PRESS
Film portrays U.S. debt as monster out of control
BY STEVE JORDON
WORLD-HERALD STAFF WRITER
The federal government, one way or another, owes $53 trillion, nearly four times the size of the entire annual U.S. economy.
Does that bother you?
If things don't change, income taxes by 2040 will consume 42 percent of your paycheck.
Are you awake yet?
How about this one: Your share of the total federal obligation is $175,000.
Think it's time to do something?
Pete Peterson and Warren Buffett hope you do. They, plus nationally known deficit fighter David Walker and other experts, will use an Omaha stage Aug. 21 to push their arguments to a nationwide audience.
The occasion is a satellite-beamed showing of the documentary "I.O.U.S.A.," followed by a panel discussion.
It's part of a broader campaign to change the course of the nation's finances.
"The vast majority of Americans have no appreciation of what is confronting our future as a country," said Peterson, a Nebraska native who will spend $1 billion of his own money in hopes of enlightening Americans.
Peterson, 82, is a former U.S. commerce secretary who made a fortune through Blackstone Group, an investment company he co-founded. He formed a foundation to tackle the nation's financial puzzle.
Peterson is financing a "wake up" tour by Walker, former U.S. comptroller general and a widely known campaigner for fiscal responsibility.
The campaign will include editorials, newspaper and TV advertising and messages delivered through "new media," including video games and blogs. The latter target young people, who, Peterson says, will suffer most if the problem is ignored.
The foundation bought the movie, which will be shown in regular theaters starting Aug. 22. Its backers hope it will help create a popular movement to confront the problem, much as Al Gore's "An Inconvenient Truth" awakened the broader public to threats to the environment.
The director of "I.O.U.S.A," Patrick Creadon, said Buffett agreed to speak on trade issues even though he isn't convinced that the government is hurtling toward financial disaster.
"I think he realized, OK, what these guys are trying to do has value," Creadon said. "He really liked the film a lot" because it deals clearly and fairly with a tough subject.
The film carefully balances its sources between Republican and Democratic leaders and will be shown at both parties' national conventions, he said.
Some of the young people quizzed in the movie are from Omaha. They were filmed the day before a segment with Buffett, and several react with shock when they hear the extent of the nation's financial dilemma.
"Before we get to fixing it, we need to educate the public about where we stand and where we're headed," Creadon said. "The film does a good job of explaining to a general audience the fundamentals of these rather complex sets of issues."
"I.O.U.S.A." goes beyond simply blaming politicians, Creadon said. It points out that Americans consume more than they produce and aren't saving money.
"Ultimately that's a selfish act, because we're buying things we're not paying for, and we're going to push these bills along to future generations."
Peterson said he believes the country's leaders will change how the government makes its financial decisions if pressured by average citizens - lots of them.
One example of a new approach concerns Social Security. Because politicians believe higher taxes or drastic benefit cuts would be political suicide, Peterson's group wants Congress to create a commission with the power to make changes in the program that would ensure its solvency.
The commission concept works in closing surplus U.S. military bases, Peterson said, and could work for Social Security, too.
The movie outlines four causes of the nation's predicament:
- Budget deficits: By spending more than it is willing to tax, government has reversed the surpluses it had in the 1990s and now is racking up debt each year.
Neither of the two apparent presidential nominees advocates changes that would address the problem, Peterson said, and both parties are responsible for spending trends.
To finance the debt, the United States sells securities to foreigners, including China and oil exporters in the Middle East, which could end up influencing U.S. policy by threatening to dump those IOUs on the world market.
The movie suggests that the United States used the same sort of "economic warfare" to force Great Britain to give up the Suez Canal in the 1950s, an event that many believe marked the end of the British Empire.
In the movie, Walker says the next generation will inherit these debts like a maxed-out credit card handed to them by their grandparents.
"They didn't create this problem, but it's their problem," he said. ". . . It's morally wrong."
- Trade deficits: Americans are addicted to buying more foreign goods than the country exports.
Buffett argues that the United States is like "Squandersville," spending more than it takes in, while foreign countries like China are "Thriftsville," building up wealth by selling more than they buy.
"I do think that piling up more and more and more external debt and having the rest of the world own more and more of the United States may create real political instability down the line and increase the possibility that demagogues come along and do some foolish things," Buffett says in the movie. - Savings deficits: "Too many Americans are following the bad example of their federal government," Walker says. "They're spending more money than they make" and end up with "a false sense of wealth."
So far this century, Americans have spent nearly 3 percent more than they earn, while people in China and other countries are saving. - Leadership deficits: Politicians cater to special interests that don't reflect what is best for society, Peterson said.
Tax cuts and spending measures are popular, but they have created the biggest debt in history, one that stands to swamp the U.S. economy if it continues to grow at the same rate.
Former Treasury Secretary Paul O'Neill says in the movie that interest on the debt will be unsustainable. "When you get extended to the point that you can't service your debt, you're finished."
Peterson said he hopes the campaign will energize a broad range of people.
"We need what I call a special interest for the general interest or a special interest for the future or a special interest for our children or grandchildren," he said. "All I want is to sustain the future of this remarkable country."
