The United States is broke.

The United States of America, if it were run as a business, would have declared Chapter 11 bankruptcy protection a long time ago.

“But Rich”, you say, “The national debt is only $10 trillion. They had that news story about moving the dollar sign to make room for the next digit.”

My response is: yes, you are right. The national federal governmental budget debt is $10 trillion, or, according to Wikipedia, is 72% of US GDP. However, this does not count many different other debt obligations that the United States owes.

The United States owes an additional:
- $40 billion in Medicare and Social Security obligations (based on 2007 figures).
- $5 trillion in Freddie Mac and Fannie Mae debt
- $41 trillion in personal debt held by average Americans.
- $2 trillion to finance the Global War on Terrorism
- Total debt obligations we owe no one but ourselves? $98,000,000,000,000 or $98 trillion dollars

United States Gross Domestic Product last year was $13 trillion.

What is debt? My definition of debt is a lien placed on future earnings.

As you can see from the numbers above, Americans have no problem mortgaging our future earnings for the comforts of today. So long as the pain and hard choices of meeting those obligations is put off until another day, Americans are quite content to live beyond their means. However, if it ended just with personal debt, it would be manageable. Unfortunately, we Americans have started holding our hands out for money that someone else made to keep us in the lifestyle we have become accustomed to.

America is like the Titanic. We have struck an iceberg called “entitlements” and we are taking on water, big time. The ship is still moving forward, doing its business, waging wars, financing the peace, providing services, etc. However, we are starting to go under water. Welfare and debt is the water that is trying to sink this ship called the “United States of America”.

We all get welfare; every last one of us. We can’t afford a home without huge amounts of debt. So what do we do? We get a mortgage for houses knowing that we will get welfare from the federal government in the form of the home mortgage deduction. Don’t want to work? No problem, we, the taxpayer, will shuffle the deck chairs on our Titanic and give you unemployment insurance. You suck at managing your finance bank, large insurance company, or multi-national automotive maker? No problem. We will give you billions and billions of dollars in welfare so that you can keep on doing what you’ve been doing. You can keep making bad loans, insuring bad loans, or keep your Faustian deal you made with labor unions. Can’t afford college? No problem. We’ll give you below-market rates on student loans and then you can deduct the cost of the loans so that colleges will have no reason to lower tuition rates or pay less than the outlandish salaries they give tenured professors. Can’t afford health care? No problem. We’ll shuffle those deck chairs one more time and give you darn near free medicine and medical services.

The federal government also is addicted to debt and welfare. The entire Global War non Terrorism has been financed with supplemental spending bills outside the normal budgetary process. The idea was that the cost of GWOT was to be outside the budget so that a) the cost of the war wouldn’t impact readiness of the rest of the military not participating in the war at the time and b) so everyone would know exactly what the war was costing us. Despite this desire for transparency and external impact, the war on terrorism is outside the budget. Our politicians give out more and more welfare every time they pass a transportation bill or a farm bill or whatever. Every ounce of pork that Congress doles out is another dollar of debt sinking our nation.

The sad fact is that our Congress is trading on our good name and is writing checks to one part of America that the rest of America can’t afford.

What can we do to stop our beautiful behemoth from slipping beneath the waves of insolvency?

First, we need candidates that will think of all Americans and not just the ones that will put them in office if they pander to them with pork.

Second, we need to give the president the tools he/she needs to stop this huge quantity of welfare. The president needs a workable line-item veto. The president needs to be able to remove the pork from all these bills. If a line-item veto can’t get passed, then we need a president with the cahones to veto every pork-laden bill that hits their desk.

Third, we need a balanced budget amendment and a freeze on government spending for at least three years. How is it that we as a nation can’t get by on $2 trillion dollars a year?

Fourth, we need to cap the national debt at $2 trillion and begin a legitimate effort to start paying down that debt. After we have fixed our costs for three years, we can actually start getting a handle on the problem.

Fifth, we need a mechanism to generate additional revenues. I propose a national lottery where, for $1 per chance, once a month 50 American citizens would receive $1 million tax free (you can only win once). This would generate billions of dollars per month in revenues to pay down the debt and provide an economic pump at the lower ends of the economy.

Sixth, we need to cut corporate tax rates to 10% to encourage foreign businesses to relocate to America. This would spur economic growth, provide more Americans more and higher paying jobs, increase tax revenues to the Federal government making it easier to live within its means, and would provide a capital inflow to the US economy.

Seventh, we need to stop encouraging irresponsible debt spending. We need to end the false incentives of deductions for interest expenses. The American people need to take ownership and responsibility of their debt, stop racking it up, and start paying it off.

I don’t think I have all the answers, but I do know that our lovely, luxury liner is taking on water and the best way to stop the water from coming in is to fix the hole.

Our addiction to debt and welfare has to end.