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I.O.U.S.A. Misses Point

Mises Daily: Friday, November 14, 2008 by

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[This essay originally appeared on LewRockwell.com.]

The American empire, like the Roman one, is heading for a fall, and an out-of-control government deficit is one of the reasons. However, destruction by deficit is not fait accompli, if Peter Peterson, David Walker, and the Concord Coalition have anything to do about it. Peterson and Walker like their government after all. Peterson was United States secretary of commerce and chairman of the Council on Foreign Relations, and is the senior chairman of the politically connected private-equity firm, Blackstone Group. Walker was comptroller general of the United States and head of the General Accounting Office. The Concord Coalition is an organization founded by the late former Sens. Paul Tsongas (D-Mass.) and Warren Rudman (R-N.H.), along with Peterson. Concord added former Sen. Bob Kerrey (D-Neb.) in 2002.

Not exactly a confederation of anarchocapitalists.

I had high hopes for the documentary film I.O.U.S.A., because it was conceived of, cowritten and executive produced by Agora Financial's Addison Wiggin, coauthor with Bill Bonner of the excellent book Empire of Debt. When the movie finally started, the opening credits even indicated that the documentary was based on the book. I wish.

Bonner and Wiggin wrote that the purpose of Empire was "to show that the United States is headed for trouble." And, "their burden is only to show that the people making important policy decisions are morons and frauds." I.O.U.S.A. shows that the United States is in trouble, all right, but instead of politicians and central bankers being outed as crooks and mountebanks, the likes of Bill Clinton and Paul Volker are treated as heroes. Ex-Fed Chair Alan Greenspan is made to look like an idiot by Ron Paul in one clip and by comedian Jon Stewart in another, yet the filmmakers continually go back for sound bites from him and ex-Fed governor Alice Rivlin as authority figures. The film even claimed that one Federal Reserve mandate is to keep inflation low. Good grief, the Fed creates inflation.

Empire of Debt cited gold 23 times, government debt 19 times, and David Walker only once, Stephen Fairfax noted on the LewRockwell.com blog. But the movie made no mention of gold and makes David Walker out to be the nation's savior. I.O.U.S.A. is essentially a buddy movie with Walker and Concord's Executive Director Robert Bixby hitting the road to alarm Americans into holding their elected officials accountable. So there are plenty of scenes in the car, in the banquet rooms, and being interviewed by local TV stations that don't air their story. Interspersed amongst these action sequences are person-on-the-street interviews that make the point that the average Joe and Jane don't know or care about the goings on with the government budget.

If billionaire Warren Buffett has his way, the great unwashed and uninformed will pay the $12.50 they saved by not seeing the movie to the government in taxes. After I.O.U.S.A. concluded, CNBC's Squawk Box honey Becky Quick moderated a panel of wise ones live from Omaha, led by Tout TV's favorite guru, Buffett. The panel assured everyone that the government Ponzi scheme of Social Security would be there when they retire. The Cato Institute's freedom-loving chairman William Niskanen even thinks people should be forced to save for retirement. Bill Novelli, CEO of AARP, believes the five guys on the panel could solve all of the country's problems. And more than one panelist blamed everything on partisanship in Washington. If our representatives in this great republic could just learn to get along, everything will work out fine, was the claim. After all, America has faced greater challenges and triumphed.

But by far the most annoying was the Omaha Oracle, who continually piped in that the budget deficits aren't that big a deal, but that trade deficits are, and that future generations of Americans will live better than the present generation, as long as Americans pay enough in taxes to keep this good American thing going. We are lucky to be born here, according to Buffett, but he is unhappy that he pays a lower tax rate than his cleaning lady. No doubt she is, too.

The main message of the film — that, by the way, was purchased by The Peter G. Peterson Foundation last month — is that all of this debt will "swamp our ship of state," and that the trade deficit will lead to less leverage in matters overseas. So, pay more taxes and urge your congressman to decrease government spending.

Instead, moviegoers should spend their time reading Wiggin and Bonner's book, buying gold, and avoiding taxes.