We. Are. F**ked.
For those of you, like myself, who understand that we have a huge deficit problem, but really don't understand either the magnitude of that problem or the consequences of it, IOUSA is a real eye-opener, although the DVD should come with a free stick so you can poke yourself in the eye with it afterwards. If you're under the age of 50, and plan on living at least another 30 years, the documentary is downright terrifying. What's even more unsettling is that the film is based on pre-recession numbers. The economy was still going relatively strong when IOUSA was being produced (or so we thought, at least), and the idea that the documentary is working with numbers before the stimulus bill, the bailouts, and the housing collapse makes it even more ominous and frightening.
IOUSA attempts to explain the United States' fiscal crisis in terms that ordinary people might understand (and if you, like me, are numbers retarded, you'll probably still understand two-thirds of it). Based loosely on William Bonner's book Empire of Debt, the doc uses archival footage and experts like Warren Buffet, Alan Greenspan, Judd Gregg, and former Treasury Secretary Paul O'Neil to provide a lot of the metaphors. But the real power of the movie lies within the narration and the fun little cartoon graphs that elucidate and petrify at the same time (I think the back-to-landers had it right in the 1970s; they just missed it by a few decades). The film is broken up into four chapters, focusing on the budget deficit, the savings deficit, the trade deficit, and the leadership deficit. Chances are, the chapter on the budget deficit will so freak you out that you'll be numb to the shock by the time the latter half of the film rolls around.
Here's the gist of those numbers, and remember these numbers are pre-recession: In early 2008, we had an $8.7 trillion dollar debt (It's $11 trillion now). Our gross domestic product (GDP), or the measure of all national income and output, is around $13.5 trillion. Even with the $8.7 trillion figure, our debt represented 64 percent of our total economy. Historically, that's bad. As bad as it's ever been, save for the Great Depression, when it peaked at 122 percent of the GDP. But the big difference between now and then is that most of that debt was financed by war bonds, so all the debt was paid back to Americans (now, most of that debt is owned by China, the oil producing countries, and Canada). For more historical context, the debt when Ronald Reagan came into office was 33 percent; after 12 years of supply-side economics, it grew to 64 percent when President Clinton came into office. Clinton put a big dent in the number (in fact, the national debt clock was retired for a time because it didn't work backwards) and left office with record surpluses predicted well into the future. We're saved! Right?
No. Then came George W. Bush. IOUSA aptly analogizes the budget problem with a diet. The only way to lose weight (the debt), is to eat less (reduce spending) or exercise (increase taxes). Bonehead Bush sat in front of the TV for eight years and scarfed down pizza and nachos -- he exercised less, he ate more, which meant that he not only increased spending massively, he also reduced taxes, which put us in our current situation. Keep in mind, too, that these numbers include the current Social Security surplus, a surplus that will turn into a deficit in 10 years when the boomers retire, which means that our yearly debt will increase exponentially. No. Seriously. We're fucked.
Fine, right? So, we've got a debt problem. Big deal. Countries run deficits. What the hell does it mean? It means that, at some point, there will be no choice in the matter: Taxes will have to be raised (a lot) to pay to service our debt, and spending will have to be curtailed (a lot). In fact, in order to finance our current liabilities, in addition to the promises we've made in the form of Social Security and Medicare, we'd need $53 trillion. That's $185,000 per person. And given the fact that we import far more than we produce (we import 17 percent of the GDP), and our savings rate has gone from 13 percent in the 1970s to -2.9 percent in 2007, it all means that we owe a ton and have no money to speak of. Hooray!
Indeed, we're heading toward financial ruin. And God Bless him, Barack Obama isn't helping. According to IOUSA (which was released into theaters during the presidential campaign), if the President eliminated earmarks, rolled back the Bush tax cuts, and ended the war in Iraq, he'd only be able to cut 14 percent off the debt. And what the filmmakers didn't know was that we'd pass that stimulus bill, pay a few trillion more in bailouts, and propose a budget that would add another trillion for health care. All of which is to say: Barack Obama has been put in a dangerously tenuous situation. He can't afford to do nothing and, in fact, during recessions, the United States historically runs up huge deficits. But in this case, Obama started with a huge deficit. In order to stimulate the economy, he's got to run up massive deficits, and in a few years, he (or someone else) will have to raise taxes to pay it back. Either that, or eliminate the post office, the Department of Defense, and Social Security/Medicare. Obama may somehow manage to reduce the unemployment rate in this country, but the debt is only going to get worse. And in four years, it doesn't matter who created it initially. Obama is going to get the blame. It's sad, really, that the only time the deficit has been reduced over the last 30 years was under a Democratic president, yet it's the Republicans who somehow have the reputation of deficit hawks.
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