This is the Cato Daily Podcast for Monday, July 11, 2011.

I'm Caleb Brown.

Cutting federal spending for the long term will require a spending cap with teeth.

Freshman U.S. Senator Mike Lee proposes a constitutional

balanced budget amendment. At the Cato Institute in April, Lee discussed his plan

which has since become part of a so-called cut cap and balance plan.

The full event is available at Cato.org.

We are in a situation in the United States that is unprecedented.

People like to say, look, we've been in difficult circumstances before and that's true we

have.

But I do believe as a popular book suggests that this time it's different. This time we have a national

debt that is fast approaching 15 trillion dollars which is an awful lot of money.

It's an amount of money that a lot of Americans don't make in a whole year.

It's an amount of money that when divided by 300 million Americans works out to about $50,000 ahead.

Depending on how you do the math, one could argue that it works out to about $150,000

per American wage earner.

This is an enormous sum and our debt to gross domestic product ratio is

depending on which metric you follow. Arguably it is fast approaching 100%.

Now one of the reasons this matters

is that there are very reliable studies that have shown in economy after economy that when a nation's

public debt crosses the 90% of debt to GDP threshold.

The sort of laws of physics, the laws of gravity, you might say, that affect the economy start to change.

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