Two billionaires used the screening of a documentary in theaters across the United States on Thursday to urge the country to come to grips with its staggering debt load.
Warren Buffett and Pete Peterson were at the premiere of the movie “I.O.U.S.A.” to add their views to the film’s message: An economic disaster will befall the nation if the federal government’s $53 trillion in debts continue to grow.
But Buffett said at a news conference before the movie’s showing that he doesn’t think the country’s financial picture is quite as dire as the filmmakers portray. “I do not regard our national debt as unduly alarming,” said Buffett, who is chairman and CEO of Berkshire Hathaway Inc., and is listed by Forbes magazine as the world’s richest man. Buffett said he’s confident the country will be able to address its debts and remain prosperous, but he doesn’t want to see the share of the US gross domestic product devoted to debt continue to grow. “We’ve overcome things far worse than what is going on right now,” Buffett said, who was interviewed in the movie but is not backing it financially.
The film that was shown Thursday in 358 theaters nationwide details the federal government’s debts. The movie is backed by Peterson _ who co-founded the Blackstone Group LP private equity firm and served as commerce secretary under President Nixon … and is part of his foundation’s campaign to give the ballooning debt a central role in the presidential campaign. “What concerns me more than anything is our savings rate,” Peterson said. Peterson said the meager US rate of savings today means that roughly 70% of the nation’s debts are being bought by foreign investors, and that could create geopolitical and economic problems for the country.
A panel discussion in Omaha followed the movie and was broadcast live to the other theaters, except on the West Coast where it was shown tape-delayed. Thursday’s panel discussion featured Buffett, Peterson, AARP CEO Bill Novelli and William Niskanen, chairman of the libertarian-leaning CATO Institute. Niskanen said the nation has to increase the retirement age in Social Security to at least 70 from the current range of 65 to 67. He also backed adding an income test to Medicare so those with more money pay a larger share of their health costs. Peterson said he hopes the movie will help explain the problems debt can bring, so politicians will feel more pressure to act. “The problem is getting the public understanding and the political will to do something about it,” he said.
The “I.O.U.S.A.” filmmakers followed former US Comptroller David Walker as he toured the country, speaking to college groups, newspaper editorial boards and community groups about the nation’s financial problems. Most of the talks in the movie took place while Walker still ran the Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government.
Walker and the movie cite GAO figures that show the US government owed roughly $53 trillion more than it had at the end of the 2007 fiscal year, the most recent figure available. About $11 trillion of that covers publicly traded government debt, the amount the federal government owes to employee pensions and the cost of environmental cleanup of federal land. The rest of the $53 trillion figure accounts for projected shortfalls in Medicare and Social Security. The cost of covering those obligations is expected to soar as more baby boomers become eligible for the two programs.
Buffett said he doesn’t believe those programs that help provide for the elderly will consume the bulk of the government’s resources in the future because America will be wealthier. “The important thing to remember is that the pie gets larger over time, and there’s more to divide up,” Buffett said.
But Walker, who also took part in the panel discussion, said he disagrees with Buffett’s assessment because the predictions the movie highlights about the country’s debt already assume the nation will be wealthier. Walker said he hopes both the Democratic and Republican candidates for president will acknowledge the staggering amount of debt the nation carries, and pledge to appoint a bipartisan coalition next year to look for solutions.
The film also featured interviews with prominent businessmen and officials from both major political parties, such as former Federal Reserve chairmen Alan Greenspan and Paul Volcker and former US Treasury secretaries Paul O’Neill and Robert Rubin. Greenspan warned that the nation cannot continue consuming more than it produces indefinitely. “Without savings, there is no future,” Greenspan said in the movie.
Thursday’s screenings and panel discussion will be followed by a 12-city theatrical run beginning Friday. Peterson says he wants to have the movie shown on TV next year. (The Economic Times)