By James Harrigan and Antony Davies - October 26, 2014

Imagine that the federal government collected all $3 trillion of its 2014 tax revenue in one lump sum on January 1. If the 2014 budget were balanced, the government would draw down on that sum over the course of the year, spending its last dollar at midnight on December 31.

Of course we haven't had a balanced budget since the Eisenhower administration (or the Clinton administration if one is willing to play accounting games). Since we don't have a balanced budget, the money will run out long before we reach the end of the year. The day the money runs out is Deficit Day, and this year it falls on October 26. Every dollar the government spends from October 27 through the end of the year goes on the nation's credit card. Spending at the rate of $10 billion a day, Washington will rack up about $660 billion in debt by the time the ball drops in Times Square.

Believe it or not, this year's 66 days of deficit spending are actually an improvement. Last year, we had 72 days. In 2013, when Deficit Day landed on September 10, we endured a whopping 112 days in the red. This annual fiscal madness has yielded a debt of $17.9 trillion. To pay it off, the government would have to shut down entirely for six full years.

When politicians talk about the debt, they invariably refer to the debt-to-GDP ratio, which is presently around 106%. That measure is fine for comparing debt levels across countries (it is noteworthy that the Greek and Cypriot economies imploded when their ratios reached 120%), but it doesn't tell us much about a government's ability to make good on what it owes. To measure the government's ability to repay its debt, we need to look at the debt-to-income ratio. That is 600%.

Alone, this would be cause for tremendous concern. But the government never pays a dime toward principal; it simply borrows more every year. This means that we are fast approaching the point at which it will become mathematically impossible for the government to pay off its debt - ever. And we're only counting the official debt. Excluded are unfunded liabilities like Social Security and Medicare benefits the government has promised but which it does not have the money to cover. With debt and unfunded liabilities of around 3,000% of its annual income, the federal government has already passed the point of no return.

The government currently pays 2.4% interest on its debt, and even at that remarkably low rate, it racks up almost half a trillion dollars in gross interest charges annually. The dangers of such a massive debt should be as obvious as they are terrifying. For 2014, sequester cuts will total around $90 billion - an unimaginably large number. Yet at Washington's prodigious rate of spending, $90 billion doesn't even pay for ten days' worth of government. Two years ago, Congress spent about six weeks discussing the wisdom of a $300 million cut to community block grants - a cut that would have funded the government for a grand total of 45 minutes. Where can they possibly hope to find the $660 billion that would balance the budget? No one ever says, because no one ever tries. All we get is much ado about nothing.

As daunting as all of this is though, our financial problems begin with deficits. And on this Deficit Day of 2014, it is high time those in elected office started behaving more responsibly. We will get exactly none of our problems solved until and unless we solve this one first. And solving this one today would require either cutting the entire federal budget by 20%, raising all tax rates by 20%, or some combination of the two. If that were to happen, we could finally start talking about Debt Repayment Day.

