Politics is money. And right now that means that politics is about the economy- both unemployment and the growing national deficit.

A quick primer: Deficit vs. Debt

The national deficit is how much we spent minus how much we made.

U.S. 2009 Income – U.S. 2009 Spending = National deficit for 2009

The national debt is the grand total of how much we owe.

National deficit 1776, +77, +78…+2008 +2009= National Debt.

Our current national debt is over $12 trillion.

A lot of the money we owe to other U.S. government institutions, or to U.S. Banks, or on things like bonds. Some of it has been purchased by other countries. China, for example, owns a lot of U.S. debt. For a long time it has been assumed that U.S. debt is a good investment. The dollar is the world standard for currency valuations and it’s usually strong. In the last few years, though, that view has been changing, and not the least of our worries is our ballooning yearly national deficit. When you hear people talk about deficit spending it means spending money we don’t have. If you carry credit card debt, you too are a deficit spender. If you have a gigantic credit card bill that you can’t pay and the interest keeps going up and you can’t pay it down, or a big mortgage and your house drops in value, you may end up in a seemingly hopeless situation- you may even decide that it’s best to declare bankruptcy, which would mean that you declare that you don’t have enough money to pay your debts, they are canceled, and you pretty much lose the ability to get credit for a while. Obviously, if the U.S. keeps going like it is and it were anyone but the most powerful and wealthy country in the world, it would have to declare bankruptcy. And maybe, just maybe, the U.S. will have to start dealing with the fact that we are on that road, and that we have to do something about it. The U.S. can’t go bankrupt- right?

The U.S. budget is described as “daunting” by congressional forecasters in a report published this week. Hopefully daunting means daunting rather than something else, the way deep recession really means depression.

It is expected that President Obama will propose a 3 year spending freeze on domestic programs in conjunction with other measures to try and reduce the deficits over the next few years. Our national deficit for 2009 was $1.4 trillion and this year’s is projected to be at $1.35 trillion.

Democrats in Congress will not be happy.

The national deficit, the worst since WWII, is 9.2% of the current GDP- economists consider 3% sustainable. Meaning we are in bad shape right now.

While the report "confirms that the recession inherited from the Bush administration continues to erode the budget's bottom line,” according to House Budget Committee Chairman John Spratt, that is often lost on people- and it really doesn’t matter except for political argument. We have to deal with our debt and our deficit spending regardless of how it starts.

And we have to do it amidst crises in unemployment, the financial world, and the health care debacle.

Photo Credit: AMagill (via Flickr under CCL)