So where is reality in all of this?

As the debt ceiling talks drone on fruitlessly, with both sides apparently unwilling to concede their main objective – Republicans to avoid any tax increases, Democrats to avoid any changes to entitlements – and both side pointing fingers at the other side and spinning each day’s events to their own advantage, where is reality in all of this?

Here are the key facts (not claims – facts!):

1) As of June 29, 2011, the Total Public Debt Outstanding of the United States of America was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual gross domestic product (GDP) of $14.66 trillion. In other words, the federal government now owns about as much as the annual value of the entire U.S. economy. According to some rankings, that is the 12th highest debt-to-GDP ratio among major nations in the world (and the higher ones are places like Greece!)

2) For 2011, the projected federal budget deficit is $1.645 trillion, on a total budget of $3.818 trillion – in other words the federal government is spending about twice as much as it takes in.

3) In 2010, Medicare and Social Security together consumed 43%, or slightly under half, of the entire budget. (Medicare at $793 billion was 23%, Social Security at $701 billon was 20%)

4) With the aging of our population, the FUTURE unfunded Medicare and Social Security liabilities over the next 75 years are variously estimated at between $70 and $140 trillion under current plans.

Bases on these numbers, a reasonable person might conclude:

a) Spending twice as much as we take in is clearly unsustainable. Spending must be reduced, and reduced drastically (by about half just to stop the INCREASE in the debt, more than that to begin to reduce the debt).

b) There is no way to increase revenues enough to reduce the deficit. If we commandeered the entire GDP of the nation, it would just about cover the deficit.

c) There is no way to make a significant dent in the deficit without reducing the amount spent by Social Security and Medicare/Medicaid, unless we are willing to zero out almost everything else in the federal budget, including the pay and pensions of the President and Congress.

So I conclude that, on balance, the Republicans have the right side of this battle. They might be wise (or at least generous) enough to allow the Democrats a few token tax increases to save face, but in fact this problem is only going to be solved by cutting federal spending, and cutting it by a lot. And beyond that, entitlements are going to have to take a significant share of the cuts, however much pain that may cause in the nation.

Liberals will scream bloody murder (as they are doing) and make all sorts of emotional claims about the poor and elderly being put out on the streets if we make any cuts -- and that may even be true (though I think it unlikely) -- but it is irrelevant. We simply cannot afford the current programs, and the pain we will feel from making the necessary cuts will be nothing to the pain we would feel if the nation goes bankrupt and the entire world financial system simply stops loaning us money.