The Horse Sense Blog compares the nonsense in today's news with good ol' fashioned horse sense

“…I shall speak forth my sentiments freely and without reserve.… It is only in this way that we can hope to arrive at truth, and fulfill the great responsibility which we hold to God and our country. Should I keep back my opinions at such a time, through fear of giving offense, I should consider myself as guilty of treason towards my country, and of an act of disloyalty toward the Majesty of Heaven, which I revere above all earthly kings.” - Patrick Henry, March 23, 1775

"The further a society drifts from truth the more it will hate those who speak it." - George Orwell

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Sunday, March 18, 2012

If They Get It, Why Aren’t They Doing Anything About It?

Here’s the Nonsense:  The Republicans will fix the economy when they get elected in November and everything will be back to normal.

Here’s the Horse Sense:  We’re facing the end of the financial world as we have known it and it seems that no one is paying attention.  We'd better make changes quickly or we’ll never turn it around.

Our nation is facing bankruptcy and few people are noticing.  With limited exception, our political leaders go on pretending nothing is wrong.  They either don’t believe something is wrong or they don’t truly understand what we face.  This is about an imminent collapse the likes of the Great Depression or worse. 

We’re not talking about a famous passage of time like an eminent elapse would be.  We’re not talking about a famous failure and falling back into bad behavior like an eminent relapse would be.

We’re talking about an imminent (as in about to happen, fast-approaching, handwriting-on-the-wall, impending, inescapable, inevitable, likely, looming, menacing, on the verge, unavoidable) collapse (as in bankruptcy, cataclysm, catastrophe, crash, disintegration, failure, ruination, undoing). 

What part of that don’t we understand?  We hear the term trillion quite a bit these days. It wasn’t too long ago we mostly heard billions and not really that long ago that things were talked about in millions. But the nation’s finances have entered a state where trillions are the common number we hear. It’s easy to be overwhelmed by such numbers. It’s easy to ignore how serious America’s finances are because the numbers are so huge that we cannot comprehend them. So how can we illustrate the enormity of a trillion dollars in a way that helps people comprehend it?

Some people would say that 1 trillion is 1000 billion, but that doesn’t really help most of us comprehend what it really is. Others would try to compare it to time and say that 1 billion seconds ago it was approximately 1979 and 1 trillion seconds ago it was approximately 29,700 BC. Such a comparison helps us begin to grasp how much larger a trillion is than a billion.

We have more than $15 trillion in national debt.  And just last week the CBO stated that they expect that to increase to $18.8 billion by 2022 (which we all know will be much larger if nothing is done to stop it). We also have a budget deficit of $1.3 trillion, and unfunded liabilities of anywhere from $60 trillion to $200 trillion, depending on which source you want to believe. The website currently lists unfunded liabilities at over $118 trillion. Based on that number we can estimate a liability of more than $1 million for every single taxpayer in the U.S. That’s right. You personally owe more than one million dollars, thanks to the politicians!

Going back to our example that uses time, 15 trillion seconds would put us back to about 473,500 BC. That’s almost a half million years ago!  If we paid $694,444 per minute (that’s $1 billion per day) it would take us over 41 years to pay the $15 trillion national debt.  

Remember the unfunded liabilities that are somewhere between $60 trillion and $200 trillion? If we use the lower of the numbers, the $60 trillion, and add it to the $15 trillion national debt it would take over 200 years to pay that off at the same rate. All these payments would have to be made over and above the cost of running the government, which currently adds over $1.3 trillion a year to the debt because our government spends more than it brings in.  Oh, and don’t forget that we used the lowest estimate of unfunded liabilities at $60 trillion, if we went up to the estimate of $118 trillion that would increase the time to pay it off to over 350 years.

If that isn’t an economic crisis, nothing is. No one could have huge debts, continue to spend more than they earn and continue to increase their debt and survive. Economics doesn’t work like that and anyone who tries to make it work will fail. It cannot work for an individual and it cannot work for a government.

Faulty thinking about carrying debt is why we are about to see a collapse. We can no longer sustain these kinds of increasing debts and out of control spending. We have to fix both or we will see a failure of our entire economic system. This is why the election of 2012 is so critical. Either we get ourselves on a path to fiscal sanity now, or there will be no future chances try again.

Sadly, we have very few politicians who are willing to face this reality. Very few politicians are willing to even suggest the hard choices that we need to make. They would rather maintain their power and ignore the problem, hoping it will take care of itself or that the bills won’t come due until long after they are out of office.

But the bill is coming due. We cannot continue to borrow to sustain ourselves. The credit is running out and we will have to pay. And just as it would be if this were our personal debt, when it comes due and we don’t have the money to pay it we will be forced to downsize, cut back, and eliminate everything we can to pay for it. Our standard of living won’t just mean that we have to give up a little; it will mean all of us will give up most of the conveniences and luxuries we’ve come to assume are a normal part of everyday life. We will move to a standard of living that will be on the level of pre-Depression era standards or worse. It may even take us back to mid-nineteenth century levels. Modern conveniences will become obtainable only for a limited few.

For most who are reading this, you have seen within your own lifetime our nation turn from the strongest and most prosperous nation on earth to the nation with more debt than any other. We have watched the leadership of our nation become so enveloped in self-interest that the future is assured to be devastating unless we act immediately.  

Americans need to do their homework and elect not just the right presidential candidate, but also pick people for the House and Senate that will work tirelessly to stop the madness and turn our nation around.  This is not just about a presidential race, it’s about choosing the right people at all levels of government.