7 Reasons This Election Doesn’t Matter

Mitt Romney, on Saturday, officially chose Wisconsin congressman Paul Ryan to be his running mate. Some analysts called it a “bold move” that energized conservatives.

How important is this decision to America’s future? It suggests Mr. Romney is putting a high priority on correcting the nation’s debt-burdened economy.

Here’s a more fundamental question: How much difference will it make who America elects in November? Many people believe it is a choice between fiscal sustainability and economic collapse. But regardless of what Democrats or Republicans say, let’s look at some realities about America’s economy that the next president, whoever he may be, is going to have to face.

Challenge 1: Can you conceptualize $1 trillion?

One million seconds is 12 days. One billion seconds is almost 32 years. One trillion seconds is about 31,688 years! (hat tip Mike Shedlock).

Think about how much a trillion is, and realize that America is going further into debt by more than $1 trillion per year. America’s total yearly budget is only $3.7 trillion. So more than a quarter of our total spending per year is borrowed—which means if we are to balance our budget, almost a quarter of America’s budget will need to be cut.

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And most of the budget balancing will probably need to be done by cutting because there simply is not enough left to tax. According to Global Economic Trend Analysis’s Mike Shedlock, even if America took 100 percent of every corporation in America, plus confiscated every single asset of the super-wealthy (like Warren Buffet and Bill Gates), we still wouldn’t even get close to balancing the budget. We would still have to “take the combined salaries of all players in the nfl, Major League Baseball, the nba and the nhl, cut military spending by $254 billion, and tax everything people make above $250,000 at a 100 percent tax rate,” Shedlock says.

But America’s days of borrowing and spending are coming to an end.

Of the $1 trillion America borrowed last year, around half of it was money that was created out of thin air by the Federal Reserve. The Fed was forced to create the money because foreigners would not lend it to America at interest rates we want.

Federal Reserve money printing is a clear sign that America’s deficit is dangerously unsustainable.

Whether America’s next president decides to cut spending or increase taxes, both are virtual death sentences for an economy that is probably in recession again.

Challenge 2: America’s massive debt

As huge as America’s deficit is, the bigger threat may be America’s practically unfathomable debt. America’s official federal debt is almost $16 trillion—but that is only the tip of the iceberg. America has promised its citizens tens of trillions more in Social Security, Medicare and Medicaid benefits. Total it all up and Prof. Laurence Kotlikoff puts America’s total liabilities at a mind-boggling $222 trillion. Go back and reconceptualize a trillion.

Not all of this money is due at once, but increasing portions will be as America’s 80 million baby boomers retire. There is not a chance that America can pay this bill.

But perhaps the most imminently dangerous part about America’s debt is refinancing risk. America is constantly borrowing money to pay back money that is coming due. Right now it is not having too much trouble borrowing because Europe appears to be in worse shape. When Europe eventually gets its act together, America may not find as many willing lenders—it may face its own Greece moment!