Right now, the U.S. economy seems to be in shambles, and most Americans want the government to play some role in helping us get through this. But government's ability to help out -- whether by cutting taxes or stabilizing the financial system or helping Americans who are down on their luck -- is severely hampered by its own dire economic condition.

For 31 out of the last 38 years, the U.S. government has spent more on programs than it has collected in taxes. This year, the red ink (that’s the deficit) could be close to half a trillion dollars. And the government projects further deficits for the next several years.

When the government spends more money than it collects, it borrows to cover the cost. Over time, the U.S. government has accumulated a staggering $9.5 trillion federal debt. Right now, we spend more money each year on interest on the debt than we spend on the war in Iraq.

There’s simply no way the government can cut taxes, or even keep them at current levels, and still afford all the programs people say they want. Something’s got to give.

Budget experts across the political spectrum – liberals, conservatives and the government’s own auditors – say the country is facing huge additional expenses in Medicare and Social Security as health costs rise and retiring baby boomers begin to leave the work force.

Medicare is the biggest problem. Not only does Medicare have to cover the needs of 78 million baby boomers, it also has to deal with health care costs that are rising much faster than the rate of inflation.

If we do nothing, the country’s debt will be growing faster than our economy in about 15 years, which means we won’t be able to keep up. By 2040, the country would need nearly every dollar it collects in taxes just to cover the costs of Medicare, Medicaid, Social Security and interest on the debt.

To protect Americans who rely on Social Security and Medicare and reduce the unsustainable costs of these programs, we need to start reforming them right away. Relatively small changes now will make a big difference later, but the longer we wait, the harder this will be for everyone.

Key sources for this data: Budget of the United States Government; Congressional Budget Office, The Long-Term Fiscal Outlook, December 2007; U.S. Government Accountability Office, The Nation's Long-Term Fiscal Outlook April 2008; Facing Up to the Nation's Finances; "Where Does the Money Go?", by Scott Bittle and Jean Johnson