Perhaps you've read his book or seen the movie "I.O.U.S.A."

David M. Walker, who served as U.S. comptroller general from 1998 to 2008, has been warning about America's looming debt crisis for years. Now the day of reckoning has drawn nearer.

Congress is scrambling to raise the nation's credit card limit before it maxes out at $14.3 trillion. Deficit spending continues at a $1.6 trillion annual pace. And in about a decade, interest on the government's debt will be its largest expense.

Republicans don't want to raise taxes. Democrats don't want to cut entitlements. So our best hope for fiscal sanity comes down to a gang of six U.S. senators and Vice President Joe Biden cutting deals.

Walker has been trying to help them all. "Doing nothing is not an option," he says.

Walker became comptroller at a time when America's debt was miraculously disappearing. Trillions of dollars later, I figured he'd be freaking out. Instead, he was optimistic Washington might finally do something, particularly given talk of a possible U.S. default that could lead to a global economic collapse.

"There is a way forward," Walker said in a telephone interview, "and by acting preemptively, we can avoid a situation that can be very distasteful.

"The American people need more of two things: truth and leadership. They haven't gotten enough of either...We have too many career politicians who are concerned with keeping their job rather than doing their job.

"Washington has lost credibility with the American people and it is rapidly losing credibility with the markets," he said. "Market signals are already evident."

Standard & Poor's is threatening to downgrade the nation's Triple-A credit rating. Investors and currency traders are increasingly selling Treasurys short. Pimco, the bond-buying behemoth, has said it's getting out of Treasurys.

"They didn't believe their investors were receiving an adequate return given the interest rate risk," Walker said. "And they are right. The only player that's really buying our long-term debt to any significant extent is the Federal Reserve. That's self-dealing."

The Fed has said its Quantitative Easing 2 will end this year.

Before it does, Washington needs to show it's serious about tackling its debt problem, Walker said. Otherwise, there could be a painful surge in interest rates, making the nation's debt load even more unwieldy.

It's mind-numbing to consider numbers in trillions or even the intricacies of Washington politics.

It's easier to take a few basic steps to avert a debt crisis than to scramble up a response after the crisis hits, says Walker, the author of the 2010 book "Come Back America: Turning the Country Around and Restoring Fiscal Responsibility."

First, Congress must raise the debt ceiling to quell fears of a default, Walker said. This money has already been spent.

People only thought President Bush cut their taxes and that Obama extended those cuts. But since deficits mounted the entire time, this was really a deferred tax increase.

Second, Walker says Congress must adopt statutory budget controls that include annual targets comparing debt to gross national product. These controls must be automatic, taking effect no matter what debates Congress wants to have.

If Congress can't hit the debt-to-GDP targets in the years to come, the algorithm takes over: Two parts of automatic spending cuts and one part of automatic revenue increases via a deficit-reduction surcharge appearing on income tax forms.

Third, Americans need to wise up. "We need a meaningful citizen education engagement effort to help the American people understand that we don't have any choice."

As automatic controls do their part, Congress will then have the time to deal with the sweeping challenges of overhauling the tax system and reforming Social Security and Medicare, whose liabilities outstrip the national debt.

America's current deficit spending, while alarming, isn't permanent, said Walker. We had a couple of unfunded wars and a recession in which unemployment skyrocketed. Bailouts and stimulus spending followed even as tax revenues plummeted. But this too shall pass.

"What won't pass are known demographic trends, rising health-care costs and outdated tax systems," Walker said. "Those drive our structural deficits...that represent the threat to our future position in the world and our standard of living at home."

America's leaders have been playing a dangerous game, essentially printing money to ease economic pains. The U.S. dollar is the world's reserve currency, so they've gotten away with what some have called a financial scheme.

"That we have over 60% of the world's global reserve currency means that we have more time or, stated differently, more rope," Walker said.

"Our market share with regard to reserve currency status is going down. It could go down dramatically if people...believe we are going to print however much money it takes to delay tough choices.

"The only debate is what are we going to do and when are we going to do it?" Walker said. "Are we going to do it in a reasoned and responsible fashion...to avoid a debt crisis? Or are we going to do it in a draconian fashion in the face of a debt crisis?"

 

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at al.lewis@dowjones.com or tellittoal.com)