Juan Enriquez is managing director of Excel Medical Ventures and the author of “As The Future Catches You.” Any opinions expressed are his own.

There are two ways of viewing this debt crisis. One is that it is simply a temporary dislocation in the credit markets and a liquidity problem. The second is that it is a crisis triggered by subprime lending, accentuated because most people still can’t afford their houses, and compounded because almost every bad loan was highly leveraged. If it is the second type of crisis, one should remember: if trapped in a ditch full of debt, quit digging.

We are piling debt on debt. U.S. consumers are tapped out. Net household savings have gone negative. Corporate debt, particularly derivatives exposure, has reached truly dangerous levels. (Outstanding derivatives exceed $655 trillion. The U.S. economy is around $13 trillion). Government indebtedness is also approaching levels that exceed even those reached in the Depression and World War II. Add these three sources of debt together and the U.S. already owes almost four times its GDP. Now we are adding trillions in bailouts and face rocket-fueled mandatory spending programs. These trends may end up being fatal if we do not act. Right now.

For years, many have been warning, pleading, threatening. Now the crisis really is upon us. And because the numbers are so large, the Obama administration has a very narrow window, say thirty to sixty days, to send ten very clear signals and buy itself some financial breathing room.

First and foremost, Obama has to focus on the dollar. There is ever more pressure on rating agencies to question whether the U.S. remains a triple AAA credit risk given the current debt overhang. If U.S. debt is downgraded then a whole series of institutions could not hold T Bills and short sellers would begin to hunt. Maybe some of the same ones that brought down the British pound.

We have to send a very clear signal that we are going to begin to live within our means, spend what we earn, eventually begin to save. This requires a bipartisan program that makes both Democrats and Republicans most unhappy as we begin to restructure our debt.

We cannot save every dying whale. Everyone wants a handout. Some are essential. But we simply cannot afford most bailouts. We cannot spend a few hundred billion more, every week, without major consequences. Some banks, some major companies, cannot be saved.

All entitlements must be fair game. They were going to exceed all government revenues by 2030. The current bailout, guarantees, and supports accelerate this reckoning by five to ten years. We are out of time. So if you are 60 to 65 you probably just lost a good chunk of your nest egg. You get a free pass. 55 to 60? We need a year’s more work out of you before retirement and benefits. Under 55? We will need at least three more years. This is fair given that benefits like Social Security were provided when being 65 was considered old and life expectancy was 68.

The U.S. cannot simply pull out of all military commitments overnight; we already saw the consequences of this in Afghanistan in the 1990s. And even if we did pull out, there are enormous cost overhangs in veteran care and benefits that have to be respected. But at the same time, we cannot afford to maintain the military we have. So there has to be a commitment to cut military spending by 2-3% per year for a decade. If we can do this in the context of mutual disarmament treaties with China and Russia, so much the better.

The greatest single threat to the budget is medical spending and benefits. We currently spend about 17% of GDP but the trends are horrific. And we only spend one out of seven dollars directly on doctors and nurses. There is much to be cut, much to be rationalized. So let’s commit to capping medical costs at 20% of GDP (it is 17% today). Begin by covering essential services first so we do not end up in budget games like: “if you wish, I’ll just shut the emergency room.”

Which brings up the matter of budget transparency… CEOs who exceeded a budget by as much, or hid as much debt, as most governments routinely do would, at best, be fired. More likely they would be jailed. We need to apply a simplified Sarbanes Oxley to business and to state and federal government. We also need to apply some transparency to unregulated markets, like derivatives.
While cutting in some places, the U.S does have to keep fast-growing start ups alive. Venture backed companies invested about 0.2% of U.S. GDP to create close to 18% of the economy. This is where you generate most of the jobs, not in the Fortune 500.

As a last, and perhaps the most important commandment and priority, the financial crisis will pass. But the long term survival of the country depends on treating education like a varsity sport. If you want to play varsity you have to put in the twice daily practices, summer training, hire the best coaches, move the incompetent aside, and build large organizations of committed parents and boosters. Not everyone can, or even wants to, play varsity, but those who choose to compete should get extraordinary resources.

If the U.S. lets people know it is serious about getting its financial house in order, we will survive and thrive. The alternative that was followed by so many others is just to keep spending, which is why the last thing most great empires do is drive themselves into bankruptcy.

This essay is adapted from a talk that Enriquez gave at the Pop!Tech conference in October. View the video below.

Juan Enriquez (2008) Pop!Tech Pop!Cast from Pop!Tech on Vimeo