This afternoon I went to see a screening of a recent documentary here at Emory, with a full title of I.O.U.S.A. – One Nation. Under Stress. In Debt. It’s a rather small budget simple movie that, much like The Blair Witch Project ten years ago, aims to scare the wits out of its American viewers. Quite like in the BWP where the good people of Burkitsville might or might not have heard stories about the child-stealing ghost of Elly Kedward, there are streetwalk-interviews in IOUSA with your average Americans, who in general are completely clueless and oblivious of what a budget or trade deficit might be and why precisely should it be a problem. There’s similarly shaky camerawork and instead of amateur actors of Blair Witch you’ve got Alan Greenspan, Paul Volcker, Robert Rubin and Warren Buffet telling you the similarly spooky things that are about to happen to USA very soon unless Americans mend their ways. Only that Greenspan and Buffet are no actors and they’re not reading a script. For an added dramatic effect the movie was presented (and followed up by a Q&A) by a former US State Comptroller from 1998 to 2008, David M. Walker, who was present in person.
Apparently the official national debt of the US is currently somewhere around $11 trillion. Again, in order to help lay people visualise what are we talking about – here is a helpful link in that regard. Of course, on its own 11*1018 expressed in dollars might be big amount of money or not so big – depending on what we compare it to. So how about that – according to the CIA Factbook, the US 2008 Gross Domestic Product was $14.33 trillion. Not too bad, the national debt is less than 80% of the annual output of the US economy. Somewhat worse news is that it is growing pretty fast – according to the current estimates, this year’s budget is in the red for another $1.8 trillion or thereabouts, while the GDP ain’t doing that hot either.
However, the scary point of the movie is that this is only part of the story, and a small part at that. In addition to direct public ($6.3tr) and intergovermental ($4.3tr) debt, the US government has apparently a total of about $43 trillion in unfunded liabilities mostly in Social Security and Medicare, on top of a few more trillion here and there. You can get the whole breakdown here. Of course, I’m really not in a position to assess what part of this is going to be unavoidable and what can be simply cut – and something certainly will have to be. And while this doesn’t necessarily have to mean that the USA will be bankrupt in a decade or so (although quite obviously this kind of a thing is no longer a realm of science fiction for an increasing number of people in the US), it does mean that the current levels of spending and saving are not sustainable.
The movie doesn’t even get into the issues of private debt which has, if anything, ballooned even faster. Or discuss the fact that the savings rate that has now steeply rebounded from the negative levels of last few years is a bit of a mixed blessing currently, as every penny saved also means penny not spent – and that will further add into the contraction of the economy.
The movie has apparently caused a bit of a stir, ranking #5 in amazon.com among documentaries. And it seems that there will be a rich field of inspiration to draw upon, as well as a wide market of viewers to cater to, for other similarly minded practicioners of the economic horror documentary genre, both in America as well as in Europe.