It seems to me that while our federal debt is a really big deal. $13 trillion it is the personal, corporate and municipal debt ($50 trillion) that is causing all of our current problems. How do we increase tax and not cause MORE personal and business defaults and then have to pay yet more trillions to bail them out, and worse have a higher percentage of zero in tax to collect? Are you aware that while your home loan may be around 5% the loan you took out so you could have a city worker and a policeman and a fireman and a teacher with a nice plump pension is at 8% (more if the fund lost money). Yes 8% is the amount we are legally on the hook for, since the numbers are based on an 8% rate of return. Seems like a lot more interest than one would usually agree to in this economy eh?
Face it, it really does not matter how the debt is distributed, if to individuals or companies or the federal govt. Current bailouts simply redistributed existing debt rather than increasing it. What matters is that very little of it will ever be repaid unless the FED prints money day and night. If you are a retiree or have ANY kind of pension then a considerable amount of this money lost will be yours
The other big issue is this business of leverage, where a single $1 debt default seems to cascade into tens of dollars in losses. Clearly in this world we need to see the first dollar not default rather than a whole cascading chain of credit swaps and derivatives going bad.