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Fiscal Wake-Up Tour

People often get irritated with me because I am pedantic about puns and other word-plays. Take “I.O.U.S.A.”. It seems to be a neat combination of “IOU” (the traditional shorthand for ‘I owe you’) and USA. To make it slicker, the second U is deleted. But that means it translates as “I owe [the] USA”, which is the precise opposite of what it is trying to convey – that the USA owes others far too much money. Maybe it is an inevitable byproduct of a mathematical mind.


David Walker was appointed in 1998 as the seventh Comptroller General of the United States. This is a prestigious office started after World War 1. He is the director of the GAO, which is similar to the UK National Audit Office.

Appointment as CG is for 15 years and except for Fred Brown who had a bad stroke after a year in office, Walker’s predecessors served out their full terms. But Walker decided to leave after 10 years to give him the freedom to campaign. He had become deeply concerned that Americans had got used to too much borrowing and not enough saving. He wanted to mount a campaign to persuade ordinary Americans to change their ways.

He teamed up with Peter Peterson, who founded the Blackstone Group with the better-known Stephen Schwarzman. Blackstone is a successful private equity group. I have low opinion of the value of such companies to society, but I have written extensively about that elsewhere. Blackstone had a successful IPO in March 2007, which make Peterson’s wealth more liquid (ticker BX). Unsurprisingly, its price has plummeted over the last few months and now stands around $6 compared with levels comfortably above $30 shortly after the IPO. But Peterson still has plenty of money.

The vehicle he established was the Peter G Peterson Foundation, so he clearly has a fairly high opinion of his own importance. The Foundation funded a documentary movie I.O.U.S.A which follows David Walker and a collection of other well-known financial figures on a Fiscal Wake-Up Tour. It is apparently showing in cinemas in America. A 30 minute version is available free on the web. There is an even shorter 8 minute version on youtube. These two free versions are rather different in slant. It is worth watching both. I have tried to embed the youtube version here:

Finally, there is a book version: I.O.U.S.A. ISBN 0470222778.

All this is not aimed at the intelligentsia. Indeed it is aimed at people who barely know what a deficit is. But it is still worth watching. The speakers have a gift for putting things simply and clearly, but fairly accurately. The old sports maxim, widely quoted by all US sales trainers ( Tom Hopkins is my favourite – I find his voice almost hypnotic), is that even the top professionals have to go back and train on the basics every season. There is a good deal of truth in that. It is easy to get so caught up in fine detail and subtle side issues, that one loses sight of the main point.

Unfortunately, IOUSA over-eggs its case. It projects a ludicrous increase in health care costs. If you strip that out, the projections look totally different. There is a handy calculator which does this. It takes a little getting used to – you pick a country whose health care spending you wish to emulate and it then gives the corresponding deficit projections. This example gives a generic lower rate of increase in health care costs:


Of course, the shortcut is to remember that any projections going forward 50 years are always complete rubbish (the Club of Rome, global warming etc etc) – we just don’t understand complex systems well enough to make useful projections that far out.

Nonetheless, I wish David Walker well. Anything to educate America would be helpful. Maybe Colin Powell could do a similar job on the elements of foreign policy.

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