We're at a funny place. The American establishment has finally come around, in unison, to admitting that America is in crisis, that our debt actually threatens our ability to endure, that if we don't make progress on this, we are going to near our endpoint as a nation. I am struck very recently by the number of leaders in American business, politics and journalism who now get a certain faraway look at the end of an evening or a meal and say, "It's worse than people think, you know." The debt crisis in Europe is not easing but worsening, the U.S. bond markets could bail tomorrow, the culture of Washington will kill any serious attempts at reform . . .

That's one takeaway from this week's Peterson Foundation fiscal summit in Washington. Bill Clinton spoke of "permanent structural deficits" and warned that "arithmetic still matters." We must focus on entitlement spending, he said, "for the same reason Willie Sutton robbed banks: That's where the money is." Virginia's Democratic Sen. Mark Warner: "Congress is Thelma and Louise in that car headed for the cliff." Obama administration economic adviser Gene Sperling—more on him in a minute—called for "serious discussion" of the specifics of a debt-reducing plan. Republicans were on the same page. No one said, "We can grow our way out of this thing," or "The negative effects of chronic debt are exaggerated, let's look at the positive side." They would have been laughed out of the room.

There's also this. The very politicians who are trying to get us out of the mess are the politicians who got us into the mess. Why would anyone trust them? As Alan Simpson admitted, for generations politicians "were told to go to Washington and bring home the bacon. Go get the money!" Now they must change: "You can't bring home the bacon anymore, because the pig is dead."

The pig is dead