Seeing Red: Buffett, Others Clash On Danger Posed by U.S. Debt
Saturday, August 23, 2008
OMAHA, Aug. 22 -- Two long-term views of the U.S. economy were on vivid display at a town hall meeting here Thursday night, with the world's richest person on one side and pretty much everybody else on the other.
If there is general agreement that times are tough in the short term -- the markets are flighty, foreclosures are widespread and jobless claims remain high -- there is sharp disagreement on what the future holds.
Some, such as super-investor Warren E. Buffett, believe that the economy is merely experiencing a "correction" and that subsequent generations of Americans will have a much higher standard of living than those alive today.
Others, such as David M. Walker -- former U.S. comptroller general and a traveling Cassandra on the perils of the mounting national debt -- fear that the economy is at an inflection point and could be headed toward disaster if something isn't done, immediately.
So the two sides went at it Thursday night, while taking questions from an audience of about 2,000 Omahans who had been given tickets to the event; the whole affair was beamed live to more than 400 theaters around the country to viewers who had paid to watch five men in suits debate the severity of the national debt.
The town hall discussion was the second half of an evening's worth of entertainment, which began with the premiere of "I.O.U.S.A.," a documentary on the national debt starring Walker and featuring Buffett and other notable thinkers on the economy.
The film's premise: The current national debt stands at more than $9.6 trillion, which represents about 66 percent of gross domestic product. This in itself is not a ruinous figure, the film says, and most economists agree.
However, Walker says in the film, if you total all of the government's current unfunded liabilities, the United States is actually in a $53 trillion hole.
Worse, Walker says, the coming boomer retirees represent a shock to the system, given their demands on Social Security, Medicare and Medicaid. These -- especially the cost of government-subsidized health care -- will push the national debt to 244 percent of gross domestic product by 2040, possibly leading to economic catastrophe.
Buffett disagreed, and spent a lot of time Thursday night talking about pie.
"Since 1982, we have added 25 million-plus jobs in this country; we will have a larger pie," Buffett said. "People will be fighting over the pie, but that's a wonderful thing. Even if we grow at 1 percent per year, we double the GDP per capita in 75 years. The pie will grow enough that everyone will get more of the pie."
Toward the end of the panel, Walker -- the debt crusader -- had had enough. He was visually champing at the bit to rebuff Buffett.