Thursday, March 26, 2009

PBS Frontline: "Ten Trillion and Counting": Armageddon on the national debt, federal deficit

On Tuesday March 24, 2009 PBS Frontline, with a last minute change on WETA, aired “Ten Trillion and Counting”, a report about the national debt, with Forrest Sawyer reporting. This airing followed President Obama’s press conference. The website reference is here.

The government owes more money than the net worth of the American people, according to the show.

Sawyer starts, after showing some brief Inauguration Day clips, by showing an undisclosed location near the White House where the government pays its bills, and schedules the borrowing of money. The show says about Jan. 21, 2009: “Night turns to day and the picture grows darker.”

One threat is that some day the government will need to borrow money, and no one shows up to buy the bonds. Then it simply will not be able to pay social security and Medicare, or even guarantee bank deposits.

The show goes back to the Bush inauguration, when President George W. Bush inherited a budget surplus.

It actually looks back further, and shows that Ronald Reagan scaled back his tax cuts and actually signed tax increases. The first president Bush was reasonably prudent, but George W. Bush took neo-conservative anti-tax ideology too literally, and feared angering the base of his party. The show then discussed the “Starve the Beast” theory.

Then we cut taxes on the rich during the war in Iraq, borrowing money from China to pay for it, and passed the bill on to our kids.

Bush used a technique called “Reconciliation” to pass his budget bill, not requiring the 60 votes for tax cuts for a process normally used for deficit reduction. This was a perversion of parliamentary procedure, of Roberts Rules of Order, perhaps. Vice President Dick Cheney passed the deciding vote.

The abandonment of “PayGo” or “Pay as you Go” spending pushed through Medicare Part D; Republicans even supported it because of pressure from the senior lobby.

Because of the economic stimulus, the deficit gets worse in the short run, and we may get through the immediate financial crisis, only to have a complete financial meltdown later (maybe on Dec 21, 2012 perhaps?)

The show covers the financial implications of the aging population, as the baby boomers turn 62 (claiming social security) and then 65 (claiming Medicare). This is a demographic tsunami. Add to that the explosion in Alzheimer’s disease. Eventually, there will be no money to spend on anything but “earned entitlements”. Medicare and Medicaid could grow to 20% of the GNP by 2050.

Will we go back to “mandatory family responsibility”?

Obama says that the biggest threat to the nation’s well being is the skyrocketing cost of health care.

The show interviews Obama’s budget director Peter Orszag. The program says that at the current projection the national debt will double by 2019.

There is an argument that “there is always a first time”: just because “it hasn’t happened” doesn’t mean it can’t happen. (Look at housing prices!) Recently China warned us that so much borrowing has them worried. Could the Chinese cut us off?

I'm surprised that the film didn't show the National Debt Clock.

See my review of the film “I.O.U.S.A.” on the movies blog Aug 22, 2008.

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