Natchitoches, LA – The leaders at the G-20 summit agreed last week that debt is the biggest threat facing the world’s economies and pledged to cut their budget deficits in half by 2013. Under current revenue and budget forecasts that doesn’t pose much of a challenge to the United States, but the CBO’s long-term budget outlook released today emphasizes the risks ahead. If we aren’t very careful to contain healthcare costs, raise taxes, cut programs or do a combination of all the above, our deficits will become, as CBO director David Elmendorf said, “unsustainable.” If Congress can’t stick to PAYGO provisions and the cost-cutting provisions in the recent health care bill (PPACA), federal debt will obliterate our economy.

World leaders talk about keeping debt under control. We can’t keep under control what’s already out of control, around the world and at every level of government. In the U.S., unfunded pension liabilities to teachers are $1 trillion. California has hundreds of billions in unfunded public employee pension liabilities. Illinois will either have to raid its state budget or raise taxes sharply by 2017 or go into default on its pension obligations. Most likely, it will seek and get a Federal bailout. So will other states. Lower-income workers in Alabama will be paying taxes or taking on a share of Federal debt to help pay the $100,000 pensions of 45-year old retirees from New York (NY already has over a hundred of those and the number is expected to grow fairly quickly).

Using standard accounting rules that businesses use, government debt in this country isn’t the paltry $13 trillion you’ve probably heard about. Total unfunded liabilities bring our real debt to over $60 trillion. That’s $60,000,000,000,000. Let’s put that in perspective. If you spent $1 million every day, it would take you 164,000 years to spend $60 trillion. If someone were to pay you $10 every second of every day ($36,000/hour), you’d have to live 190,000 years to make that much. And that’s how much more we owe in pensions, health care costs, interest and principle than we expect government to pull in by the time everyone now working gets everything he thinks he (or she) has coming to him. To put that in further perspective, our economy produces about $14 trillion worth of wealth every year, so paying out that much over the next 75 years isn’t impossible, but the number keeps growing.

John Keynes, the economist who revolutionized macroeconomics 80 years ago, said that in the long-run we’re all dead. Keynesians argue that people who are worried about debt are like people who worry about how best to remodel the kitchen while the house is burning down. Paul Krugman, a clever economist in his own right, thinks austerity is a bigger threat to Europe than debt and that we’re on the verge of a global depression if governments don’t stimulate their economies. We have to pile on more debt now to pay for national life-support and worry about the bill when it looks like the patient will live.

So, either we have to stop borrowing or the economy is doomed, or we have to borrow more or the economy is doomed. I’d be claiming much more knowledge than I have if I told you I know which the real case is. My bias should be clear, but my doctorate in economics gives me no special access to the Truth. It shouldn’t surprise anyone that the economic situation is creating enormous anxiety and that consumer confidence is falling. Not only are many of us worried about our jobs, but we’re unconvinced that anyone in Washington has a clear idea what the real problems are, let alone a plan to solve them. It’s at a time like this that we should remember that the economy is more than just numbers. It’s an enormous exercise in faith and mutual reliance. “The economy” is also a community, and like any community its survival and health depend more on the integrity of its leaders than on their intelligence. It depends more on confidence in the way rules are made and applied than on the wisdom of any particular rule.

What the economy needs more than a stimulus or deficit reduction is confidence in national institutions and national leadership. Whichever course Congress and the President choose, they should be clear about their goals and demonstrate commitment to following rules and not making the game up as they go along. I think that FDR was wrong about a great deal in his handling of the Great Depression, but he had one message that bears repeating: We have nothing to fear but fear itself. The end of fear requires that we look realistically at the world around us and our own situations, but it also requires courage in Washington. Cut the deficit or pass a stimulus, but take responsibility and show some guts. Don’t play deficit hawk one day and stuff $10 billion for teachers in a defense appropriation the next. And for Heaven’s sake, lock Joe Biden in a closet or sew his lips shut.

James Picht teaches economics at the Louisiana Scholars' College in Natchitoches, Louisiana. From the age of six he always knew what he wanted to be. Economist wasn't it. But after accidentally falling in to it he found that he liked it. Now he also likes raising his two children, being a husband to Lisa, and taking pictures of trees in the middle of the night. If you ask him whether there's any hope for courage in Washington, he'll tell you it will take a miracle.

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