The complicated, dull, and unsexy subjects are always the ones people should worry the most about, since their very nature pushes them from public consciousness. Trite buzzwords are easy to come by when it comes to nationalism, religion, supposed moral issues and other similarly pointless areas of debate. Ask anyone where they stand on abortion, drug legalization, and gay marriage, and most likely they will have an answer ready for you, ill-informed though it may be. The point is that they have given the matter some thought, albeit a generally shallow trial. Economic issues, on the other hand, elude us even in the middle of a credit crisis and approaching depression with hundreds of thousands of job losses per month. Discussion is everywhere you turn, but this is panic mode, and the populace has given very little thought to the presence of a mammoth federal debt that is trending upward in an exponential curve. Well, little thought until their 401k values evaporated or their small business went bust. Issues like the federal deficit, deficit spending, and trade imbalances can be difficult to get your head around, and unfortunately a great deal of the chatter about this has been ideological in nature. Now that the buzzwords of Reaganomics and Vice President Cheney’s assertion that “We don’t need to worry about deficits” have been discredited, where do we stand now? The dry but efficient documentary I.O.U.S.A. admirably teases the issue apart in a way that engages and informs. I describe it as dry, but given how frightening the numbers are in the graphs bathed in a bloody red color, I would prefer it dry and direct.
The documentary begins with a montage of U.S. presidents addressing the nation about the importance of fiscal responsibility and balancing the budget. All of them have the rhetoric down pat, just as a friendly reminder that what you are about to see has not escaped detection, rather there has been a relative deficit of leadership. One notable exception would be Bill Clinton, who whilst being sucked off generated the first budget surplus in years, and charted a course of similar surpluses for the next 25 years. This announcement was greeted with applause, and then apparently amnesia as George Bush won the election. The combination of profligate spending on various projects both military (research and weapons development in addition to
Afghanistan and the Iraq Hobby War) and civilian (Medicare Part D: Confusing and Expensive is our motto) vaulted the federal deficit to its highest level in history, with a comfortably upward trend. The Comptroller General is on hand to state, unequivocally, that our current standard of living is unsustainable, and that a crash is inevitable. The result of this crash? That the government will no longer be solvent, unable to pay interest on the federal debt and provide services of any kind with all that taxpayer revenue. As if to rub rock salt in the wounds of the viewer, there are numerous ‘man on the street’ interviews with young people who clearly don’t know the definition of the word deficit, let alone the long term ramifications of having one.
The real feat of I.O.U.S.A. is making the history and future trends of the budget deficit entertaining – the time flies by, which is fortunate since by the end your heart will be in your shoes as you consider the places in the world where you might emigrate. The history of the deficit is dominated by times of war and peace, with corresponding peaks and valleys in the size of the deficit. In 1789, the deficit was $87 million, about 40% of the gross domestic product (GDP), and by 1835, this was reduced to zero by a government that was perennially concerned about running a deficit at all. The civil war ballooned the deficit back to $1 billion, the Great Depression increased it to 44% of the GDP, each time the deficit was paid down when the war or recession subsided. The record was after the Second World War, when the deficit was 122% of the GDP, though the economy at that time was booming, and that deficit was financed by domestically bought federal savings bonds.
In 1980, the rules changed as a recession was beaten down, yet the deficits continued to rise with the Reagan revolution and the popularity of supply-side economics. With a $2.6 trillion debt, the deficit was 64% of the GDP by the end of the Reagan era, with no war or recession to justify its existence. A new mantra of ‘addiction to debt’ and a desire for real fiscal responsibility ushered in Bill Clinton, and powered his budget balancing act. He felt that deficits would eventually become a national security issue, as the deficit of the modern era was financed by foreign lenders, rather than Americans. The potential risk of allowing foreign powers to gain leverage over the United States economy by controlling this debt, gaining control of American interests abroad, and essentially bleeding wealth to these other nations was seen as something to be avoided. This was thought to be true especially for entitlement programs (Social Security, Medicare, and Medicaid) that were increasing in cost and would skyrocket as the self-indulgent baby boomer generation retired and started getting sick.
The responsibility ended with the Bush presidency, not due to stupidity, but rather a disinterest in governance and fiscal policy. Medicare Part D was a tremendous gift to pharmaceutical companies, the ‘savings account’ to replace social security was a joke, and the massive transfer of wealth to Iraq (weapons manufacturers, reconstruction funding to friends of the administration) among other truckloads of waste combined with deep tax cuts increased the deficit dramatically. Even if these idiocies had not occurred, the entitlement programs’ steadily increasing costs would have become a problem. This hole, then, is not a product of the Bush administration, but of decades of fiscal policy that eschewed responsibility for the attraction of immediate spending. The blame for this rests with the voters, always ready to punish political leaders for balancing the budget or raising taxes, and failing to take their leaders to task for economic irresponsibility. Anti-regulation ideologues like Phil Gramm helped cripple the laws put in place to inhibit speculation and shady financial practices. Alan Greenspan’s belief in the market’s invisible hand turned out to be faulty, as it was down his pants the entire time. Through it all, we scarcely questioned the wisdom of our leaders, even as the Wall Street bailout became a heist of obscene magnitude.
The vehemence that taxpayers show towards tax hikes of any kind never made sense to me. Until the roads, water, post office, and national parks are privatized – and they will be eventually, thanks to Ayn Rand-quoting demagogues – taxes are needed to pay for this shit. Your grandfather’s bypass surgery was covered almost entirely by Medicare. Illness happens to everyone eventually, so don’t bitch about the costs if you are shortsighted enough to vote down the only reasons the majority of all medical admissions and procedures are covered at all. This is, in a way, the tale of our times: we want it all, and we want someone else to pay for it.
In the end, the only answer afforded by I.O.U.S.A. is that the budget must be balanced, and with a tidy surplus at that for rainy days and paying down the debt to keep America in solvency, to keep the American dollar as worthless as a peso, and minimizing the spending that Americans have become accustomed to. I hesitate to use the word ‘addiction’, as this applies to an actual need, be it physical or psychological. America does not have a need as much as a petulant want, and the toys leave the pram whenever our pleading isn’t met. To reduce health care spending, we should become accustomed to a lower quality of health care, as in waiting for six weeks for that knee replacement like the Canadians do, and not to demand that our doctors write a prescription for the fucking purple pill because their commercials are shiny. To reduce Social Security, we need to work to the age of 70 or 75. Tough shit, because we now live far longer than the system was intended to bear, and well beyond what the health care system can manage without running up bills of Bushian extravagance. To reduce military spending – fuck it. The American military was ground down by pajama-clad desperadoes with homemade bombs, so that titanic budget makes no sense at all. We outspend China, Japan, Germany, the United Kingdom, and
Russia altogether, though this provides security mostly to the Skull-and-Bones members who inherited the Lockheed-Martin or Grumman thrones. Even if you are passionate about weapons-fondling, it is clear that time is running out to control the debt, and taxpayers simply cannot indulge this fantasy anymore.
So what happens if we fail to perform this Herculean task? Today nearly half the debt, at 66% of our GDP, is financed by foreign capital in the form of federal bonds, and this proportion is rising. In order to feed our debts these banks will continue to invest until the debt is high enough to crack their confidence that the dollar will continue to be worth anything. If the dollar continues to fall or if they stop investing, then the Federal Reserve will have no choice but to print more money, which will further erode the value of the dollar, and so forth. As long as imports outweigh exports and domestic industries die off, the situation will be unlikely to change much. It is projected by the Peter Peterson Foundation that by 2040 our federal deficit will be 244% of our GDP. The
United States will not require a boogeyman to fight – our enemies will be all around us, and they will be right to be pissed that we are defaulting on debt with a worthless currency.
I.O.U.S.A. is an important documentary to put it mildly, and is prescient considering it was released before the credit crunch occurred. Currently, fiscal responsibility is politically attractive, and it is yet possible for our elected representatives to act like adults to fix the immediate problem without swift punishment. It took an approaching depression to bring
America to its senses. This too shall pass, and another charlatan cowboy will run on a platform of empty nationalism and wrecking the economy for private gain. This is understandable, since spending wildly is attractive, and guarantees an audience amongst the mouth breathers who believe that the government is a Marxist company that levies taxes because it hates our freedom. Bear the lessons of the film in mind, because our cynicism will be tested on a daily basis as our current president and any future president will be looking to us, the mob, for hints on how they should proceed with governance. For fuck’s sake, start paying attention.