I.O.U.S.A - A Nation in Debt
Since we first mentioned IOUSA in early August, a lot more clips have become available.
Part 1
Part 2
Part 3
Part 4
>
Wednesday, August 27, 2008 | 12:15 AM | Permalink
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Income - Expenses - Investments = Savings
From the mid-90s we started moving more of our housing expense from the "Expense" category to the "Investment" category.
Jose the berry picker dropping 700 grand on a house with his $20K salary isn't going to have much savings, but he sure had one hella investment portfolio.
If we were serious about tax policy we would not worry about taxing capital gains and wage income, but increase the tax levels on the wealthy's land ownership. This is the hidden lever of the economy that the neo-classicals have successfully hidden from public view.
Posted by: Troy | Aug 27, 2008 12:32:26 AM
Barry,
Any consideration of my proposal for you to host an Economic Crisis Dream Team Summit to actually help come up with some solutions, or should we just give up? I have posted this idea a few times and some people liked the idea...you have been very mum on it.
My Nominations again...Roubini, Volcker, Stiglitz, Bogle, Shiller, Barry as moderator.
Posted by: Steve Barry | Aug 27, 2008 1:14:24 AM
Barry,
I thank you for posting these video links. It's time for a thorough discussions of these issues.
Many economists and others have their thick heads buried in the sand, quibbling over a few specific numbers here and there. Screw them.
It's time to lay out where we're headed.
Thanks for the effort.
Posted by: Movie Guy | Aug 27, 2008 2:51:53 AM
i am a berry picker and i resent that comment Troy.
Posted by: Jose the berry picker | Aug 27, 2008 3:40:36 AM
I'm a berry picker and I also resent that comment.
Posted by: christopher spiegle the berry picker | Aug 27, 2008 4:32:40 AM
'Jose the berry picker's McMansion' the 2008 remake of that 1970s classic by Rockin' Ronnie Ray-gun 'The Cadillac Driving Welfare Queen'
Got Fear?
Posted by: freejack | Aug 27, 2008 6:07:02 AM
Right wing claptrap, bankrolled in part by the CATO Institute.
Funny, I didn't see the line entitled "military spending" on that list of items totalling $53 Billion. I guess it's free, right? Bueller? Anyone?
For those interested in the truth about Social Security, which is the one part of the budget that is in excellent shape, read any article by Bruce Webb at Angry Bear. As to Medicare, the US can get more bang for the buck by picking at random any health care system of any other industrialized nation, and enacting it word for word.
This film is tripe, by the same people who enacted income tax cuts for billionaires (and google the producers of the film, BTW, to see who they are and what their interest might be) in 2001, creating huge budget deficits, and now want to steal what's left of middle class social insurance rather than make the general budget whole..
Posted by: ndd | Aug 27, 2008 6:56:05 AM
"totalling $53 Billion"
$53 Trillion
(Quatrillion-Gazillion-Obamamillion!......scared yet?)
Posted by: nnd's angelic twin | Aug 27, 2008 7:11:06 AM
Thank you #7 I was well aware that the number was $53 trillion, but unfortunately caught the typo after I posted.
With a $13 Trillion/year GDP, that $53 trillion coming due in decades and decades will be taken out of the $500 trillion - $ 1 quadrillion economy. Taxes over the last half century plus have generally amounted to 20% of GDP.
The facts stand. Social security is in excellent shape. Out of control health care costs explain Medicare's issues and can be contained. Military expenditures are nowhere discussed in RW talking points.
Had the 2001 tax cuts not been enacted, we would be in much better shape. This film proposes that the middle and working classes must lose their insurance so that billionaires can keep their tax cuts.
They can shove that.
Posted by: ndd | Aug 27, 2008 7:43:08 AM
BARRY!
Why don't you FOCUS on the simple...YES SIMPLE TRUTH that S&P 500 earnings came in at $17 per share for Q2! 5 weeks ago consensus estimates were for $21.68 per share! They missed by 22%!
http://64.233.167.104/search?q=cache:PkIPXrP7oLIJ:www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS+s%26p+earnings&hl=en&ct=clnk&cd=1&gl=us
More importantly the year over year drop from the high water mark of Q2 2007 was 29%!!
Rosenberg of Merrill says full year 2009 to be $50 PER SHARE!
Hello!
Now...factor in the WORLD is heading DEEP into recession territory in the next 6 t 12 months and a strengthening dollar will whack the earnings of the multinationals in the next 2 quarters and you get a recipe for disaster.
SIMPLY PUT...the market will follow earnings! HIGHLIGHT this FACT for the stock markket-junky-wannabee types (like me)!
1000 on the S&P 500 is VERY VERY strong possibility sometime in the next 6 months!
Posted by: Kirk | Aug 27, 2008 7:52:21 AM
Saw the movie and the follow-on discussion with Buffet, Peterson, Walker, CATO Rep, AARP Rep and moderated by Becky Quick from CNBC (go figure). The movie does a decent job of explaining the various deficits but does not offer solutions. In the follow-on discussion there was little substance with Buffet essentially saying everything will be just fine. One question on whether the dollar would drop further due to these deficits was essentially unanswered. The theme of the answers was we need to tighten our belts, work longer, means test medicare, save more, etc. Mostly platitudes and saying we have plenty of time to fix things. The one exception was David Walker (former head of GAO) who seems to get the urgency.
In the end the movie will make folks aware of the deficit issues but given the current credit crisis I don't think the US's current system can be saved or should be.
Posted by: Dale | Aug 27, 2008 8:04:56 AM
A government default will concentrate the mind wonderfully. When the ax falls, get off the sidewalks, because you want to avoid the falling bodies.
Posted by: Xenophon | Aug 27, 2008 8:24:16 AM
Saw the movie and the discussion.
Never really explained the facts, from my perspective.
The key is the 53 trillion dollar number and what it means.
10 trillion is straight up treasury debt that has to be supported at the current interest rate (4%). That's not that scary provided interest rates don't do what they did in the late 70s.
Most of the rest is social security and medicare. I couldn't figure out what this is. Is it the total to paid over time or what would already have to be in a pension fund if the US had to fund these like GM funds its pension responsibilities. The difference between these two extremes is the difference between no big problem and we are freakin doomed.
At least, that's how a software engineering looks at it whos trying hard to understand it and went to the movie and listened carefully. I also read Wiggin's book Demise of the Dollar which was trash.
Posted by: MontyHigh | Aug 27, 2008 8:27:37 AM
Monty High: The Social Security and Medicare numbers are "total paid out over time" (I believe Walker talks about lengths of 50-75 years). Hence even assuming no real growth in the economy whatsoever, 50/75 years X $13 trillion GDP = $650/$975 trillion GDP over time funding $53 trillion payments.
Again, I recommend everybody who is concerned about SS in particular click on the "angry bear" link over in the left column, and read any of Bruce Webb's posts.
Posted by: ndd | Aug 27, 2008 8:37:34 AM
As with most things, the entirety of the content is pure pablum.
However, what is essential is that the conversational ball gets rolling regarding the importance of paying down the debt. The right-wing talking point of "lower taxes, HIGHER spending" is inane.
Social Security is fine. Health care spending would be drastically reduced with the simple regulatory enforced mandate that insurance companies PAY on 100% of actual claims.
Currently the reimbursement to hospitals is around 30% of claims submitted based on work completed. If you wonder why your hospital visit costs so much, point your finger directly at the insurance companies - not the hospital. A good hospital system has a profit margin of 1.5%. That is not a typo - 1.5%. If every stay was reimbursed, overall costs would decrease drastically to you the customer, because the large majority of hospitals are in fact nonprofit organizations.
Instead, insurance companies are permitted to simply not pay on 70% of claims, and the difference is shoveled out to executives and lobbyists.
We don't need to "blow up the system" - what we need is for the insurance regulators to do their job.
Posted by: Unsympathetic | Aug 27, 2008 8:49:27 AM
I saw the movie. Excellent. Every high school and college student should see it. Buffett was disappointing during the debate afterwards, talking about a bigger pie benefitting everyone. Here is a link to an article I've written in support.
http://seekingalpha.com/article/92303-looming-financial-catastrophe-a-real-inconvenient-truth?source=front_page_most_popular_articles
Posted by: JGQ | Aug 27, 2008 8:54:47 AM
Post by: ndd | Aug 27, 2008 6:56:05 AM
I second that post and could not bring myself to plunking down $12.50 for a ticket and most likely a fiver for popcorn and soda. I'll wait for the public library to post it. I've seen all that info for free here at TBP.
With respect to Dale, MontyHigh & JGQ, thanks for supporting the film industry. Money is just paper, ya gotta turn it into an experience. But I'm sure the film is attempting to present that you gotta save it someplace for that rainy day and old age.
ps - If I was rolling in free cash and could stomach the 130 mile round-trip to a movie house I'da gone to see it.
Posted by: Greg0658 | Aug 27, 2008 9:23:47 AM
"If we were serious about tax policy we would not worry about taxing capital gains and wage income, but increase the tax levels on the wealthy's land ownership. This is the hidden lever of the economy that the neo-classicals have successfully hidden from public view."
Taxes are a necessary evil. Government needs tax revenue to pave the roads, keep the schools open, put cops on the street, run the courts, defend the country, etc.
Now how should they get it?
All taxes negatively impact the economy, but some taxes impact it more so than others. Corporate taxes encourage corporations to locate elsewhere with lower tax rates. Capital gains taxes inhibit capital investment. Income taxes inhibit hard work. Sales taxes inhibit consumption. Property taxes (and other wealth taxes, like the inheritance tax) inhibit wealth accumulation.
Off all the ways to get tax revenue, Capital gains and corporate taxes are the most harmful since they are a drain on the very engine that drives the economy. Yet since corporations pay corporate taxes* and the affluent pay most capital gains taxes, there is little political motivation for policy makers to cut them. On the other hand, property taxes and inheritance taxes, which have considerably less impact on the economy, generate far more outrage among the general population. This is because wealth taxes take something that has already been earned, while people never see the money that income tax or capital gains taxes take away. These are emotional and political policy decisions, not rational ones.
Interestingly enough, my experience is that it is not the Wall St. Banker who is concerned with property taxes as it is the "land poor" rural red stater who wants to hold the land that he is not putting to optimal economic use. Massive property tax cuts, at the expense of capital gains, corporate, and income tax cuts are every bit as populist and economically ignorant as the most extravagant liberal social program.
*There is a good bit of truth to the statement that corporations do not pay taxes, they only collect them. But in politics, perception is far more important than reality, and the final check comes from the corporation, not their customers.
Posted by: JimBeam | Aug 27, 2008 9:29:03 AM
pss - Troy that is an interesting idea "not worry about taxing capital gains and wage income, but increase the tax levels on the wealthy's land ownership"
and freejack LOL funny :-)
Posted by: Greg0658 | Aug 27, 2008 9:35:06 AM
I saw the movie on opening night (w/panel discussion) The movie does a great job of explaining the situation clearly to a wide swath of people. I've reccommended this movie to everyone I know.
BTW - in the panel discussion, they mention the tax cuts, and Iraq/Afghanistan - even if both were to sunset, it wouldn't cover our obligations.
I admit that Buffett and Peterson got a little to 'America the beautiful, tear, tear' for my taste. And the 'privitize SS' garbage being spouted by the CATO Rep was countered by the CEO of AARP - thank goodness!
Lots of comments above about the simple fixes for Medicare - anyone of you ever get in the ring with an insurance lobby? Good luck!
Posted by: BustaMove | Aug 27, 2008 9:43:35 AM
"taxes negatively impact the economy"
not so - taxes take from the over compensated and recycle the cash into new plans - many families, sm business and mega corps depend on that redistribution
over compensated = profits above a globally accepted return on investment
I like the drill down on the tax types.
"Capital gains and corporate taxes are the most harmful" classic talking your book
Land ownership? Once born you are guaranteed nothing. Its a jungle baby.
To many people making to many problems.
Posted by: Greg0658 | Aug 27, 2008 9:55:52 AM
NDD wrote:"This film is tripe, by the same people who enacted income tax cuts for billionaires (and google the producers of the film, BTW, to see who they are and what their interest might be) in 2001, creating huge budget deficits, and now want to steal what's left of middle class social insurance rather than make the general budget whole.."
Can you provide more specific information? I'm not saying that as a snark - I just did a bunch of searching and have not found anything about this issue. Any thoughts appreciated.
Posted by: dmwr | Aug 27, 2008 10:06:48 AM
When I read all of the above comments and look at where the US is today I think the below quote is most appropriate.
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's greatest civilizations is 200 years." (Alexander Fraser Tytler, 1776)
The fact that it's from 1776 adds weight to societies doing the same thing over and over again.
Posted by: Dale | Aug 27, 2008 10:19:19 AM
And for evidence of the above from Marketwatch,
"Guns or butter ... why not both? Democrats ask
National security can also mean spending money at home, they say"
http://www.marketwatch.com/news/story/guns-butter--why-not/story.aspx?guid={8483DCEE-C3AB-4D6C-95C6-2FE7DE6F3E8E}&dist=hplatest
I thought Johnson settled the guns and butter debate during Vietnam.
Posted by: Dale | Aug 27, 2008 10:28:52 AM
There are lies, damn lies and statistics. There is no way we can continue at the pace we are going but then we won't. The market is going to enforce change. But, I have seen some of the analysis on these future projections and they are complete lies. And, they are massive lies. But, if this scares the shit out of people and helps boot out the jackasses, that's fine by me.
Posted by: bdg123 | Aug 27, 2008 12:00:01 PM
