I.O.U.S.A. Movie Summary, Review and Background Information

Why the United States Is Going Bankrupt

Obama watching IOUSA the movie
President and Michelle Obama watching a 3D movie at the White House. Could it be IOUSA?. Photo: Getty Images News

I.O.U.S.A. The Movie is a 2007 documentary that warns about the U.S. debt. Its message is even more important in 2017 since the debt is almost $20 trillion. When the movie was released, it was a mere $8.7 trillion.

Review

The producers do an excellent job of explaining all of the issues surrounding the growing federal debt. The film is both clear and entertaining, which is not easy with such a technical topic.

It starts off with interviews with average Americans and asks them "How big is the U.S. debt?"  The answers are funny but frightening. Most people don't know. 

You'll find easy-to-grasp visuals to illustrate the massive size of the debt. It compared it to the entire output of the U.S. economy. Gross domestic product was $13.7 trillion then, but $18 trillion now. The producers tried to warn the country when the debt-to-GDP ratio was 64 percent. Now it's more than 100 percent.

The movie is prophetic because it warned that the debt would only grow if nothing were done. But the truth is even worse. The debt has grown despite Congressional action. Congress enforced a mandatory 10 percent spending cut called sequestration. But Congress added to the Overseas Contingency Fund that's exempt from sequestration.

I.O.U.S.A. features former U.S. Comptroller General David Walker as a key speaker. In 2007,  this 60 Minutes interview featured him.

 In the movie, Walker explains the many reasons why the U.S. debt will continue to drag down our standard of living. It helps you understand how the debt will affect you and your children.

It uses dynamic graphics that show how the debt was created by four types of deficits. The first three are a leadership deficit, a savings deficit, and a balance of payments including a trade deficit.

Budget Deficit

The most time is rightly given to the fourth deficit, the budget deficit. The deficit increases the debt. Interest payments on the debt add to the deficit in a vicious cycle. Each year, government overspending is added to the debt. In other words, the debt to fund World War II has never been repaid. Each war increased taxes and lead to post-war recessions. 

The film points out how Reaganomics and subsequent supply-side economics expanded the debt. The theory said that lower tax rates would free up businesses to create more than enough growth to replace the lost revenue. Instead, debt skyrocketed. 

Official budget deficit reports don't show the true addition to the debt. The movie explains how politicians use the Social Security fund to subsidize government spending. Thanks to decades of pilfering, the funds are dwindling. There won't be enough to pay for future retirement benefits. Who to blame? Presidents Bush and Obama created the largest budget deficits.

The debt becomes even more unsustainable when interest rates rise.  When that happens, the interest on the debt will cost more than the $250 billion it does now. 

The film's credibility is enhanced by interviews with financier Warren Buffett, and Former Federal Reserve Chairmen Alan Greenspan and Paul Volcker.

 It was directed by Patrick Creadon.

The Peter J. Peterson Foundation funded the movie. If you would like to work on solutions, check out the Foundation's website.

This film was made before the financial crisis in 2008 that created trillions more in debt.  The problem is even worse now and will continue to escalate. The U.S. debt was at crisis levels during President Bush's administration. President Obama added $7 trillion. That makes him the president who contributed the most to the U.S. debt.

The film's only downside is that it wasn't widely distributed. Sadly, it ran for less than a week. Here's the two-minute trailer. You can watch the entire movie free on Youtube right now. There's also this 30-minute summary. It isn't available on Netflix.