, and become more self dependent. If we keep going after terrorist in other countries, or fighting for oil, we will be at war forever.

Guest's picture
funkright

is that you are insular, self focused.. we (read: world) are all in this together. Thinking of 'just ones self' does no good, not only for the USA, but for everyone else.

That said, it's rather pathetic, the amount of the money that goes to your defense budget.. If they could take that and dedicated 1/2 to feeding and improving the world, just imagine what could be accomplished.

The Roman empire lasted 1000 years, I don't think the USA will last half that long..

Guest's picture
amargeson

RBAROSS,

A law that forces a balanced budget curtails the government's ability to deficit spend in times like now when it absolutely must be done. The federal government should be spending less than it takes in from tax revenues when the economy is growing, and spending more than it takes in when the economy is in a recession. This is absolutely essential to stabilize the natural peaks and valleys of mainly free market economies.

Balanced budget requirements would tie the governments' economic hand and cause the recession we're in now to last substantially longer and be far worse than they are.

I share in your frustration that we do have a "leadership deficit". Instead of doing what they were supposed to do such as during the 90's (deficit spend in the recession of the early 90's and surpluses when the economy was steaming along in the late 90's), the federal government deficit spent in historic proportions following 9/11 on what was a very minor recession, and continued to deficit spend at record levels without pause during one of the largest periods of growth in US history. Not only did that fail to prevent the economic calamity we face today, it contributed to it.

However, historic deficit spending now that we're in what is one of the worst if not the worst recession since the Great Depression is absolutely the right thing to do. There's no doubt in my mind that without the recent gobs of money being spend by the federal government in stimulus packages, our economy would have collapsed. Note there was very little debate and change in policy about the need for massive stimulus packages even as there was a transition between two significantly ideologically different presidential administrations. It's because they simply had to be done. (And we should be encouraging our leaders to work together like they did then when our country desperately needs them to!)

Be enraged at the decisions for the uncontrolled spending leading up to this recession, not the decisions now to continue it for the immediate future, and fight for surpluses once the economy is back on track! And make sure you vote for candidates in whatever political party (or independents) that in fact are fiscally responsible. Please remember though there is a time for deficit spending. It is macroeconomically a necessity in times of at least moderate or severe recessions.

Sorry for the long post. I know many readers, to their praise, have fought hard to get out of debt, as I have. But when it comes to federal government budgets, there are larger macroeconomic forces at play that complicate this topic more than personal financing. While requiring balanced budgets sounds like a simple, common sense plan, it doesn't mean it's a good one. Believe me, I wish it were!

Guest's picture
Mom of 2

I just watched the 30 minute version, and really enjoyed it. I requested the full-length DVD from my library. Thanks for the article and the review.

It is interesting reading the comments - I think they reflect one of the many, many reasons that the US government can't get spending under control: Nobody can agree on what should take priority, and what should or should not be cut. Instead of looking at the big picture and recognizing that sacrifices in ALL areas WILL be required, many people seem to be fine only with the cutbacks that they don't think will affect them.

As for the commenter talking about military spending - I think you missed the part of the movie about the total cost of Iraq only being 3% of our problem. I absolutely agree that the US needs to stop seeking conflicts, but I also fully support our troops. They didn't ask to go to a foreign country and put their lives on the line, and to leave them hanging out to dry by drastically cutting their spending would be a death sentence.

No, there are much bigger problems that are going to require sacrifice from all areas, and politicians who are willing to give instead of taking all the time.

I vote that one area that can be cut is the numerous perks available to Congress, such as their amazing, wonderful, full-benefit, tax-payer-funded, no-premium, life-long health care.

Xin Lu's picture
Xin Lu

For those who are interested, here is a fairly recent interview with David Walker:  http://www.washingtonpost.com/wp-dyn/content/article/2009/08/28/AR200908...

He talks about the stimulus in this for a little bit.

Guest's picture
Hanna

Wow this documentary is great!

Guest's picture
Ellen

Hearing the numbers of the U.S. debt just makes me feel uneasy (my stomach flipped). The thing to take into consideration is that, though this debt would be enormous for any one individual, and impossible to pay off in a lifetime, the U.S. as a whole can generate a lot of money from the debts it is taking on right now. A lot of the stimulus money that is being spent will generate money put back into the economy and toward the debt it incurs. Think of it more as an investment. Hopefully it is a good one.

Guest's picture
Kelja

The national debt is horrendous & continues to grow unabated. Bush added to it & Obama is making it even worse. Forget paying it off; that will never happen. We can't catch up especially with more debt looming (health care proposal, unfunded liabilities).

What is clear is the powers that be - present administration & the FED - are on the path to monetize the debt. That is, they are buying their own debt with money freshly printed. This is shaking up the usual lenders (China, Japan). This is leading to the deterioration of the US dollar - happening right now. Strategically, this makes sense. You pay off debt with dollars worth less than the original dollars lent.

This is party time for debtors and bad news for savers. Savers of course see their dollars erode in value.

Both higher interest rates and rampant inflation are in our future. I've been trying to tell people to protect themselves for the last few years but you know how unsolicited advice falls on deaf ears.

Has anyone noticed gold hit $1020 today?

Guest's picture

The great thing about US debt, is that we don't have to pay it back! Actually, we do through the capital account, but foreigners keep on buying our treasuries, so rates keep on staying low, and therefore we keep on borrowing. We're all in cahoots, and it's wonderful!

Guest's picture
Roy

Postscript: After The Crash

Within weeks of your review and the comments here, the US economy went completely off the rails, taking with it most of the world's developed economies.

The US national debt is now in the teens of trillions, but the elephant in the room - the "un-funded future obligations" - effectively pushes the figure to a nightmare-ish $70T.

That is not a typo. Seventy Trillion Dollars. But hey, that's not budgeted for, so it's not "real", so the government hopes you'll buy into ignoring it... at least until it's someone elses problem down the road.

And the governments answer? More debt. More borrowing to finance its insane rate of expenditure.

It's as screwed up as a drunk man who thinks he can drink himself to sobriety.

Currently, if everyone was taxed 100% of their income, the country still would not have enough to pay off that debt load.

I think it's high time I.O.U. USA got another viewing. Too many people just didn't get it, didn't grasp the message, back in '07-'08.

Maggie Wells's picture

I just watched this tonight 2 years later and it is still very relevant and very scary. Makes me happy with some of my choices and a little regretful of others.