Walker Warns US Faces $53 Trillion Hole as Entitlement Costs Surge

IOUSAtheMovie

Unfunded Medicare and Social Security promises will consume all federal tax revenue and force taxes to double unless Washington enacts structural entitlement reforms.

AI-assisted summary of I.O.U.S.A.: Byte-Sized - The 30 Minute Version — original source. Check the original for full context.

Source published: 2008-10-31

Key ideas

The United States faces an unfunded liability hole of $53 trillion—equivalent to roughly $175,000 per citizen—driven primarily by future commitments for Medicare and Social Security. (0:04)
The nation's fiscal vulnerability is compounded by four interlocking shortfalls: the federal budget deficit, a near-zero or negative personal savings rate, a chronic balance of payments/trade deficit, and a political leadership deficit. (0:04)
Commonly debated political solutions fall far short of solving the structural imbalance: ending the Iraq War addresses under 3%, expiring the Bush tax cuts addresses about 10%, and eliminating all earmarks addresses only about 1% of annual spending. (27:46)
By 2040, the national debt-to-GDP ratio is projected to reach double the historical peak set at the end of World War II, risking severe economic destabilization and dependency on foreign creditors. (27:46)

Detailed notes

## Background Uploaded to YouTube by IOUSAtheMovie on October 31, 2008, this presentation is a condensed 30-minute web adaptation of the acclaimed feature-length documentary 'I.O.U.S.A.' According to the video description, the release was designed for widespread online sharing to alert citizens to the rapidly mounting national debt and the staggering $53 trillion in federal obligations owed to foreign creditors and the American public.

## TL;DR Led by former U.S. Comptroller General David M. Walker, the program examines America's mounting fiscal crisis across four compounding fronts: the budget deficit, the savings deficit, the trade deficit, and a bipartisan leadership deficit. The film reveals that while the official debt stood near $9 trillion, the true total of unfunded federal promises—dominated by runaway Medicare and Social Security obligations for the retiring Baby Boomer generation—amounts to an unsustainable $53 trillion. Prominent figures including Warren Buffett and former Treasury Secretary Paul O’Neill demonstrate that popular political proposals, such as repealing tax cuts or ending the Iraq War, fail to fix the underlying structural shortfall. Ultimately, the documentary issues an urgent call for grassroots citizen action before reliance on foreign creditors and runaway entitlements permanently erode the nation's standard of living.

## Atmosphere & style The presentation carries the grave, high-stakes urgency of a national security briefing delivered by seasoned accountants, economic analysts, and whistleblowers. This sobering tone is punctuated by jarring street interviews that expose widespread public financial illiteracy, alongside satirical moments like a Saturday Night Live sketch that mock chronic overconsumption. Watching the film feels like an escalating wake-up call, using unrelenting mathematical charts and historical analogies to transform abstract economic data into an impending national horror story.

## Bulletin - [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) The United States faces an unfunded liability hole of $53 trillion—equivalent to roughly $175,000 per citizen—driven primarily by future commitments for Medicare and Social Security. - [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) The nation's fiscal vulnerability is compounded by four interlocking shortfalls: the federal budget deficit, a near-zero or negative personal savings rate, a chronic balance of payments/trade deficit, and a political leadership deficit. - [27:46](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1666s) Commonly debated political solutions fall far short of solving the structural imbalance: ending the Iraq War addresses under 3%, expiring the Bush tax cuts addresses about 10%, and eliminating all earmarks addresses only about 1% of annual spending. - [27:46](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1666s) By 2040, the national debt-to-GDP ratio is projected to reach double the historical peak set at the end of World War II, risking severe economic destabilization and dependency on foreign creditors.

## Key takeaways - [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) U.S. Comptroller General David M. Walker describes the national debt and mounting liabilities as a domestic 'fiscal cancer' more dangerous than foreign adversaries. - [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) The stated federal debt of $8.7 trillion in early 2007 represented only a fraction of total commitments; factoring in unfunded Medicare and Social Security promises expanded total obligations to $53 trillion. - [03:47](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=227s) Throughout early U.S. history, debts incurred during conflicts like the Revolutionary War and Civil War were deliberately paid down through strict fiscal discipline and shared public sacrifice. - [07:39](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=459s) During a 40-year window, the federal government ran 35 budget deficits and only five surpluses, masking operational shortfalls by absorbing cash surpluses from the Social Security trust fund. - [07:39](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=459s) A demographic inflection point was projected for 2017, when Baby Boomer retirements would cause Social Security's cash flows to reverse from generating surplus revenue to expanding federal deficits. - [11:39](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=699s) Mandatory spending on entitlement programs—Medicare, Medicaid, and Social Security—is driven upward by demographic shifts and escalating healthcare costs, threatening to crowd out all discretionary government functions. - [14:03](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=843s) American households exhibited negative savings rates for two consecutive years, a phenomenon previously seen only during the Great Depression, depriving the domestic economy of capital. - [17:11](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1031s) Warren Buffett's parable of Squanderville and Thriftsville warns that chronic trade deficits lead a nation to trade away its physical assets and future income to foreign trading partners. - [19:29](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1169s) The 1956 Suez Crisis illustrates the geopolitical danger of debt dependence, as the U.S. forced Great Britain to abandon a military operation by threatening to dump its British pound reserves. - [21:58](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1318s) Former Treasury Secretary Paul O'Neill was ousted from the Bush administration after opposing tax cuts during wartime, revealing political leadership that routinely ignored compounding debt. - [26:17](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1577s) Medicare obligations alone make up $34 trillion of the nation's $53 trillion fiscal shortfall, with $8 trillion generated by the 2003 Medicare Part D prescription drug law. - [27:46](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1666s) Popular budget remedies—such as ending earmarks, expiring tax cuts, or withdrawing from foreign wars—fail to close more than a tiny fraction of the long-term entitlement-driven funding gap. - [27:46](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1666s) Without structural reforms, closing the fiscal shortfall purely through revenue would require doubling federal tax burdens across the board. - [29:12](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1752s) Because the fiscal crisis is entirely domestic and self-inflicted, long-term stabilization requires direct citizen engagement and political accountability.

## Detailed walkthrough ### [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) A Fiscal Cancer: Introducing America’s Debt Crisis

The crisis opens not with foreign battlefields, but with a warning that the greatest danger to the country comes from within its own borders. As news montages flash across the screen—reporting on the housing market collapse, spreading Wall Street panic, spiking oil and gold prices, and emergency Federal Reserve interest rate cuts—an urgent alarm is sounded: “I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility.” At the center of this warning is David M. Walker, the Comptroller General of the United States and the nation's top accountant. After calculating the federal government's income, current liabilities, and future promises, Walker delivers a blunt diagnosis of the nation's trajectory: “We suffer from a fiscal cancer; it is growing within us, and if we do not treat it, it could have catastrophic consequences for our country.”

When everyday Americans on the street are asked to guess the size of the federal debt, their estimates miss the reality by orders of magnitude; one passerby guesses sixty-nine billion dollars, only to be shocked upon learning the actual figure stands at $8.7 trillion. In February 2007, that $8.7 trillion debt represented roughly 64 percent of the nation's $13.5 trillion Gross Domestic Product (GDP). Yet the existing debt is only the surface of the crisis. When adding up all of the federal government's unfunded promises for Medicare and Social Security as of September 30, 2007, the nation sits inside an astounding $53 trillion hole—a deficit expanding by two to three trillion dollars every year simply by doing nothing, accelerated even further by expanding annual deficits and financial bailouts.

To understand the crisis, the film frames the predicament not as a single shortfall, but as an interlocking web of four compounding national deficits:

```mermaid flowchart TD accTitle: The Four Deficits Facing America accDescr: A flow diagram showing how the four deficits feed into national fiscal instability.

subgraph Deficits["The Compounding National Pressures"] D1["1. Budget Deficit<br/>(Government spending exceeds revenue)"] D2["2. Savings Deficit<br/>(Citizens spend beyond their means)"] D3["3. Balance of Payments Deficit<br/>(Trade deficit & foreign borrowing)"] D4["4. Leadership Deficit<br/>(Inability of politicians to make hard choices)"] end

D4 --> D1 D2 --> D3 D1 --> Crisis["$53 Trillion Unfunded Obligations Hole"] D3 --> Crisis ```

- **The Federal Debt (Feb 2007):** $8.7 trillion, or approximately 64% of the $13.5 trillion gross domestic product. - **The True Total Obligations (Sept 2007):** $53 trillion when including unfunded promises for Social Security and Medicare. - **Annual Growth Rate:** Compounding by $2 to $3 trillion per year through inaction alone. - **The Four Deficits:** The budget deficit, the savings deficit, the balance of payments deficit (including the trade deficit), and the leadership deficit.

---

[03:47](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=227s) From the Founding Fathers to the Reagan Era: A History of U.S. Debt

America's debt accumulation reflects the cumulative total of every annual budget deficit and surplus since the founding of the republic. When the federal government began operations on March 4, 1789, it inherited an initial Revolutionary War debt of $75 million—roughly 40 percent of the young economy. Terrified by this burden, the Founding Fathers acted swiftly to pay it off. A similar discipline occurred after the Civil War, which brought the federal government to the brink of bankruptcy before the debt was rapidly reduced once more. The structural framework of modern American finance arrived in 1913 with the creation of the Federal Reserve System to manage the money supply, alongside the establishment of the modern federal income tax.

Following the immense hardships of the Great Depression, President Franklin D. Roosevelt introduced Social Security as foundational insurance bought and paid for by workers and employers. World War II necessitated unprecedented government borrowing, but it was matched by collective civilian sacrifice; as Hollywood star Humphrey Bogart declared in a public appeal, “Our fighting men have just won history's greatest victory for freedom; buy bonds for their future and for your own future.” However, the massive social and military outlays of the 1960s and 1970s eventually triggered severe stagflation and economic distress by the decade's end.

The 1980s heralded Ronald Reagan's supply-side economics and the contentious Laffer Curve, which posited that reducing marginal tax rates would stimulate enough economic activity to boost net tax revenues. The theory provoked fierce pushback even within conservative ranks; during the 1980 primary campaign, George H. W. Bush famously dismissed supply-side theory: “Let me just give you a difference that I have with Governor Reagan on taxes: it is what I call a voodoo economic policy.” Regardless of the ideological debate, the historical outcome was undeniable: debt exploded during an era of relative peace and prosperity as the country became structurally addicted to borrowing.

- **March 4, 1789:** Starting national debt was $75 million (~40% of GDP), which the Founders prioritized paying down. - **1913:** Creation of the Federal Reserve System and the modern federal income tax. - **1930s–1940s:** Social Security established; World War II debt financed directly through popular war bonds. - **1980s:** Emergence of supply-side economics ("Reaganomics"); national debt surged during peacetime as borrowing became institutionalized.

---

[07:39](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=459s) The Brief Surplus and the Looming Entitlement Tsunami

A rare moment of fiscal discipline arrived in the late 1990s when political leaders from both parties convened to balance the ledger. President Bill Clinton praised the achievement at a bill signing ceremony: “We come here today, Democrats and Republicans, to celebrate a true milestone for our nation; in a few moments, I will sign into law the first balanced budget in a generation.” Yet policy experts point out that the political system naturally tilts toward fiscal dysfunction. Political inertia perpetually favors expanding popular federal programs while simultaneously cutting taxes, avoiding the painful, necessary trade-offs required to balance actual program costs against realistic revenues.

Over a 40-year window, the federal government recorded 35 annual deficits and just five surpluses. Worse, those numbers concealed an accounting sleight-of-hand: the federal government systematically used massive cash surpluses from Social Security to pay for unrelated day-to-day government operations. As a speaker underscores, “This is something that's utterly unsustainable, and remember, all of that has happened before the Baby Boomers retire—and the Baby Boomers are not a projection; they're born, they're out there, they're going to be eligible for Social Security and Medicare, and yet we can't pay our bills now.”

By 2017, Social Security's cash flows will reverse, moving from generating surplus revenue that masks the general deficit to running shortfalls that actively widen it. When combined with runaway Medicare obligations, the long-term projection threatens total economic destabilization. One speaker underscores the gravity of the threat in stark national-security terms: “This issue represents the potential fiscal meltdown of this nation, and it absolutely guarantees, if it's not addressed, that our children will have less of a quality of life than we've had, that they will have a government they can't afford, and that we will be demanding so much of them in the area of taxes that they will not have the money to send their kids to college, or buy that home, or just live a good quality of life.”

- **The 40-Year Ledger:** 35 deficits versus only 5 budget surpluses. - **Hidden Deficits:** Annual Social Security trust fund surpluses were routinely absorbed into the general fund to pay standard operational bills. - **2017 Milestone:** The inflection point where Social Security stops buffering the federal deficit and begins compounding it as Baby Boomers retire.

---

[11:39](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=699s) Grassroots Awakening and the Inevitable Math

To combat public indifference, grass-roots advocates take their warning directly to high schools and college campuses, confronting students with the stark reality of the debt burden they are inheriting. Activists urge youth to wake up to the hypocrisy between what they are taught at home and what Washington practices: parents lecture children about saving money and avoiding credit cards, while the elected officials sent to represent them pile on historic debt. As an activist engages passing students, the message is intentionally blunt: “You're a prisoner to the national debt.” When someone protests that this approach is terrifying, the campaigner replies unapologetically: “I know I am scaring people; that's the point, man—it's a scary issue.”

The mathematical reality driving this fiscal imbalance is straightforward. While short-term federal budget deficits fluctuate with the business cycle, the long-term outlook is driven by three major entitlement programs: Medicare, Medicaid, and Social Security. The spending curve for these three programs rises relentlessly under current law, driven by rising longevity and escalating medical costs. As an economic analyst observes, “Unless we're willing to raise taxes and keep on raising them, or close down the rest of the federal government, we've got a very big problem staring us in the face.”

The sequence culminates with a satirical pop-culture critique from *Saturday Night Live*, parodying the nation's chronic inability to live within its means. A comedic infomercial pitches a revolutionary personal finance book with an absurdly straightforward concept: > “Did you know millions of Americans live with debt they cannot control? That's why I developed this unique new program for managing your debt. It's called: *Don't Buy Stuff You Cannot Afford*... If you don't have any money, you should not buy anything!”

[14:03](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=843s) The Savings Deficit and the Culture of Consumption

The film questions everyday Americans on the street about their personal financial habits, asking how much money they actually have put away in their savings accounts. The answers reveal a bleak reality: responses range from “a couple hundred bucks” to “about a thousand maybe.” One young person candidly admits, “I end up using most of the money in my savings account so it doesn't really like work as a savings account like I'm not actually saving anything I'm just storing it there,” while another observes that the overwhelming majority of citizens live paycheck to paycheck.

Following these street interviews, David Yepsen, chief political columnist for the *Des Moines Register*, convenes a discussion alongside Dean Baker and others, calling this the single most critical challenge facing the nation. Yepsen warns that the public is mirroring the destructive habits of the federal government by living well beyond their means—taking out home equity lines of credit, racking up credit card debt, and accumulating crushing compound interest until they are staring down an inability to make their basic payments.

Compounding the problem, the United States experienced a negative household savings rate for two consecutive years, a phenomenon not seen since the Great Depression in 1933 and 1934. Economists in the film caution that sacrificing for tomorrow has been entirely replaced by an easy-credit, live-for-today mentality. Because many citizens have never endured a genuine economic downturn, they simply fail to save for a rainy day. This deprives the broader economy of the domestic capital required for research, development, and productive investment. As one commentator bluntly summarizes: “Without savings there is no future.”

- Everyday Americans report minimal personal savings, treating accounts as short-term cash depots rather than long-term reserves. - For two years in a row, American households ran a negative savings rate, spending more than their net take-home pay. - The only previous time household savings dropped below zero was during the Great Depression in 1933 and 1934. - David Yepsen states: “The reason we have to borrow from foreign players who hold more of our national mortgage who have more leverage on us and we have less leverage on them it's because we're not saving and that's got to change.”

---

[17:11](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1031s) The Trade Deficit and Warren Buffett’s Parable of Squanderville

Street interviews continue, testing whether ordinary citizens understand what a trade deficit actually means. Several people hesitate or guess that it represents a medical condition, a general disorder, or simply “something wrong.” In economic reality, running a trade deficit means a country imports far more goods and services than it exports. In 2007, while China recorded the largest trade surplus on the globe, the United States ranked dead last.

```mermaid flowchart TD accTitle: Trade Deficit and Asset Transfer Mechanism accDescr: Flow showing how continuous consumption without domestic savings transfers national wealth to foreign creditors. subgraph S1["Domestic Trade Imbalance"] A["Low Personal Savings Rate"] --> B["U.S. Consumes More Than It Produces"] B --> C["Massive Trade Deficit (Imports Exceed Exports)"] end subgraph S2["Accumulation by Foreign Partners"] C --> D["Trading Partners Accumulate U.S. Dollars"] D --> E["Foreign Capital Buys U.S. Debt & Domestic Assets"] end subgraph S3["Long-Term Geopolitical Impact"] E --> F["Foreign Ownership of U.S. Wealth Increases"] F --> G["Severe Geopolitical Vulnerability & Financial Leverage"] end ```

To explain the danger of persistent trade imbalances without putting audiences to sleep, legendary investor Warren Buffett recalls the allegory he published in *Fortune* magazine concerning two fictional islands: Squanderville and Thriftsville. The residents of Squanderville choose to trade away portions of their island’s land and property to obtain everyday consumer items rather than producing goods themselves. While this creates a comfortable illusion of prosperity in the near term, Squanderville eventually runs completely out of property to barter. Its citizens are then forced to work twice as hard—not only to meet their daily basic needs, but also to service the mounting debt owed to their foreign neighbors. Buffett warns: “Short-term actions have long-term consequences that sometimes people don't think about in the short run.”

- In 2007, China had the largest trade surplus in the world, while the United States ranked dead last. - When trading partners run massive surpluses with the U.S., they reinvest those surplus dollars by purchasing American debt, real estate, and physical assets. - If domestic savings remain near zero while federal budget deficits continue to climb, the nation becomes entirely dependent on foreign capital to finance both public operations and private investment.

---

[19:29](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1169s) Foreign Ownership of Debt and the 1956 Suez Crisis Lesson

When asked how the federal government raises money when it runs a deficit, an interviewee naively replies: “I'm under the assumption that everyone else borrows money from us.” The documentary explains that following World War II, virtually all outstanding U.S. government debt was held domestically by American citizens through savings bonds. Today, however, the convergence of low personal savings, deep budget deficits, and structural trade deficits has forced the federal government to become heavily reliant on foreign creditors to purchase Treasury securities.

To illustrate the geopolitical dangers of being deeply in debt to other nations, the documentary revisits the Suez Crisis of autumn 1956. When Great Britain and France launched a military campaign alongside Israel to seize the Suez Canal from Egypt, the Soviet Union threatened direct intervention, bringing the world to the brink of a third world war. Desperate to de-escalate the conflict without sending troops, President Dwight D. Eisenhower’s administration resorted to financial warfare.

At the time, the United States held massive amounts of British sovereign debt. Washington issued an ultimatum: if Britain did not immediately cease operations and withdraw its forces, the U.S. Treasury would dump its extensive holdings of the British pound sterling onto the open market. Doing so would have collapsed Britain’s currency and wrecked its post-war economy. Faced with total financial ruin, the British and French capitulated and pulled their forces out within weeks.

Buffett points out the haunting parallel for modern America: when a nation is structurally reliant on foreign lenders, it surrenders its strategic independence. Warren Buffett warns: “If 15 or 20 years from now 2 or 3% of the GDP is being paid abroad merely to service the debts or the ownership of assets that been incurred because we're overconsuming, that will be politically unstable.”

---

[21:58](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1318s) The Leadership Deficit and Paul O’Neill’s Firing

The film transitions to what it labels the most dangerous deficit of all: the leadership deficit. While impossible to measure in raw dollar terms, political leaders across Washington are well aware of the looming fiscal catastrophe, yet deliberately dodge tough decisions because confronting them requires telling voters uncomfortable truths.

Former Treasury Secretary Paul O’Neill recounts his tumultuous 23-month tenure inside the Bush 43 administration. O’Neill was abruptly fired after vehemently opposing a second major round of tax cuts in the second half of 2002. He recalls that Vice President Dick Cheney called him in, informed him that President George W. Bush wanted to make personnel changes, and urged O'Neill to publicly claim that he was stepping down voluntarily to return to the private sector. O’Neill refused to participate in the charade: “For me to say that I've decided to leave the Treasury is a lie and I'm not into doing lies, and so that was it.” O'Neill packed his briefcase, walked down to his reserved parking spot, and drove straight home to Pittsburgh.

O’Neill reveals that during internal debates over the proposed 2003 tax cuts, Vice President Cheney dismissed his warnings about runaway deficits by insisting that “deficits don't matter.” O’Neill expresses his deep dismay over this philosophy, pointing out that when the administration took office, the national debt stood at roughly $5.6 trillion, but had ballooned to $8.8 trillion by the time of filming. O'Neill cautions: “You inevitably get into trouble when you get extended to the point that you can't service your debt, you're finished.”

- Paul O’Neill served as Secretary of the Treasury for 23 months before being dismissed for challenging administration fiscal policy. - O’Neill opposed cutting taxes in 2002–2003 while simultaneously launching and financing the war in Iraq. - Vice President Dick Cheney privately told O'Neill that the administration did not have to worry about debt. - The national debt expanded from roughly $5.6 trillion at the start of the George W. Bush administration to $8.8 trillion just a few years later.

---

[26:17](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1577s) The True $53 Trillion Fiscal Hole

The segment concludes by puncturing common political talking points. Many partisans claim the national balance sheet can be repaired simply by eliminating government waste, fraud, and abuse, by reversing the 2001 and 2003 Bush tax cuts, or by withdrawing all troops from Iraq. The documentary demonstrates that enactments of all three policies combined would not even begin to solve the structural crisis, because the overwhelming driver of future debt lies in unfunded entitlement programs.

``` Total Current Liabilities (Public Debt & Other Direct Liabilities): $11 Trillion Unfunded Social Security Obligations: $7 Trillion Unfunded Medicare Promises (Total): $34 Trillion - Medicare Parts A & B (Hospital & Medical Insurance): $26 Trillion - Medicare Part D (Prescription Drug Benefit): $8 Trillion Miscellaneous Items: $1 Trillion --------------------------------------------------------------------------------- TOTAL ACCUMULATED FISCAL OBLIGATIONS: $53 Trillion ```

The narrator breaks down the staggering numbers that comprise America's real balance sheet: approximately $11 trillion in direct legal liabilities, $7 trillion in unfunded Social Security promises, $34 trillion in unfunded Medicare obligations (including $8 trillion alone for the 2003 Medicare Part D prescription drug law, which had been marketed as a cost-saving reform), and another $1 trillion in assorted obligations. All told, the actual bill facing the nation stands at $53 trillion.

To fund these commitments today would require having $53 trillion in cash already invested and earning interest—an amount equal to roughly $175,000 for every man, woman, and child in the country. The government currently has zero dollars set aside for this purpose. The film warns that unless massive structural changes occur, by the time current college graduates reach retirement age in four decades, every penny of incoming federal tax revenue will be entirely consumed by only two items: paying interest on the national debt and covering a portion of Social Security benefits.

[27:46](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1666s) The Looming Fiscal Trap: Taxes, Debt-to-GDP, and Inadequate Fixes

The federal government’s trajectory threatens to overwhelm all basic functions of the state. If mandatory spending on programs like Medicare and Medicaid continues unchecked, it will consume all federal revenues, leaving every other federal agency and department completely defunded and out of business. To close this financing gap solely through taxation, the federal government would have to raise tax burdens across the board to more than double current levels. While politicians reflexively recoil at the mention of any tax increase, the mathematical reality of staying on the current fiscal path will eventually force a dramatic doubling of federal taxes. By the year 2040, the national debt-to-GDP ratio will reach twice the record level set at the end of World War II, continuing to skyrocket thereafter and raising a grim question: who will be willing to lend the United States money under those conditions?

```mermaid flowchart TD accTitle: Fiscal Fixes Compared to the Total Problem accDescr: Bar-style flowchart comparing the small fiscal impact of common political solutions against the overall problem size. subgraph Solutions ["Commonly Proposed Fixes"] Earmarks["Eliminating All Earmarks & Pork: ~1% of annual spending"] BushCuts["Expiring All Bush Tax Cuts: ~10% of financial hole"] IraqWar["Ending the Iraq War: <3% of total financial problem"] end subgraph TotalGap ["The Reality"] Gap["Unfunded Obligations & Deficits: The Remaining ~87%+ Financing Gap"] end Solutions -.->|"insufficient to close"| Gap ```

The scale of the crisis is far greater than the public or political leadership recognizes, rendering the most popular talking points and scapegoats numerically irrelevant. Partisan debate frequently focuses on budget items that account for only a trivial fraction of the structural shortfall:

- **Eliminating pork barrel spending and earmarks:** Completely abolishing all congressional earmarks and special-interest pork would address only about 1% of annual federal spending. - **Allowing the Bush tax cuts to expire:** Letting all three Bush tax cuts expire in 2010 would close only about 10% of the long-term federal financial hole. - **Ending the war in Iraq:** Even if the Iraq War concluded immediately in 2009, its entire estimated long-term cost represents less than 3% of the total financial shortfall facing the nation.

As the film cautions: > “No matter what you personally believe should be done to address our nation’s deficits, the magnitude of our problem is much bigger than people understand.”

---

[29:12](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1752s) The Four Deficits and a Call to Citizen Action

America's structural vulnerability is driven by four interlocking shortfalls: the budget deficit, the savings deficit, the trade deficit, and the leadership deficit. While each of these deficits is perilous on its own, together they form a toxic mix that imperils the nation's economic stability and the living standards of future generations. This financial reckoning will arrive alongside a massive demographic shift, as tens of millions of Baby Boomers retire and claim their promised entitlement benefits, creating an unprecedented wave of mandatory spending that the federal government is thoroughly unprepared to finance.

Unlike external geopolitical conflicts, this fiscal crisis is entirely self-inflicted and cannot be blamed on foreign rivals or outside forces. Because the problem belongs to the United States alone, the responsibility for confronting it rests directly with the American public rather than entrenched political institutions. Viewers are urged to take responsibility as citizens, visit the Peter G. Peterson Foundation website (pgpf.org), and organize under its citizen action initiatives to demand accountability before the ship of state is overwhelmed.

> “As the Baby Boomers retire in large numbers, this tidal wave of spending will reach our shores and we are simply not prepared for it, and trust me, it could swamp our ship of state.”

> “Working together, we can make sure that our future is better than our past.”

## Notable quotes > [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility.

> [00:04](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=4s) We suffer from a fiscal cancer; it is growing within us, and if we do not treat it, it could have catastrophic consequences for our country. — David M. Walker

> [19:29](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1169s) If 15 or 20 years from now 2 or 3% of the GDP is being paid abroad merely to service the debts or the ownership of assets that been incurred because we're overconsuming, that will be politically unstable. — Warren Buffett

> [21:58](https://www.youtube.com/watch?v=O_TjBNjc9Bo&t=1318s) You inevitably get into trouble when you get extended to the point that you can't service your debt, you're finished. — Paul O’Neill

## Mentioned I.O.U.S.A., David M. Walker, Warren Buffett, Paul O’Neill, David Yepsen, Dean Baker, Dick Cheney, George W. Bush, Bill Clinton, Ronald Reagan, George H. W. Bush, Franklin D. Roosevelt, Dwight D. Eisenhower, Humphrey Bogart, Federal Reserve, Social Security, Medicare, Medicaid, Des Moines Register, Peter G. Peterson Foundation, Saturday Night Live

## Video description By now, you may have heard about our acclaimed documentary I.O.U.S.A., a film that boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. The film has been a huge hit, getting rave reviews from Roger Ebert and others.

Now, we proudly release a 30-minute condensed version of I.O.U.S.A. designed specifically for watching and sharing on the web - for free.

So if you haven't had a chance to see the movie yet, watch the condensed I.O.U.S.A. today. If you've already seen it in a theater, check out the abbreviated version for a refresher. Then, tell your friends, your family, your Facebook friends and your Twitter followers about the staggering amount of money - $53 trillion - in financial obligations owed by the federal government to foreign investors and to every single American in the form of pensions, health benefits, Social Security and Medicare.

[Source](https://www.youtube.com/watch?v=O_TjBNjc9Bo)

中文简报

沃克警告：福利支出激增，美国面临53万亿美元财政黑洞除非华盛顿推行结构性福利改革，否则联邦医疗保险与社会保障的无资金准备承诺将耗尽全部联邦税收，并迫使税率翻倍。在该片中，美国前总审计长戴维·M·沃克带领观众审视了美国在四个相互交织的维度上日益加剧的财政危机：预算赤字、储蓄赤字、贸易赤字以及两党领导力缺失。影片揭示，尽管当时官方公布的债务约为9万亿美元，但随着婴儿潮一代步入退休年龄，失控的联邦医疗保险和社会保障债务构成了主要的无资金准备联邦承诺，其真实总额高达难以维系的53万亿美元。包括沃伦·巴菲特和前财政部长保罗·奥尼尔在内的知名人士指出，废除减税政策或结束伊拉克战争等常见政治提议，均无法解决深层的结构性资金缺口。纪录片最终发出紧急呼吁，号召基层公民采取行动，以免对外国债权人的依赖和失控的福利支出永久侵蚀国民生活水平。美国面临高达53万亿美元的无资金准备负债缺口（约合每位公民负担17.5万美元），这主要由联邦医疗保险和社会保障的未来承诺所致。 (0:04) 国家财政的脆弱性由四项相互交织的赤字共同加剧：联邦预算赤字、趋近于零乃至为负的个人储蓄率、长期的国际收支/贸易逆差，以及政治领导力的匮乏。 (0:04) 普遍讨论的政治解决方案远不足以解决结构性失衡：结束伊拉克战争解决的缺口不足3%，布什减税政策到期解决约10%，而取消全部专款专案仅能解决约1%的年度开支。 (27:46) 预计到2040年，美国国家债务与GDP之比将达到二战结束时所创历史峰值的两倍，从而带来严重的经济动荡风险并加剧对外国债权人的依赖。 (27:46)

Source quotes

[0:04] I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility. [0:04] David M. Walker: We suffer from a fiscal cancer; it is growing within us, and if we do not treat it, it could have catastrophic consequences for our country. [19:29] Warren Buffett: If 15 or 20 years from now 2 or 3% of the GDP is being paid abroad merely to service the debts or the ownership of assets that been incurred because we're overconsuming, that will be politically unstable. [21:58] Paul O’Neill: You inevitably get into trouble when you get extended to the point that you can't service your debt, you're finished.

Original transcript

[0:04] I would argue that the most serious [0:07] threat to the United States is not [0:09] someone hiding in a cave in Afghanistan [0:12] or Pakistan but our own fiscal IR [0:20] responsibility what hit the economy [0:22] first was a housing slump fears spread [0:24] to Wall Street consumers tighten their [0:26] Pur string US Federal Reserve cut its [0:28] key interest rate by half pointy I word [0:31] inflation is coming to the major [0:32] developments on the lending crisis in [0:34] the US oil and gold prices are spiking [0:36] nuclear here on our financial Market [0:38] complicated because of where we are in [0:39] the election cycle huge disconnect [0:41] between Wall Street and Main Street [0:51] [Music] [1:12] who is David Walker and why should we [1:14] care he's the nation's top accountant [1:16] The Controller General of the United [1:18] States he's total up the government's [1:20] income liabilities and future [1:22] obligations and concluded that our [1:24] current standard of living is [1:26] unsustainable unless some drastic action [1:28] is taken and is's not alone we suffer [1:32] from a fiscal cancer it is growing [1:36] within us and if we do not treat it it [1:39] could have catastrophic consequences for [1:42] our [1:46] [Music] [1:48] country how big is the federal [1:51] debt I don't know I'm guessing quite a [1:55] bit I know it's a heck a lot more than [1:57] it was probably 10 years ago well take a [1:59] stab at it [2:00] 69 [2:02] billion it's probably huge what if I [2:05] told you it was 8.7 [2:09] trillion that's pretty [2:11] crazy that's shouldn't be that [2:16] way $8.7 [2:19] trillion just how much money is that [2:22] with a number this large it helps to [2:24] compare it to the overall size of [2:26] America's economy what economists call [2:28] the gross domestic product or GDP in [2:31] February 2007 when our federal debt was [2:34] $8.7 trillion our GDP was around 13.5 [2:39] trillion that meant that our federal [2:41] debt was about 64% of our GDP this level [2:45] of debt to GDP is not the real problem [2:48] it's where we're headed that matters if [2:50] you were to add up all the federal [2:51] government's unfunded promises for [2:53] Medicare and Social Security you would [2:55] see that as of September 30 2007 America [2:59] had dug itself into a 53 trillion hole [3:02] and it's getting deeper by at least $2 [3:04] to3 trillion every year by doing nothing [3:07] unfortunately with increasing budget [3:09] deficits and recent government bailouts [3:11] we're now digging even [3:15] faster America faces four serious [3:19] deficits today the first is a budget [3:21] deficit the second is a savings deficit [3:26] the third is a balance of payments [3:28] deficit of which the trade deficit as a [3:30] subset and the fourth and most serious [3:32] of all is a leadership deficit how can [3:35] this be happening to the richest country [3:39] in the world well we've lost our way [3:41] quite frankly uh let me tell you how we [3:43] got to where we [3:47] are today's federal debt is the sum of [3:49] all of our annual budget deficits and [3:51] surpluses going back to the beginning of [3:53] our federal [3:54] government our war for independence [3:57] created much of our early debt and by [3:59] March 4th [4:00] 1789 the first day of our federal [4:02] government our national debt was $75 [4:05] million which was about 40% of our [4:09] economy this terrified our founding [4:11] fathers and they acted quickly to pay it [4:18] down we didn't stay there for long the [4:21] Civil War not only had a huge human cost [4:24] it brought the United States to the [4:25] brink of bankruptcy however like before [4:29] we paid our debt debt down [4:30] quickly in 1913 the Federal Reserve [4:34] System was created to help manage the [4:35] nation's money supply and oversee [4:38] National Banks that year was also the [4:40] birth of the modern income [4:43] tax World War I was supposed to be the [4:45] war to end all wars several years later [4:48] the Great Depression brought with it [4:50] extreme economic hardship for millions [4:52] of Americans this social security [4:55] measure gives at least some protection [4:59] to 30 millions of our citizens it is [5:03] insurance that you and your employer [5:05] have bought and paid [5:08] for World War II was a time of sacrifice [5:11] and while the government took on [5:12] unprecedented levels of debt Americans [5:14] bought savings bonds to finance our [5:16] winning the [5:18] war and Now ladies and gentlemen Mr [5:21] Humphrey Bard our fighting man have just [5:23] won History's Greatest victory for [5:25] Freedom buy bonds for their future and [5:28] for your own future got another bond to [5:31] buy it's official it's all over it's [5:34] total [5:35] [Music] [5:36] [Applause] [5:40] Victory the large military and social [5:42] spending practices of the 1960s and70s [5:45] were two key factors that led to a major [5:48] economic downturn by the end of the [5:52] 1970s the 1980 saw the rise of supply [5:55] side economics it's morning again in [5:57] America Reaganomics you're you're the [6:00] trickle down Theory guy I'm betting my [6:02] reputation on it the controversial [6:04] laugher curve proposed that lower [6:05] marginal tax rates would eventually [6:07] generate higher tax revenues the theory [6:10] did have its critics let me just give [6:13] you a difference that I have with [6:15] Governor Reagan on taxes it is what I [6:17] call a voodoo economic [6:20] policy for decades we have pile deficit [6:24] upon deficit mortgaging our future and [6:27] our children's future for the temporary [6:29] convenience of the [6:33] present read my [6:40] lips the debate over supply side [6:42] economics continues to this day but what [6:45] is not debatable is that the federal [6:46] debt exploded in the [6:48] [Music] [6:52] 1980s a fundamental shift had [6:55] occurred America was becoming addicted [6:58] to debt never before in our history had [7:01] so much debt been created during an era [7:03] of relative peace and [7:05] prosperity yes the Cold War ended but it [7:08] came at an extremely high price and [7:10] people from across the political [7:12] Spectrum were becoming very alarmed [7:18] [Music] [7:27] [Music] [7:39] we come here today Democrats and [7:42] Republicans to celebrate a true [7:45] milestone for our nation in a few [7:48] moments I will sign into law the first [7:50] balanced budget in a generation [8:00] the politics of of sound fiscal policy [8:03] are very difficult because the natural [8:05] inertia in the political system if you [8:07] will is toward Federal programs most of [8:10] which are are very useful and therefore [8:13] the the inertia is toward spending on [8:14] the one hand and tax cuts on the other [8:17] hand but if you're going to have sound [8:20] fiscal conditions you have got to both [8:22] constrain your spending and you also [8:24] have to provide for adequate revenues [8:26] and what ultimately is involved are very [8:29] difficult trade-off decisions involving [8:31] Federal programs and what the American [8:32] people want their government to do and [8:34] then providing the means to pay for it [8:45] [Music] [9:40] [Music] [9:42] in the last 40 years we've had 35 budget [9:45] deficits and only five budget surpluses [9:48] but remember we've been running large [9:50] annual surpluses in our social security [9:52] program for [9:53] years these surpluses are spent every [9:56] year to help pay other bills in the [9:58] federal government [9:59] without the Social Security surpluses [10:02] our real track record on deficits looks [10:04] a whole lot [10:06] worse this is something that's utterly [10:08] unsustainable and remember all of that [10:10] has happened before the Baby Boomers [10:13] retire and the Baby Boomers are not a [10:15] projection they're born they're out [10:18] there they're going to be eligible for [10:19] Social Security and Medicare and yet we [10:22] can't pay our bills [10:24] now in less than 10 years Social [10:27] Security will be paying out more than it [10:29] takes takes in and will only get worse [10:31] as Baby Boomers retire in larger and [10:33] larger numbers by 2017 Social Security [10:37] will not be helping to reduce our [10:38] overall deficit it will be adding to it [10:42] our enormous Medicare deficits and other [10:44] federal spending that also lie ahead [10:47] will only make this situation [10:53] worse the only issue that's more severe [10:56] than this would be the idea that a [10:57] Islamic fundamentalist would get his [10:59] hand hands on or her hands on a nuclear [11:00] weapon and use it against us beyond that [11:03] there's nothing that's more severe than [11:04] this this this issue represents the [11:07] potential fiscal meltdown of this nation [11:09] and it absolutely guarantees if it's not [11:11] addressed that our children will have [11:13] less of a quality of life than we've had [11:15] that they will have a government they [11:16] can't afford uh and that we will be [11:18] demanding so much of them in the area of [11:20] taxes that they will not have the money [11:22] to send their kids to college or buy [11:24] that home or just live a good quality of [11:26] life [11:27] [Music] [11:39] America you won't have any of these if [11:42] you don't start learning about the day [11:45] you're a prisoner to the National de oh [11:48] you scaring I know I am scaring people [11:50] that's the point man it's a scary issue [11:52] you don't want to scare away from us [11:53] there you want say okay it stinks you [11:56] know our parents talk our ears off from [11:58] the time we're T about financial [12:00] responsibility this is what you have to [12:01] do don't get into credit card Deb you [12:03] have to pay for what you buy you have to [12:06] save your money and then the politicians [12:08] who are supposed to represent your [12:10] values and represent what you want they [12:12] aren't doing the same thing they're [12:13] telling you one thing and doing another [12:15] thing would you like to go on a DAT with [12:16] me no would you like to learn about the [12:17] vet yes it's hard to really really get [12:20] kids inspired but I think we're starting [12:22] to do that it sort of gives you [12:27] hope right now if you look at the [12:29] federal budget it's running a deficit [12:31] and it will probably run a deficit for [12:33] the next uh several years those deficits [12:37] are not off the charts we've been there [12:39] before but what is really worrisome is [12:42] the longer run future if you look at [12:45] just three programs Medicare Medicaid [12:49] and Social Security the spending for [12:52] those programs under current rules will [12:56] rise very rapidly over the next few [12:59] years indeed for the foreseeable future [13:03] longevity increases and Rising Medical [13:06] Care spending are symptoms of being a [13:08] rich country however we got to do [13:10] something about it unless we're willing [13:13] to raise taxes and keep on raising them [13:16] or close down the rest of the federal [13:19] government we've got a very big problem [13:23] staring Us in the face [13:32] did you know millions of Americans live [13:34] with Deb they cannot control that's why [13:36] I developed this unique new program for [13:38] managing your debt it's called don't buy [13:41] stuff you cannot [13:44] afford oh let me see [13:48] that if you don't have any money you [13:51] should not buy anything H sounds [13:54] interesting sounds confusing I don't [13:57] know honey this makes a lot of sense [13:58] there's a whole section here on how to [14:00] buy expensive things using money you [14:03] save give me that and where would you [14:07] get this saved [14:10] money how much money do you guys have in [14:13] your savings accounts uh couple hundred [14:16] bucks uh about a th000 [14:21] maybe are you talking about MoneyWise I [14:24] end up using most of the money in my [14:25] savings account so it doesn't really [14:27] like work as a savings account like I'm [14:28] not actually saving anything I'm just [14:30] storing it there I think most people can [14:34] say that they um live paycheck to [14:35] paycheck I think the good majority of us [14:40] do David we've got you right here Robert [14:44] you're right over here the introductions [14:46] this is Dean B I'm David yson and I'm a [14:49] political columnist with the De Moine [14:51] register I think this issue is really [14:53] the most important issue fa in the [14:55] country too many Americans are following [14:57] the bad example of their federal [14:58] government government they're spending [15:00] more money than they make they're taking [15:02] out home equity loans they're charging [15:04] up their credit cards they're building [15:05] up compound interest and seeing the day [15:07] the not too distant future where they [15:08] may not be able to make the does that [15:10] exacerbate the national problem it [15:12] clearly does because for two years in a [15:14] row American households have spent more [15:18] money than they took home a negative [15:20] savings rate the last time that happened [15:22] was 1933 and 1934 not good years for [15:25] America of the world now we're in a very [15:27] different situation than 1933 [15:29] 1934 but the reason we have to borrow [15:31] from foreign players who hold more of [15:33] our national mortgage who have more [15:35] leverage on us and we have less leverage [15:37] on them it's because we're not saving [15:38] and that's got to change I think it's [15:40] going to take a crisis before America [15:42] responds to this we're not going to be [15:43] willing to take this pain until it gets [15:45] to be a real [15:48] problem the concepts of sacrificing and [15:51] building for a better tomorrow have been [15:53] pushed aside by our live for today easy [15:56] credit and consumption oriented Society [15:59] many Americans have never seen a rainy [16:01] day and therefore simply choose not to [16:03] save for one this is a major problem [16:06] because savings results in increased [16:08] investment additional research and [16:10] development a stronger economy and an [16:13] improvement in our overall standard of [16:17] [Music] [16:19] living savings essentially is putting [16:23] aside part of what you produce part of [16:26] your income to have have provision for [16:30] the [16:30] future what these various different [16:33] deficits are [16:35] suggesting is that we are trying to [16:38] consume more than we produce we can do [16:42] that in the short run but over the long [16:44] run it is of course [16:46] impossible without savings there is no [16:53] future Americans must start to save [16:56] again and they need to invest those [16:58] saving to help create a better future [17:00] for themselves their families and our [17:03] [Music] [17:11] country when I say trade deficit do you [17:15] know what that [17:16] means um deficit usually means something [17:21] like uh disorder or something so [17:23] something is wrong with it it's not good [17:26] it's the money that the United [17:31] is the trade deficit with other [17:32] countries maybe so if we have a trade [17:34] deficit we're importing more than we're [17:36] exporting okay there it [17:41] is in 2007 China had the largest Trade [17:46] Surplus in the world and who was dead [17:50] last the United States of America yeah a [17:54] few years ago I wrote an article for [17:56] fortune on sort of the parable of the [17:58] Sandersville and and then fisv which was [18:01] designed to simplify for people problems [18:04] inherent in persistent and large trade [18:07] imbalances economics tends to put people [18:10] to sleep and I thought maybe by creating [18:12] a couple of islands with inhabitants of [18:15] quite widely different activities that [18:18] it might get across a point that [18:19] otherwise they get lost on the thrust is [18:22] that that if you own a lot of property [18:26] an island in this case you can trade it [18:29] off for the things that you eat and [18:30] consume every day and you can do that [18:33] for a long [18:34] time but eventually you run out of [18:37] property and then you have to work a [18:38] whole lot harder to provide your own [18:40] needs but also to pay back the debt [18:42] you've incurred short-term actions have [18:45] long-term consequences that sometimes [18:47] people don't think about in the short [18:49] run [18:54] [Music] [19:02] if you're buying more than you're [19:03] selling which is what a trade deficit is [19:06] eventually your trading partners are [19:07] going to own a lot of your wealth when [19:10] they are not buying your goods and [19:11] services with this money they will be [19:13] looking for ways to invest it running [19:15] large and persistent trade imbalances [19:17] can be problematic especially when a [19:19] country has a low savings rate and its [19:22] government needs to borrow more money [19:24] every year to pay its bills [19:28] [Music] [19:29] when the federal government needs to [19:31] borrow money yeah do you know how they [19:33] do [19:34] [Music] [19:36] that I'm under the assumption that [19:39] everyone else borrows money from us [19:42] [Music] [19:44] so in the past when we ran large budget [19:47] deficits our government turned to [19:49] Americans to borrow that money after [19:51] World War II virtually all the federal [19:54] debt was owed to Americans today our [19:57] high budget deficits our low personal [19:59] savings rate and large trade deficits [20:02] have caused us to become increasingly [20:04] reliant on foreigners to finance our [20:06] debt and provide capital for investment [20:09] there's nothing inherently wrong with [20:11] this in the short term and the truth is [20:13] America lends money to other [20:15] countries however as our Reliance on [20:18] foreign lenders increases every year one [20:20] might ask what are the longer term [20:22] consequences [20:29] [Music] [20:31] in the fall of 1956 the world was on the [20:34] brink of a major International [20:36] conflict America's allies Britain and [20:38] France were engaged in a battle against [20:41] Egypt over control of the Suz [20:44] Canal the Soviet Union was threatening [20:46] to intervene on the side of [20:48] Egypt America wanted to avoid military [20:51] action at any cost and demanded that the [20:54] British and French allies withdraw from [20:56] the [20:57] region when when their request was [20:59] denied the US turned to financial [21:04] Warfare America which at that time own [21:07] much of England's debt threatened to [21:08] sell off or dump a significant part of [21:11] its Holdings in the British [21:13] pound this would have effectively [21:16] destroyed England's [21:17] currency the result all British and [21:20] French military forces withdrew from the [21:22] Suz region within weeks [21:33] if 15 or 20 years from now 2 or 3% of [21:37] the GDP is being paid abroad merely to [21:40] service the debts or the ownership of [21:43] assets that been incurred because we're [21:45] overc consuming that will be politically [21:48] unstable [21:58] while it can't be measured in dollar [22:00] terms our leadership deficit is our [22:02] nation's biggest challenge too many of [22:04] our current leaders know we are facing a [22:06] financial crisis yet they lack the [22:08] courage to do something about it [22:14] [Music] [22:22] [Music] [22:45] in the Battle of Iraq the United States [22:48] and our allies have prevailed [22:51] [Applause] [22:56] [Music] [23:03] [Music] [23:29] [Music] [23:35] [Music] [23:48] President Bush 43 I asked me to come [23:51] back to the government be the Secretary [23:53] of the Treasury which I did for 23 [23:56] months uh before I got fired for having [23:58] a difference of [24:00] opinion for the record the White House [24:02] is saying that treasury secretary Paul [24:04] O'Neal and top economic adviser Larry [24:07] Lindsay tendered their resignations [24:09] voluntarily the vice president said uh [24:13] the president decided to make some [24:15] changes and you're one of the changes [24:17] and what we'd like to do is I have you [24:21] come over and meet with a president and [24:24] basically say that uh you've decided to [24:27] go back to the private [24:29] sector you know for me to say that I've [24:32] decided to uh leave the treasury is a [24:36] lie and I'm not into doing lies and so [24:40] that was it I went back to my [24:42] office laat up my brief case and went [24:45] down to the parking space that's [24:47] reserved for the Secretary of [24:49] Treasury got my car and drove back to [24:53] Pittsburgh well you know it's the first [24:54] in my life I'd never been fired before [24:57] I'd only been promoted to ever higher [24:59] levels of responsibility but you know it [25:02] was okay with me uh because I would have [25:05] really been [25:07] uncomfortable uh arguing for policies I [25:11] didn't believe [25:12] in I argued during the second half of [25:16] 2002 we should not have another tax cut [25:19] that was not a popular View and in fact [25:22] it led to a conversation with the vice [25:24] president where he basically told me [25:26] that we don't have to worry about death [25:29] you know which I got to tell you was [25:30] really a shock to me you know when we [25:34] the bush 43 Administration took over we [25:36] had something over five maybe 5.6 [25:39] trillion dollar worth of national debt [25:42] today I think the number is 8.8 trillion [25:45] that's not an innocent change it is a [25:48] Monumental change in The Debt Service [25:51] that we have to do in addition to and on [25:54] top of all of the other things that our [25:57] country needs to do you know I think we [25:59] only need to look at the fate of other [26:01] countries who've lived beyond their [26:03] means for a long time you in evitably [26:06] get into trouble when you get extended [26:10] to the point that you can't service your [26:12] debt you're [26:17] finished some people think that we can [26:19] solve our financial problems by stopping [26:21] fraud waste and abuse or by canceling [26:24] the Bush tax cuts or by ending the war [26:26] in Iraq the truth is we could do all [26:29] three of these things and we would not [26:32] come close to solving our nation's [26:33] fiscal [26:35] challenges here's how bad our situation [26:37] really [26:38] is we already have approximately 11 [26:41] trillion in total liabilities including [26:44] public debt to this amount you need to [26:46] add the current unfunded obligations for [26:48] social security benefits of about $7 [26:51] trillion then add medicare's unfunded [26:54] promises $34 [26:56] trillion of which about 26 trillion [26:59] relates to Medicare Parts A and B and [27:02] about 8 trillion relates to Medicare [27:04] Part D the new prescription drug benefit [27:07] which some claimed would save money in [27:10] overall Medicare cost add another [27:12] trillion dollars in miscellaneous items [27:14] and you get $53 [27:19] trillion our country would need 53 [27:21] trillion invested today which is about [27:25] $175,000 per person to deliver on the [27:27] government obligations and promises how [27:30] much of this $53 trillion do we have [27:35] Zip by the time today's college [27:37] graduates ready to retire 40 years from [27:39] now the only things our government will [27:41] be able to pay for are interest on the [27:43] federal debt and some social security [27:46] Medicare and Medicaid benefits all other [27:49] parts of the federal government will be [27:51] closed and out of [27:54] business what about taxes we would have [27:57] to raise federal tax burdens across the [27:59] board more than two times today's levels [28:01] to close the financing Gap some [28:04] politicians complain when any tax [28:05] increases are mentioned we're facing a [28:08] more than doubling of federal taxes if [28:10] we continue down our present [28:14] path remember our debt to [28:17] GDP by the year 2040 our debt to GDP [28:21] will be twice the record level at the [28:23] end of World War II and it skyrockets [28:26] after that [28:29] who's going to lend us money [28:31] then no matter what you personally [28:33] believe should be done to address our [28:35] nation's deficits the magnitude of our [28:37] problem is much bigger than people [28:39] understand let's assume for a moment [28:41] that all ear marks and special interest [28:43] pork barrel spending were eliminated [28:45] they only represent about 1% of our [28:48] annual federal [28:49] spending what if all three Bush tax cuts [28:52] expired in [28:53] 2010 that would only address about 10% [28:56] of our federal financial [28:59] whole and what about [29:01] Iraq even if the war ended in 2009 the [29:05] total estimated cost of the war over [29:07] time is less than 3% of our total [29:09] financial [29:12] problem our budget savings trade and [29:16] Leadership deficits individually are bad [29:19] enough but in combination they create a [29:22] toxic mix that threatens our countries [29:25] and our families Futures as the Baby [29:28] Boomers retire in large numbers this [29:30] tidal wave of spending will reach our [29:33] Shores and we are simply not prepared [29:36] for and trust me it could swamp our ship [29:39] of State unlike many other problems [29:42] facing our country this one is ours [29:45] alone we can and we must solve this one [29:49] the question is when will we as our [29:52] nation's Founders said it's really up to [29:55] us we the people [30:00] if you're concerned about our nation's [30:01] four deficits and you want to do [30:02] something about them please sign up [30:04] under the citizen action section of our [30:06] website at pgpf dorg working together we [30:10] can make sure that our future is better [30:11] than our [30:26] past [30:56] e [31:26] e [31:56] e e