By Evan Bayh

America is on an unsustainable fiscal path that threatens our future. Changing course is imperative, and Democrats should lead the way.

Last month the Office of Management and Budget predicted that the national debt will increase by $9 trillion over the next decade—$2 trillion more than forecast just four months earlier. Government net interest payments exceed $1 trillion in 2019, up from $382 billion this year. Because projected deficits exceed projected economic growth, the gap will be self-perpetuating.

The consequences of all this will not be benign. A world saturated with U.S. currency will eventually look elsewhere to invest, causing the dollar's value to drop; foreign creditors, their confidence shaken by our fiscal profligacy, will demand higher payments to keep holding our debt. The net effect will be "stagflation," that pernicious combination of slower growth, higher inflation and interest rates, and lower living standards Americans suffered through in the 1970s.

These events will diminish our global influence, because fiscal strength is essential to diplomatic leverage, military might and national significance. No great nation can rely upon the generosity of strangers or the forbearance of potential adversaries to meet its security needs. America is doing both. China uses its monetary reserves to curry favor in developing countries once in the U.S. sphere of influence; we must borrow to pay for the wars in Iraq and Afghanistan.

Worst of all is the legacy we will leave. From the "Greatest Generation" we inherited an America that is the strongest, most affluent, freest nation on earth. On our present course, our children will not. We violate a fundamental part of our national character by taking from our children to satisfy our desires today.

Congress's initial reaction to our fiscal peril has not been encouraging. The $410 billion omnibus spending bill passed in March increased domestic discretionary spending by 8% and included more than 8,000 earmarks. This year's budget contemplates domestic discretionary increases of nearly 9%, three times the rate of inflation. If the past is any guide, it will include thousands of new earmarks.

Any serious effort to control the deficit must begin with spending restraint. Efficiency and frugality, common virtues in the private sector, must be incorporated into government. Congress should enact health-care reform that actually lowers the deficit. For the next fiscal year, assuming the economy has gathered sufficient momentum, we should freeze domestic discretionary spending, limit increases in defense spending to the rate of inflation, forgo pay raises for federal workers, and institute a federal hiring freeze.

These steps alone won't put our fiscal house in order; more difficult action is needed. But by showing common cause with middle-class families facing their own budget crises, we can send an important signal that Washington has the will to chart a more responsible course.

In many ways, it is unfair to blame President Barack Obama for the magnitude of federal government's fiscal problem and the urgency of dealing with it. He didn't create this mess. According to a New York Times estimate, 90% of the deficit growth over Mr. Obama's first term in office is attributable to policies and conditions he inherited. Regardless, if we wait for the markets to force corrective action, the danger to our economy will be greater and the correction more painful.

Spending restraint will not come easily to the Democratic Party. Pent-up demand for investment in education, health care and the environment is understandable after the Bush years. But long-term progressive government can't be built on a foundation of debt and deficits. We cannot indefinitely share with the less-fortunate resources we do not possess. Ultimately, a growing economy with increased revenues and a stable national balance sheet are the best guarantors of social progress.

Fortunately, fiscal probity is not entirely alien to Democrats' DNA. Andrew Jackson eliminated the national debt during his presidency. Harry Truman restored balance to the federal budget following World War II. John F. Kennedy cut taxes to stimulate growth. Bill Clinton left the nation's finances so secure that some worried about the size of prospective surpluses.

As Indiana's governor, I cut spending during difficult times, balanced the budget, and didn't raise taxes. When times improved and revenue increased, we used the surplus to invest in progressive priorities that made our state more humane.

This approach found favor with people across the ideological spectrum. Conservatives were happy that budgets were balanced and taxes kept modest. Progressives ultimately saw the fruits of our discipline in higher funding for the things we cherish.

The choice is clear. We can take the path of least resistance and ignore the impending day of reckoning. Or we can do what is necessary to right the fiscal ship of state and lay a foundation for prudent, progressive government for a generation.

I believe Barack Obama will choose the responsible course. If he does, he will find kindred spirits in our party prepared to help.