I remember my first economic lesson. Reagan was president and I was in the second grade.

“Dad,” I asked. “What is the difference between Democrats and Republicans?”

“Well,” he answered. “Democrats like to tax and spend.”

Yuck. That didn’t appeal to me at all (even eight year olds understand the concept of stealing).

“What about Republicans?” I asked hopefully.

My dad hesitated. “Well, unfortunately, they like to borrow and spend.”

“Oh…” So neither party could control themselves… I was crushed.

Fast forward to today. The Peterson-Pew Commission on Budget Reform has released a report that shows that America is in a full-blown deficit crisis.

Here are the facts: In 2009, the deficit rose to $1.4 trillion ; the total national debt rose to $11.9 trillion – a $2 trillion increase.

This year, the national debt rose from 41% of the GDP, to 53% of the GDP. Next year the debt will increase to 61% of the GDP.

By 2018, Peterson-Pew estimates that the national debt will equal 85% of the GDP. By 2038 -- 200%.

Chew on that one for a moment… A debt that is 200% of the GDP… That’s not good.

The consequences of debt will be widespread, effecting every portion of society.

Higher taxes will only be the first pain... As the debt increases, the government will be forced to raise interest rates. Higher interest rates will make it difficult for Americans to buy new homes, cars, etc. which, in turn, will decrease “the country’s standard of living.”

As the pace of borrowing increases, the government’s interest payments will also skyrocket. This past year, the US spent $200 billion on interest alone. Ouch... At our current spending pace, the US will soon have to borrow money just to pay for borrowed money… (result: even higher taxes)

And then there’s the US fiscal stability. Right now, we can handle high debt because the US dollar is the world’s reserve currency. But, that may not be the case much longer. During the past year, the UN, IMF, Russia, and China have all stated their desire to pull away from the dollar. Just yesterday, Saudi Arabia, Kuwait, Bahrain, and Qatar started the Gulf Monetary Council , which will create a new oil currency (displacing the US dollar).

To put it bluntly, we’re losing our international mojo. So, we’ve got to fix our debt problem –quickly.

Here’s a couple solutions.

One, we need true health care reform. Peterson-Pew estimates that government spending on Medicare, Medicaid, and Social Security will increase from 8.5% (2008) to 11% in 2018, to 17% in 2038.

Unfortunately, the current health care bills do not reform the system – they simply expand a bloated bureaucracy. The debated bills will cost over $1trillion and do nothing meaningful to bring down soaring costs.

Real health care reform that brings down medical inflation is a key ingredient to the budget menu.

Second, we need to make a concerted effort to stabilize our debt. The commission recommends stabilizing the debt at 60% by 2018.

Nice idea, you say. But how do we stabilize debt?

Well, we should learn from nations such as New Zealand, which cut its debt ratio from 73% to 30%. They accomplished this miracle through spending cuts, privatization, and by “reducing the number of public employees by half.” (As opposed to the current US Congress that just increased the budget for government programs by 10%).

Besides spending cuts, we must encourage economic growth. Peterson-Pew argues for “fundamental tax reform,” and “improving labor force incentives.” I agree. We must encourage business’ to come to the US by lowering the corporate tax rate -- which, at 35%, are among the highest in the world.

Peterson-Pew also recommends a trigger option – an automatic decrease in the budget or tax increases if Congress goes over the budget.

This is another well-meaning idea… but, Congress polices their budget like a cat guards gerbils... They can – and will -- change their debt limit.

So, in the end, Peterson-Pew’s ideas are great… But in the hands of today’s Congress they are meaningless.

Folks, in this absence of Congressional maturity, it is up to us, the people, to demand fiscal sanity. We must talk to our friends and neighbors alerting them of the crisis. We must call our public officials, email our Congressmen… And we must vote.

We are the one thing that can stop the tsunami of debt from cascading over this nation.

But if we do not cry out, both with our voices and our votes, then we condemn the next generation to a second-class future -- to a life where our children will pay for our financial gluttony.