Please stay on topic. And while we may not always agree with the ideas of others, please stay polite and no personal attacks. Thank you.

IOUSA paints a grim picture of America’s financial future: Basically we are drowning in a sea of debt, a crisis of unprecedented dimensions that will leave America at the mercy of foreign governments and potential political upheaval. Cited as causes: Unpaid debts, imbalanced trade, living beyond our means as individuals and as a country, and expanding government without a way to pay for it.

The film emphasizes that deficits and debt are wrong and bad.  America’s growing federal budget deficit, our national trade deficit and our failure to save money could bring out the end of the American way of life. 

IOUSA follows Robert Bixby, director of the Concord Coalition, and David Walker, the U.S. comptroller general–who has resigned to be a more politically active exponent of paying down the debt– across America on their Fiscal Wake Up tour. Intercut with their discussion of the film’s thesis–that today’s federal budgets absurdly combine big programs with low taxes, which means inevitably that taxes must skyrocket or the federal budget must shrink–are interviews with people on the street who reveal their lack of comprehension about our national debts.  Snappy charts and graphics help reinforce the film’s points.

IOUSA’s solutions to America’s debt: broad entitlement overhaul, tough budget controls, conservation of energy and not buying things you can’t afford, which seems pretty sensible.

Warren Buffett is interviewed, as is William Bonner, whose book Empire of Debt inspired this film. There are clips of Allen Greenspan and other economists and an historical look back at presidents addressing the national debt. All the experts seem to agree that higher taxes and less spending are necessary.

The main criticism of the film and its proponent Pete Peterson– who made tens of millions running a Wall Street private equity fund, much of which he was able to shelter from normal taxation–is the focus on “fixing” Social Security which the film claims will be bankrupt soon if it continues to pay out like it is now, and if the government continues to borrow from Social Security to help cover parts of the national debt, thus making the federal deficits seem smaller than they are–around $200 billion a year smaller.

However, each time the government has dipped into the Social Security trust fund this way, it issued a legal obligation to pay back the money with interest whenever Social Security needed it to pay benefits. Could the government not be able to afford the pay back? That is one question the film raises.

The “entitlements” mentioned as needing overhaul are Medicare, Medicaid and the self-funded Social Security. And while the need to reform Social Security is discussed, there is little call for health care reform. Currently the government picks up roughly half of the tab for health care through programs like Medicare and Medicaid, making them potential budget destroyers.

One excellent take-away: As the economy digs out of its hole, restoring household savings will be crucial for ultimate recovery and for reduction of our dependence on foreign capital.

And a great piece used effectively: A sketch from Saturday Live where a economic recovery plan is proposed: Don’t Buy Stuff You Can’t Afford.