To put it succinctly, the sky is not falling. Cable news finds it can attract ratings by running scare stories about the deficit, but as you say, more sober thinking is called for.

There is much more than "deficit reduction" going on in these debates, and I am talking about more than just policy riders related to wolves. The Medicaid block grant plan (with less publicity, a similar block grant proposal is made for food stamps) is a radical remaking of social policy, and at its core a rejection of the concept of a federal safety net. The Cato Institute promotes the idea as a step toward entirely devolving Medicaid to the states.

The President is right to state his unqualified opposition to such a scheme, though he hasn't exactly demonstrated himself to be a champion of his party's values so far in the budget debates. He has a bad habit of developing a compromise in his mind--thinking that as a national leader he has a greater sense of the national interest than any of the parochial members of Congress--and presenting it as his opening bid, rushing to compromise further the moment things get controversial.

It's almost comical, though, how both parties dance around the true elephant in the room. In 1942, Senator Harry Truman led a Senate committee to investigate waste and fraud in military spending. Recall that 1942 was a far more dangerous year for national security than any recent time, and Truman was treated as a hero for helping to conserve vital national resources when they were scarce. Anyone observing today's military spending, whether an isolationist, pacifist, neoconservative, or anything else, who believes that the Pentagon spends its budget in the most efficient manner possible ought to have his head examined.

Lots of problems as usual with TVD's domestic issues analysis, though I do thank him for stating flatly that Medicare privatization and Medicaid block grants are bad ideas:
1) Where is the evidence that the short-term federal deficit is dangerous? Most mainstream economists say running a sizable deficit is necessary now to stimulate the economy and there's no immediate danger of crowding out private investment or frightening the bond market. McCain advisor Mark Zandi, the International Monetary Fund, and Goldman Sachs all have warned about how cutting spending now could choke off the economic recovery.
2) If Obama's speech seemed sharp-edged, it's mostly because he flatly rejected Paul Ryan's proposed Medicare privatization and Medicaid block granting, just like TVD does. That was the best part of Obama's speech.
3) Obama didn't just stress tax increases, he stressed big spending cuts, too -- 3 dollars in cuts for every dollar of tax increases, compared to all spending cuts under the Ryan plan.
4) The CBO contradicts TVD. Its analysis of the health reform law shows that the mechanisms of the law will cut Medicare costs and reduce the deficit by more than $100 billion over the next 10 years and by hundreds of billions more over the next 20 years.
5) Contrary to what TVD says is the need to change SS and Medicare eligibility, raising the cap on taxable income for the Social Security payroll tax would solve most of the long-term SS shortfall, without any damaging increase in the SS eligibility age. And a Kaiser Family Foundation analysis shows raising the Medicare age would just shift costs from the federal government to everyone else, including private employers.
5) Studies have shown that a tiny percentage of small business owners earn enough to fall under the higher marginal tax rates proposed by Obama, and most of those "owners" are doctors and lawyers.
6) Much of the deficit reduction ginned up by the Simpson-Bowles commission came from magically holding Medicare costs to 1% over the consumer price index, the so-called magic asterisk. They provided no prescription for how to achieve that miraculous outcome.
7) TVD disapprovingly says Dems will portray Republicans as heartless toward seniors and the poor. But he himself characterizes the House GOP budget as exactly that.
Lots of loose factual and analytic statements, as per usual.

Two things could fix the debt problem:

1) let the Bush tax cuts expire. (Easy congress does nothing, which is what they do best)

2) Expand Medicare to cover everybody, thus reducing the health care costs of running Medicare for only the old and the really sick. ie, bring the currently healthy into the payment plans and thus go from paying 14% to 7% of GDP on medical expenses merely by tossing the private health insurance industry.

No the sky isn't falling. But if you are one of the 400 wealthiest individuals who control over 50% of the countries wealth, it's time for your taxes to rise.

If anyone would like a clear graph of why we are heading for the abyss, just look at this graph.

http://market-ticker.org/akcs-www?get_gallerynr=962

This shows that the GDP has been rising only because of borrowing by the Fed. That's not sustainable. The "real" GDP, is negative because we are directing so much cash to serving the past debt.

and

http://market-ticker.org/akcs-www?get_gallerynr=1465

This second graph shows that the problem began about the time of President Regan, who lowered taxes and increased spending. As you can see the growth is going to kill the economy.

Whether the world is going to give us a pass to get our house in order over the next 30 years is doubtful. Much of the world has had enough of our greedy ways, and our wars.

S&P; just issued a fiscal credit warning - heed it at your risk. If we lose AAA rating, interest payments will explode!

Progressives of both parties created the problem. Now its up to adults to fix it.

Progressives didn't invade Iraq, deregulate the banks, pass tax cuts for the rich. Those were conservative initiatives. If you are going to point fingers at groups for our troubles, at least give the right groups the blame.