It seems everybody made New Year’s resolutions in December, even Uncle Sam. The federal government’s came via the Report of the National Commission on Fiscal Responsibility and Reform, otherwise known as “The Moment of Truth.” The basic story is nothing terribly new. Spending is rising, and revenues are falling short – about $1.60 goes out for every $1 that comes in. The real shocker is that by 2025, expected revenues will pay only for Medicare, Medicaid, Social Security and interest payments on the debt. Every other federal activity, including defense, will be paid for with borrowed money.

The time for action is now, declared the commission.

Like many laudable resolutions that quickly go by the wayside, The Moment of Truth did not garner enough votes to make it to the floor of the House or Senate for a vote before 2010 ended. Rather, in the Christmas spirit, Congress instead passed and the president signed an unfunded $860 billion tax cut extension with enough bells and whistles attached to make just about everybody happy for the holidays.

Complicating the way out of the debt trap is the unemployment rate of near 10 percent, a housing market expected to decline further in 2011 and a fragile economic recovery. Certainly there has been better economic news lately, but it’s not actually Morning in America here. So slamming on the spending brakes at the moment doesn’t seem like a good idea either. With the national debt going from $6 trillion to $14 trillion in the last 10 years, we’re between a rock and a hard place.

There is sure to be drama as politicians are finally forced to tackle the mounting debt. In several weeks, the nation’s credit limit will be breached if the debt ceiling is not raised. Should the $14.3 trillion debt ceiling be exceeded, the country will technically be in default on its borrowing.

Also on the near-term docket is the need for a congressional resolution to fund the government through the end of the fiscal year. Unless a rabbit is pulled from a hat, there is just no way around making very hard decisions on cutting spending, raising revenues and reforming the tax structure.

Welcome to the party! The United States will not be alone in the battle against out-of-control deficits and debt. With a new coalition government in Britain, the United Kingdom is already implementing a multi-year fiscal reform plan despite a AAA credit rating. Many other countries are at the debt reduction mill as well. Time will soon tell if our government can overcome political gridlock and find the elusive common ground to make a serious battle against a looming threat to our financial security.

I’m sure that in the days ahead, we will hear much more of the oft-used but little-heeded refrain “We’ve got to do it for the children.” Maybe this time?

Peter Percival (ppercival@onlyworkforyou.com) is a registered investment adviser at Syverson Strege & Co. in West Des Moines.