I.O.U.S.A - Addison Wiggin [6]
&
Sons, especially Debra Englander, Joan O
’ Neill, and Kelly
O ’ Connor, for all of their hard work on this book and putting up with our unique understanding of deadlines.
We would like to thank the Wiggin and Incontrera families, as well as Craig Stouffer, for their continued support of this project (and of us). Thanks to our friends and co - workers for putting up with our hectic schedules, being a sounding board when needed, and even providing us with a place to write (thanks, Kyle!).
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Acknowledgments xxi
Last, we would like to thank the distinguished group of experts who allowed us to interrupt their busy lives to sit down with us to be interviewed for I.O.U.S.A. :
• Alice Rivlin
• William Bonner
• Robert Rubin
• Peter G. Peterson
• Ron Paul
• Paul Volcker
• Alan Greenspan
• Warren Buffett
• James Areddy
• Paul O ’ Neill
• Arthur Laffer
• Steve Forbes
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Part One
THE MISSION
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THE MISSION
Defi cit reduction cannot be described as a sexy topic. Unfortunately, it is hard to break through with an unsexy message. It comes across as kind of like taking a cold shower. We come along after the sexy messages and cool people off.
— Bob Bixby, executive director,
Concord Coalition, in the fi lm I.O.U.S.A.
The I.O.U.S.A. project has been one long, cold shower.
As Bob Bixby put it, it ’ s hard to break through with an unsexy message. But we ’ ve been trying. The fi lm and the book are the culmination of nearly fi ve years of work. When we began, the potential diffi culties of a growing national debt and a struggling currency — both abetted by negligence on the part of the nation ’ s policy makers — were far from the media headlines.
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4 The
Mission
Words like subprime, mortgage - backed securities, and infl ation barely piqued the interest of the average American. Gasoline and food prices appeared to be stable. The stock market
appeared to have recovered from the tech bust and was on its way to new record highs. It looked like house prices would be going up forever. Interest rates were dropping. Despite the wars in Iraq and Afghanistan, Americans were generally positive about the outlook for the economy and their own prospects within it.
But we had our suspicions.
Along with much of the Western world, the United States is entering a demographic transformation to an older society.
But we ’ re doing so at a bad time. Health care costs are rising dramatically. The nation has a falling savings rate. Together they make a very bad combination for the economy. But, as with any extravaganza, it ’ s hard to get people to see that the party ’ s over.
■ ■ ■
In the fall of 2005, after two years of research and writing, Bill Bonner and I published Empire of Debt, a look at the history of rising debt in all levels of American society. The federal government had been, and still is, running historic defi cits in the federal budget. The national debt was growing at a pace never seen in the nation ’ s history. While the Bush administration waged increasingly unpopular wars overseas, Congress — and, by extension, the American people — was depending more and more on foreign lenders and tapping the Social Security and Medicare trust funds to pay its bills. The national savings rate was about to go negative. And the current account balance — the nation ’ s balance sheet with the rest of the world — was entering historically negative territory as well.
On the surface, the stock market and housing were