The entire country's economy is fundamentally broken. It begins with the federal reserve and works all the way down to bankers and derivatives. There is honestly no coming out of the debt we owe. At this point, we are just printing money.
Over 12 trillion in national debt.
Over 16 trillion in personal debt.
Over 2 trillion in monopoly money creation.
Over 106 trillion in unfunded liabilities.
Over 625 trillion in derivatives.
Yeah.... Good luck. No other country in the history of the world has come out of something like that.. let alone anything a fraction of that size. Oh, and did I mention we're still spending and wanting to increase unfunded liabilities trillions further?
It certainly is possible that we'll find ourselves unable to escape from our debt. The only possible way out is to grow the economy, but the Fed, being private bankers, will use interest rates to hold growth down to levels that don't endanger (via inflation) the bankers' returns on long-range loans. Turning over interest rates to Congress on the other hand will just mean manipulation for political gain, leading to more severe crashes like this one. At current rates you are correct - we have zero hope of growing the economy fast enough to keep up with government spending increases, let alone actually paying off our debt. I can envision a worldwide crash into depression, probably leading to one world currency and virtual serfdom for most of us.
Some things we could do:
1. Revert to a reserve-backed currency (gold, silver, or both.)
2. Ban derivative and money market trading. Stock trading is necessary to finance corporate growth, those are not.
3. Establish relatively severe tax penalties for short term stock transactions to discourage day trading and gaming the system by driving short-term prices up and down.
4. Restore the regulations separating mortgage banks and other financial institutions that the Republicans knocked down.
5. Restore common-sense goals for Fannie Mae and Freddie Mac that the Democrats knocked down.
6. Pass a Constitutional Amendment giving the president a line-item veto for spending bills.
7. Pass a Constitutional Amendment requiring a balanced budget, with later adjustments made up out of the next year's budget and the only exemption being a war specifically declared by Congress (also incidentally ending these idiotic discussions about whether or not something is a war.) Maybe even establish a supplemental tax just for declared wars so that a president and Congress wanting to go to war has to fund it directly, thereby raising the bar.
8. Eliminate unions' right to strike - all such disputes to be taken up by a federal arbiter without disturbing productivity.
9. Establish a base 10% import tariff on all imported goods. The USA is by far a net importer, not a net exporter. For rogue countries or those with what we consider unfair wages (considering their overall economic conditions) or unacceptable environmental policies, slap on a surcharge import tariff.
10. Establish one retail level sales tax like the Fair Tax as the federal government's sole means of taxation, prebating each household's sales taxes at the poverty level each month (or perhaps at a higher rate; maybe 150% of poverty. But set it in stone so that politicians can no longer buy votes by promising to take from one group and give to another.) Everyone sees exactly what the tax rate is, US manufacturers have a competitive advantage within the USA, foreign competitors have an increased incentive to build products for the US market within the USA, and everyone can see the economic results of raising or lowering the tax rate. Also, this would encourage savings because they would be untaxed. How many of us are tired of the federal government taking a fourth to half of our income off the top and then chiding us for not saving enough?
11. Move programs like food stamps to the state level. $30,000 is a livable wage for a family of four in rural Tennessee without government help; it's starvation in New York City. Also, the results of each state's governance, tax rates and methods, and programs would be readily apparent, so voters (and other states) could learn and act accordingly. Let the federal government reserve dollars for federal concerns (e.g. interstates, rail projects, defense) and for helping a few critically injured states like Michigan at a time.
12. Set up federal "Manhattan projects" such as establishing recycling centers, or thermal depolymerization oil and/or energy plants, refueling/recharging stations for electric or hydrogen vehicles, biological hydrogen production, etc. as national referenda. Debate them endlessly pro and con, let the proponents propose the required level of funding (as a percent increase and duration of the sales tax), and let the public select which ones to fund and where to do a pilot project. If the pilot project succeeds, repeat it on a national level.
13. Greatly increase DOE reward projects like that for a function and affordable 900 lumen, 9W, 100 lumen/watt LED A-lamp light bulb (to replace 60W incandescents.) For example, why not a similar contest for a factory-built, site-assembled 1,200 square foot, 3 BR/2B home that uses 50% of the energy of standard stick-built, code-compliant homes and sells for 75% of the cost? Make the goal attractive enough that industry and consumers will adopt it, make the prizes large enough to offset substantial amounts of R&D and perhaps apply to the first three or four technologies meeting the goal.
14. Regulate maximum credit card (and similar) rates to prime plus four percent or similar. This would force credit card companies to issue cards to only the most financially stable people and force most of us to live within our means.
15. Ban all federal guarantees, backing, and financing of mortgages other than fixed rate 10, 15, 20, and 30 year mortgages. If you want a five year interest-only note with a balloon payment, you and your lender are on your on.
Lots of practical things can be done - this is twenty minutes of thinking and typing after all - but we are going to change our paradigm one way or another. And a great deal of the world generates large parts of its profits in the USA, so if we go down, so does much of the world.
Incidentally I knew this was coming back in '04 or '05. A friend sold thirteen rental houses just a couple months before the bottom fell out; a lot of people could see this coming. I happened to watch or hear Glenn Beck, which I seldom do (mainly because of scheduling and time), and he explained exactly how the unrealistic demands the Democrats placed (and the Republicans left) on Fannie Mae and Freddie Mac had created a huge boom in demand in selling houses to people who fundamentally could not afford them. He explained how this (and lax oversite of the GSEs) was also leading to rampant fraud in home appraising, and in mortgage lending companies, to meet this government-driven need. He explained how this made the mortgage companies making these loans extremely profitable and how the GSEs were transferring the risk to the federal government, how the sudden explosion of profits led to these companies going public to cash in, how these new stocks were so hot that numerous funds were buying & holding them (thus creating instruments whose value was derivative of the bubble stocks), and how this was inevitably going to crash. And he explained how and roughly when this was all going to crash (as it did), how these mortgage companies would suddenly lose the vast majority of their value, how the derivatives would lose ALL of their value, and how this was going to take down the housing and finance markets.
Glenn Beck is hardly the brightest guy (as he often says) nor the most influential; the same guys that explained this to him were no doubt explaining it to many, many other people. Yet we removed regulations set in place after the Great Depression specifically to prevent such a crash from once again taking down multiple financial sectors, and we did nothing (nor have we yet) to fix these fundamental underlying problems. This isn't rocket science; we can fix our economy long term, if we can but find the will.