April 18, 2014

I.O.U.S.A. -- Questions and Answers

Following the nationwide premiere of the documentary film, I.O.U.S.A, a panel discussion of distinguished experts took questions at a town-hall meeting and from moviegoers online. Cast members David Walker, former Comptroller General of the United States and current President of the Peter G. Peterson Foundation, and Concord Coalition Executive Director Robert Bixby, are still taking your questions and answering them online.

Questions & Answers

  • MATTHEW K., BEL AIR, MD:

    Given the unwillingness of our politicians to address this problem facing our nation, what can the average citizen do to prepare for the adverse effects to come -- besides buying gold, a gun, and ammo??
  • DAVE WALKER:

    Matthew, individuals need to recognize that the government has over-promised. Therefore, individuals who are not in retirement or at retirement age need to assume they'll have to take more personal responsibility for their own financial futures. At the same time, the federal government should have a sound and secure safety net for the poor.
  • SCOTT C., DEERFIELD, IL:

    What would be the probability of the government printing money to pay for the deficit instead of raising taxes or reducing programs? What will inflation look like?
  • DAVE WALKER:

    Scott, we simply cannot inflate our way out of our $53 federal financial burden since the $41 trillion in off-balance sheet obligations grows faster than inflation.
  • KATHLEEN C., FOREST PARK, IL:

    How will a continuation of the growing gap between rich and poor, with the shrinking of the middle class, affect the long-term stability of the U.S.? Is it important to address this issue?
  • DAVE WALKER:

    Good question, Kathleen. There is a growing gap between the rich and the poor in the world and within the U.S. This is a serious issue and could result in additional tensions and civil unrest over time if it is not addressed. The degree of risk will depend in part on the certainty and security of the government's social safety net.
  • DOUGLAS S., BRISTOL, CT:

    Nobody likes to pay taxes. But everybody wants safe roads, bridges, police, firemen, national security and related forces...I think people would be less frustrated about paying taxes if they could believe their money wasn't being wasted...If Congress authorizes a PayGo [pay-as-you-go] system like we had in the 1990's, will programs such as NIH [National Institutes of Health] funding to cure chronic diseases like diabetes still be seen as an investment?
  • BOB BIXBY:

    This observation reflects the frustration many Americans feel about the way the government spends their tax dollars. They simply don't trust politicians to spend the money wisely. Politicians must remedy this frustration if they are going to expect their constituents to pay higher taxes or accept cuts from projected spending levels on important programs such as Medicare and Social Security. No one will accept such sacrifices if they think the savings will be squandered. It is true, as we point out in the movie, that pure waste and "pork" is a relatively small part of the budget. But it is a very big deal in shaping public perceptions. So while politicians can't entirely fill the $53 trillion hole by cracking down on waste, fraud and abuse -- or frankly come anywhere close -- they can begin to regain public trust and build consensus for the more difficult budgetary choices by demonstrating that they know how to set priorities and distinguish between political wants and public needs.

    As a technical point, the pay-as-you-go rule (paygo) does not apply to annually appropriated programs such as NIH funding. It only applies to entitlements and taxes. Nevertheless, it's an excellent question because it raises the distinction between government spending on things that have a potential payoff down the road (i.e., investments) and things that do not (i.e., consumption). Currently, the government does not do a very good job of distinguishing the two. In fact, two-thirds of the budget is committed to entitlement programs such as Social Security, Medicare and Medicaid along with interest on the national debt. If we simply allow these items to grow on autopilot, the resulting spending will crowd out investments that could help grow the economy. Clearly, there are areas such as health care and scientific research, roads and bridges, education and homeland security where we could invest (spend) more. There is no reason to presume, however, that these investments must be deficit financed. They can, and should, be financed by setting priorities, cutting back on low priority items, including tax loopholes that have no economic justification and, if necessary, raising new revenues. Paygo is an important tool for enforcing such trade-offs. Its basic logic is that if something is worth doing, it is worth paying for. Paygo is not inconsistent with investment. To the contrary, it seeks to stop the fiscal bleeding and encourage wiser allocation of our tax dollars.
  • BRAD P., FORT COLLINS, CO:

    Given the influence that special interest groups have in Washington, how can the unrepresented majority of Americans plead their case for sound monetary policy and fiscal sanity, especially when no candidates are legitimately addressing the issue?
  • BOB BIXBY:

    Paul Tsongas used to say that politicians are like weathervanes. They will point wherever the wind is blowing. Our job is to change the wind direction. The way to do that is to become a local activist for fiscal responsibility and generational stewardship. We can help you gather the facts. Once you do, start speaking out through social, civic, and professional networks. Demand straight answers from candidates and elected officials. When your local Member of Congress holds a Town Hall meeting, go and make your voice heard. If you can gather some friends and family, bring them along. Go to "Meet the Candidate" forums and ask tough questions. Support those who give you honest answers. Individual Americans have more power than they give themselves credit for.