The national debt is approaching $10 trillion, Americans are spending more than they save, and our foreign trade deficit is ever rising. The liabilities of Social Security and Medicare will soon overburden the younger generation. That’s what David Walker believes, anyway. In fact, he believes it so much that he resigned early from his post as U.S. Comptroller General, determined to warn the public of the “fiscal cancer” that may soon lead to a “financial meltdown.”
To spread his message, Walker teamed up with director Patrick Creadon (known for his documentary, Wordplay) and producer Addison Wiggin (executive publisher of Agora Financial) for the documentary I.O.U.S.A, which explores the escalating national debt and the burdens on millennial in the coming decades.
The style of the film, which has been likened to Al Gore in David Guggenheim’s An Inconvenient Truth, is laden with charts, figures, and graphics that provide the audience with a quick econ primer. To supplement the economic facts and figures (which may soon evaporate from the minds of those without a general understanding of macroeconomics), Creadon interviewed both government officials and citizens in a candid, Jay Leno-style man-on-the-street approach that boils down a “sophisticated story… into bite sized nuggets.”
Creadon’s spoke to Alan Greenspan, Rep. Ron Paul, and Warren Buffet, who spoke of the value of thriftiness. Speaker of the House Nancy Pelosi was also on the list of interviewees (although she did not appear in the film). When Pelosi’s aide informed her of an interview request for a documentary, she asked the topic of the film. The aide answered, “National debt,” to which Pelosi exclaimed, “Who in the hell would make a film about national debt?”
The idea for the documentary came from Addison Wiggin and William Bonner’s book, Empire of Debt, which was the original focus of the film. However, on the day that Wiggin and Bonner sent their book to each member of Congress, they saw a USA Today article on Walker’s Fiscal Wake-Up Tour, and his message resonated with them. They pitched the documentary to Walker, who asked, “Does this have anything to do with that book, Empire of Debt?” Wiggin hesitated, not sure if he actually liked the book, which provided a stark contrast to many conventional ideas, stating that the U.S. has transformed from a republic to an empire. But Walker shared their concerns and saw the documentary as a useful opportunity to spread his message.
The crew said the film’s goal is to educate the public on the budget challenges that lie ahead for the U.S. Creadon says that people walk out of the theater saying, “That wasn’t nearly as complicated as I thought it would be.” Walker hopes that the public will walk away from the film more enlightened and ready to practice fiscal responsibility and hold their Congressmen responsible for their decisions. Creadon stated at the AFI/Discovery Channel Documentary Festival this past weekend in Maryland: “We have to sit down as a country and just hug it out… for about 90 minutes. We’ve lost the idea that we’re on the same team.”
In 2005, Walker joined forces with the Concord Coalition, Brookings Institute, and the Heritage Foundation to form the “four cornerstones” of the Fiscal Wake-Up Tour. Walker then partnered with Concord Coalition executive director Robert Bixby. Unlike his counterpart, who is confident and dynamic in front of the camera, Bixby is an endearingly lanky and disheveled budget wonk. But the pair found common ground in their message, and traveled to various U.S. cities as messengers of the looming crisis of national debt and entitlements. They plan to continue the tour into 2009, urging American citizens to put national debt at the forefront of the presidential debates.
In March of 2008, Walker resigned from his position as U.S. Comptroller General, realizing that there were many things he could not do as Comptroller, like “build strong overt coalitions for change,” fuel grassroots efforts to hold politicians fiscally responsible, and advance political reforms. “Generals don’t leave the fight,” Walker says, “but sometimes they change their positions on the battlefield.”
Through the Fiscal Wake-Up Tour, Walker was able to connect with citizens who were either uninformed or unaware of the growing national debt. Although addressing a complex topic, Walker was impressed with how well people understood his message. “The American people are a lot brighter than many of their elected officials give them credit for,” he says. “I have found in my involvement with the Fiscal Wake-Up Tour that when you speak the truth, they get it. They know we have a problem and are willing to let the tough choices be made, but they don’t have a lot of confidence in our political institutions. They want assurance that if they make some sacrifices, it won’t be in vain.”
To clarify his message, Walker breaks up the national debt into four categories: budget, savings, balance of payments (trade), and leadership, which he considers the most important. In the film, he traces America’s record of debt, with the helpful graphic aid of a penny bouncing through American history, from its conception to present day, where the national debt has reached astronomical numbers — $9.3 trillion and growing.
The film features segments meant to trigger alarm in the American public. Possibly the most disturbing segment of the film warns of the hazards of borrowing from other countries and running a trade deficit; our indebtedness to China may even lead to “financial warfare,” where the U.S. is in hoc to other governments. Other figures make our financial situation look rather bleak: We need $53 trillion to cover all government debt and obligation — that’s $170,000 for each American citizen, according to Walker. Are we past the point of no return? Bixby says not yet. “If this was doom and gloom, we wouldn’t be doing it.”
So what are the key issues in national debt, and how can we help to alleviate them? When it comes to tackling the biggest problems of national debt, Walker says: “If there’s one thing that could bankrupt the United States, it’s health care costs.”
Michael Cannon, Director of Health Studies at the Cato Institute and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It, agrees. Cannon projects a much larger debt than Walker: “If you look at Medicare all by itself, the total unfunded liabilities are somewhere between 70 and 90 trillion dollars…That’s the discounted present value, meaning if you put 70 trillion dollars in the bank today and earned a 3 percent interest rate, that would cover all the benefits in the infinite future.”
But that’s not the worst of it. “If you throw in Social Security, Medicaid, and the national debt, our total debt is closer to 110 to 120 trillion dollars.” He notes that his projections don’t just look at a 75-year horizon like most, but the infinite horizon.
So how do we even begin to solve the problems of national debt and entitlements? Walker lists suggestions at the end of the film, including Social Security reform, generating more revenue, and increasing savings.
Cannon asserts that: “For Medicare, we have to realize we simply cannot provide unlimited amounts of free healthcare to every senior. We only have two options: bring more money in or cut benefits. If we simply increase taxes, they would eventually reach 40 percent of GDP. We shouldn’t arbitrarily cut back, either. We are better off finding an amount of money that we can spend per senior on healthcare, and allow them to choose their own options according to the spending guidelines….Politically, you may need to raise taxes, but it should be a last resort.”
Michael Tanner, Cannon’s Cato Institute colleague and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It, concurs: “The first thing people can do is educate themselves about this. Advocate reform options that put patients in the position where they own and control the money that purchases their health care. Give the patient a voucher so they can purchase their health insurance…When you give people caps and let them buy the insurance they want, it isn’t subject to political manipulation.”
Mostly, Walker explains, it’s boils down to smart planning. On an individual level, there are numerous easy steps that most people can take: Register to vote, have a budget, plan for the future — and save, save, save.
So far, Walker and Bixby have visited over 40 cities and half the states in the U.S., and they don’t plan to stop any time soon. Next up: “Focusing on the ‘purple states,'” said Walker; “the states that could go either Democrat or Republican.” You can expect to see him in Milwaukee, WI on June 30 and Cleveland, OH soon after. Once September hits, the Fiscal Wake-Up Tour will spend much of its time conducting town hall meetings on college campuses. Walker believes that young people have the ability to make these issues vital and create communities that can be active in local politics, writing op/eds and utilizing the internet. After all, it’s the younger generation that looks to suffer the most from the fiscal irresponsibility of their elders.
As of yet, I.O.U.S.A. has only been viewed at film festivals, where it has received much praise (and a standing ovation at Sundance). Walker claims they have received an overwhelming positive response, and that any criticism comes from “anybody who’s vested in the status quo.” You can expect to see the documentary in theaters nation-wide on August 21. The Peter G. Peterson foundation, for which David Walker is the CEO, will purchase the film in order to distribute it as widely as possible; they will condense the film into an eight-minute portion for news networks. Walker projects a TV outlet for the film in January of 2009, and then eventually a full-length video on YouTube. It may eventually be released on DVD, and he hopes that it will be free of charge. Walker claims that PGPF’s main objective is spreading the word, not making profits.
Walker projects that it may take 20 years to fully reform entitlements and government spending and get back on track. Until then, he’s determined to make sure that happens. And it doesn’t matter if other countries are worse off than the U.S., says Walker. After all, “What does it help to be the best looking horse in the glue factory?”
—Nicole Trafton is a Doublethink reporter.
(EDITOR’S NOTE:This piece quotes Cato expert Michael Cannon as saying, “Politically, you may need to raise taxes, but it should be a last resort.” He now says that he doesn’t believe he said this and that it does not reflect his position on tax increases. He has posted an item at Cato’s blog detailing his position on the matter.)