America's $53 trillion jumbo loan

Americans are now tasting the sour fruits of unaffordable mortgages: foreclosure, bankruptcy, falling markets. The nation, too, is staring at overwhelming debt, made worse by this week's forecast of a whopper federal deficit. Washington mustn't let this burden rise, for the sake of global financial markets and future US generations.

It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy – 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.

But this is just one "mortgage" that the federal government (i.e., taxpayers) must meet. It owes on all the deficits it has accumulated over the years (the national debt), and it has jumbo liabilities to come in the form of Social Security, Medicare, and Medicaid.

Adding all those liabilities together, the government has dug itself into a $53 trillion fiscal hole – the equivalent of $175,000 per person living in the United States. If the White House and Congress continue to follow the do-nothing plan, in another 30 years or so the federal government will spend more than twice as much as it raises in taxes.

That sounds like a long way off, perhaps, but the time to fix it is now – before it develops into a red-ink tidal wave that makes the current home-lending crisis look like a puddle.

It can be done, but how?

First, when in a hole, stop digging. Republican presidential candidate John McCain says he'll balance the budget by the end of his first term, but he's vague on many details. Whoever wins will have to resist financial pressures to keep borrowing – to dig an even bigger hole to China and other countries, which already hold nearly half of US debt.

Democrat Barack Obama says he'll cut waste and eliminate part of the Bush tax cut, but makes no promise to balance the budget. He suggests raising the Social Security tax on high earners as a way to shore up that troubled system.

But Washington won't be able to tinker its way to paying for the government's retirement and health-care obligations – by far the biggest fiscal drains. Only fundamental reform of Social Security, Medicare, and Medicaid can move America to dry ground.

Yet lawmakers are loath to overhaul these sacred entitlements. Who wants to be responsible for raising the retirement age? Or telling better-off baby boomers they're too wealthy to qualify for Medicare – a system they've paid into all along?

Some wise Democrats and Republicans in Congress (Jim Cooper and Frank Wolf in the House and Kent Conrad and Judd Gregg in the Senate) have a way to move forward. Their bills would name a bipartisan commission to recommend changes to entitlements. Congress would then have to vote up or down on the entire package.

Washington has tried something similar to this before. The bipartisan BRAC Commission makes the tough calls on military base closings. Yes, Congress is passing the buck – but to professionals without a political ax to grind.

At the next campaign debate, let's ask Mr. Obama and Mr. McCain whether they support this legislation. It will put them publicly on the spot – right where this issue deserves to be.