Both parties are now measured by their “pet projects.” Depending on which side of the fence you are on everything on the other side is just plain stupid. Alas, although the debates at your local Starbucks may be heated and entertaining, all of that conversational “noise” keeps us from addressing the real solution;

Fix the deficit and you have enough money for whatever you want to focus on.

Plain and simple? Debt restricts your options.

Having spent the last 20 years educating people on personal finance and self-employment (shameless book plug here) I can tell you the solutions are not that complex.

Just take a couple of 25 year-olds; one with credit card debt and one without. Obviously the one that is “debt free” has the ability to take advantage of deals or not be burdened with debt should the economy get rough.

I was both of those kids. I had lots of debt and finally got out of it. I can tell you when I wasn’t paying finance charges for items long since purchased I suddenly had plenty of money.

In the end, personal finance is no different than business (or government). You can’t continue to spend money you do not have. It will ALWAYS catch up with you at some point.

Stop the deficit spending and there will be plenty of money to provide for whatever programs both parties feel is worthy. Don’t stop the growing deficit and you will see the world’s largest bankruptcy – the United States.

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The Times Square sign was originally put up by Manhattan developer Seymour Durst in 1989 to draw attention to the growing debt. The amount then? $2.7 trillion.

As we have now surpassed $10 trillion, the “$” had to be changed to a “1.” They plan on updating the sign next year to add two more digits.

At the rate we are going, are you sure we only need to add two more digits?

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www.youtube.com/watch?v=-DJIVQIRIHs

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Whichever, Obama or McCain, walks into the White House in 2009 either will face the same problem; A record US deficit. 

The estimated US deficit for 2009 is now $482 billion. 

The slowing economy, increased government spending, and not raising (proportionally) taxes all add to the mix. 

It is important to note the $482bn represents about 3% of the total output of the US economy. This is well below some of the deficits seen in the 1980’s and 1990’s (percentage wise). However, these figures do not include any bailout of Freddie Mac or Fannie May (the federal housing bill that just passed in congress). 

In either case, I suspect neither candidate elected to office is going to be immediately inclined to lower any taxes or increase any government spending – and justly so. 

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Well, here is a surprise. Our government is overspending again…by a lot!

The U.S.’s long-term financial obligations grew by another $2.5 trillion from last year. That means, if you factor in all the obligations such as Social Security, Medicare and other government programs, the debt is about $531,472 per household. (and you thought your Visa bill was high didn’t you?!) 

The big liabilities from 2007… 

Civil Servant Retirement: $106 billion

Social Security: $900 billion

Medicare: $1.2 trillion 

The numbers are actually much worse when you get into accounting methods. 

Corporations and states are required to count new financial obligations, even if the payments will be made later. Spoiler alert: Our government will not follow those accounting rules. 

What does this mean? Medicare, for example, has an unfunded liability of $30.4 trillion. I guess the government better start looking under seat cushions in a real hurry. 

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