Examining the increasing level of federal debt.

• Author: Kavanagh, Shayne C.

I.O.U.S.A : One Nation.

Under Stress. In Debt

Film directed

by Patrick Creadon

distributed by the Peter

G. Peterson Foundation

2008, rated PG

Book by Addison Wiggin and Kate Incontrerra Wiley

2008, 288 pages, $19.95

This documentary film and its companion book shine a spotlight on the increasing level of indebtedness that the American federal government has incurred, and which the filmmakers believe seriously threaten the future prosperity of the country. The film primarily stars David Walker, then the United States Comptroller General and head of the Government Accountability Office, and his "Fiscal Wake-Up Tour," an ongoing initiative to educate the public on the debt and its implications. (Walker resigned in March 2008 to head the Peter G. Peterson Foundation, which distributed the 1.0. US.A. movie.) I. O. US.A. also features interviews with financial and economic luminaries (including Warren Buffet, Paul Volker, and Paul O'Neill), members of Congress, and activists.

Walker first points out that the level of federal debt was $8.7 trillion as of February 2007, or 64 percent of the American gross domestic product (GDP). This compares to 40 percent at the end of the Revolutionary War, 41 percent at the height of the Great Depression, 122 percent at the end of World War II, and 35 percent at the end of the 1970s recession. Hence, it is not that the current level of debt is unbearable, but that the past trend and the future outlook are potentially ruinous. The film marks the rise of supply side economics in the 1980s as the point at which federal debt "exploded" and a fundamental shift occurred--America became "addicted to debt" and "never before had so much debt been created so quickly."

While the rising federal debt is worrisome when considered in isolation, the film puts forward that the United States actually faces four serious deficits, making the total problem much more serious: a budget deficit, a savings deficit, a trade deficit, and a leadership deficit.

THE BUDGET DEFICIT

The federal debt is, of course, the accumulation of budget deficits and surpluses since the founding of the Republic. In the past 40 years, there have been only five surpluses. Surpluses in the Social Security program have historically been used to help reduce budget deficits. However, as baby boomers begin to retire, Social Security surpluses will begin to disappear--by 2017, Social Security will start paying out more than it takes in, resulting in even greater...