I.O.U.S.A.: A Surprisingly Entertaining Look at America's Debt Crisis

By Jessica Mosby, The Wip. Posted August 11, 2008.

Paying upwards of $10 to see a movie about economics, particularly in these increasingly desperate financial times, hardly seems like a prudent decision -- much less a pleasurable way to spend a Sunday afternoon. But if you're willing to shell out the cash to see the new documentary I.O.U.S.A., which opens in theaters this August, you may be surprised at just how enjoyable and educational a film about America's economy can be.

Director Patrick Creadon is apparently making a career out of unexpectedly entertaining films that document usually dry topics. Just as his 2006 hit Wordplay made crossword puzzles and its enthusiasts engaging subjects (even for people who have never pondered "2 down, five letter word for 'Likeness'"), Creadon's new film, which is based on the book of the same name, rebuffs the notion that "economics" and "fun" have to be mutually exclusive. For 85 minutes, I.O.U.S.A. zips through 200 years of American history to explain how the richest country in the world is currently $9.5 trillion in debt.

The federal debt seems too incredible a sum to even fully grasp; an easier way to understand such an enormous figure is that if the debt was equally divided among the country's population, each American would owe over $30,000.

If you have no idea or don't even care that this debt exists, I.O.U.S.A. makes you want to learn. The film's complex premise and daunting numbers are made more accessible by the use of colorful graphs and illustrations. Creadon effectively contrasts what average people think (or think they know) against experts' analysis, which keeps the film from being too weighed down by statistics and theories. The film's tone can be summed up by student activist Mike Tully who yells at passersby in one scene: "Would you like to go on a date with me? No! Would you like to learn about the debt? Yes!"

A deficit is nothing new for the United States. The federal government has almost always spent more than it earned in taxes. The film's tour through history actually makes the current debt slightly less distressing; in 1946 World War II spending contributed to the national debt peaking at 120% of the country's Gross Domestic Product (GDP). Politicians, regardless of political affiliation, don't want to make the tough decision of cutting spending and raising taxes, especially when it means not being reelected. But Creadon argues -- without actually being partisan -- that the only way to decrease the national debt is to enact a more responsible fiscal policy that does just that.

A significant portion of I.O.U.S.A. follows former U.S. Comptroller General David Walker and The Concord Coalition Executive Director Robert Bixby as they tour the country speaking in town hall meetings as part of their Fiscal Wake-Up Tour. Since 2005, Walker and Bixby have made it their mission to educate the public on the reality that the future of the country depends on making difficult financial decisions. Hearing two middle-aged bureaucrats talk about economics and the country's dire future is oddly compelling and even funny (maybe it's all the Tab soda that the good-humored Bixby is always drinking).

According to Bixby, the current budget -- with over $700 billion annually allocated for military spending and a yearly budget deficit of over $230 billion -- is "unsustainable" over the long term; future generations are going to inherit an enormous debt while simultaneously shouldering the rising costs of Social Security and Medicare as the country ages. The Iraq war alone is costing approximately $275 million a day.

Between 1980 and 1990 the national debt more than tripled. After being elected in 1992, President Bill Clinton broke his campaign promise to lower taxes, deciding instead to balance the budget and eliminate the debt by 2012. But we haven't continued to pay down our debt; the rising budget deficit, and what that means for the country's future, is why Walker and Bixby started their Fiscal Wake-Up Tour.

Even people who are aware of the budget deficit (and, according to the film's hilarious interviews with random people on the street, that's only a handful) don't fully understand the complexity and ramifications of the deficit.

Who actually loans the United States this money? The easy answer: to finance deficit spending, the government sells bonds, even employing Humphrey Bogart during WWII as a spokesman to encourage people to buy bonds to finance the war. In the past Americans primarily bought government bonds, but today 47.8% of the debt is held by foreign countries or individuals.

Aside from voting for more responsible politicians, there is little the average American can do about the budget deficit. But there is something we can all do about an equally serious economic problem: the trade deficit, specifically the amount of Chinese-made goods Americans buy. Warren Buffet famously wrote about the problem in his 2003 Forbes magazine article titled "Squanderville versus Thriftville". During an on-screen interview, Buffet says that he is more concerned with the trade deficit than the budget deficit.

While true trade between countries is good, the film asserts that the United States is too reliant on foreign countries to produce necessary goods. This situation has created low cost goods and services for American consumers, while destroying the county's manufacturing industry. Workers at a Chinese light bulb factory featured in the film only make $10 a day. So instead of Americans being able to make their own light bulbs at domestic factories that pay a living wage, they buy cheaper light bulbs from China without really considering the long-term financial and ethical ramifications.

Americans need to start thinking about the consequences of buying foreign goods that could be easily produced in their own country -- even if that means accepting a slightly higher price tag. The current economic relationship is contributing to China's growing prowess and the United States' growing trade deficit.

I.O.U.S.A. is an incredibly timely documentary that is able to address a serious issue in an accessible and fun way, which is never an easy feat. Spending money and time on an educational documentary film may not appeal to everyone, but understanding the country's economy is especially important as a recession looms and the price tag for the Iraq war escalates to $3 trillion. However, some people may be overwhelmed by the amount of information that the film presents, especially those not familiar with economics.

But even if some of the individual concepts are muddled, the point is still comprehensible: the United States needs to change its economic policies lest they lead to the country's demise.

To its credit, I.O.U.S.A. does not take political sides; regardless of which party is in office -- politicians on both sides of the aisle are responsible for the current situation -- the United States needs a balanced budget and more equitable international trade relationships.

For those who think that this sobering issue exists solely at a federal level, the film points out that individual Americans have the same negative savings rate as the country. It's individuals who are buying all of those cheap tchotchkes from China, therefore contributing to the country's trade deficit.

While it may be easier to simply ignore the complexities of the country's finances, Americans actually have a chance to reevaluate their fiscal policies with the upcoming presidential elections -- watching I.O.U.S.A. is a good place to start.

See more stories tagged with: china, trade, national debt

Jessica Mosby is a writer and critic living in San Francisco, California.

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