‘We're out of money," President Obama admitted. "We're operating in deep deficits," he said in a May 23 C-SPAN interview.

While Obama is refreshingly realistic, he resembles a man who strolls into a bar, sees that his wallet is empty, then slaps a round of drinks for everyone onto his wheezing credit card.

Rather than use America's rapidly deteriorating public finances to restore fiscal discipline after G. W. Bush's deplorable spend-o-rama, Obama is digging America into a deeper hole - not with a shovel, but with a backhoe. If he continues, the ensuing canyon walls will collapse and crush us.

Look how spectacularly Washington squanders your money:

* General Motors recently requested $2.6 billion in fresh bailout money. On May 22, Washington gave GM $4 billion, 154 percent of what it wanted. Worse yet, this gift arrived just days before GM was expected to declare bankruptcy. The Treasury might as well have deposited $4 billion into the nearest landfill.

* The so-called Bridge to Software is an $11 million taxpayer-funded project in Redmond, Wash. This landscaped bridge, pedestrian walkway, and bike lane will connect the east and west campuses of Microsoft - a company with $20 billion in cash. Meanwhile, as CBS News reports, the 76-year-old South Park Bridge carries 20,000 people daily and scores 4 out of 100 on a government-safety scale. (Before it collapsed in 2007, Minneapolis's Mississippi River Bridge earned a 40.) Its repair remains unfunded. Washington is utterly incapable of setting priorities, or of barring the wealthy from the trough.

Across the entire budget, such lunacy soon spells fiscal doom.

* Thanks to recession-driven revenue shortfalls and the endless Bush-Obama bailouts and stimuli, the federal deficit will explode from 2008's $458 billion to at least $1.84 trillion in 2009. Despite the mid-month tax collections, the federal government finished with an April deficit for the first time in 26 years. Washington incinerated all those hard-earned tax payments within a fortnight.

* Last year was the first in which Medicare disbursements outran revenues. Medicare is expected to go kaput in 2017, two years sooner than had been predicted. Come 2016, Social Security checks similarly will outpace the payroll taxes that fund them.

* Publicly held debt's share of Gross Domestic Product has soared from 33 percent in 2001 to 44 percent in 2008 and will hit 77 percent in 2013, Standard & Poor forecasts. Federal IOUs total $8 trillion. Beyond that, $45 trillion in unfunded liabilities constitute a long-term Red River on the national ledger. Financial analysts warn that America could lose its sterling AAA bond rating. Atop international humiliation, this would subject both government and consumers to higher interest rates as U.S. bonds grow riskier.

Washington has greeted all of this, not by cutting outlays, but by monetizing them. As commentator Glenn Beck puts it: "We've gone from tax-and-spend to tax-and-print."

Obama now faces a domestic "Nixon goes to China" moment that could transform him into one of America's finest presidents or convert him into Jimmy Carter II.

Just as Richard Nixon's anti-Communist record gave him the latitude to re-engage Mao's China, Obama's solid-Left credentials grant him the leeway to padlock dozens of government agencies, terminate hundreds of federal programs, and finally slay the entitlement monsters that will devour this republic. Obama can do this without becoming paralyzed by liberal catcalls about feeding Granny to crocodiles. A few concrete steps would help Obama succeed.

* Obama should implement zero-based budgeting. Every federal commission, agency, and department should justify its spending from the first dollar up, rather than simply ladle fresh cash onto last year's often bloated and duplicative budget.

Why, for instance, does Uncle Sam still run the $166 million Tennessee Valley Authority and the $958 million Rural Utilities Service, now that Appalachia has electricity? Similarly, must every program at the departments of Commerce, Housing, and Transportation remain immortal?

* Each federal transfer and entitlement payment should be affluence-tested. Poor people without options should keep vital assistance. The middle class should get middling help, at best. And the wealthy finally should be told to fend for themselves - from subsidized "farmers" who inhabit Manhattan's luxury co-ops, to millionaire seniors on subsidized pharmaceuticals, to CEOs swimming laps in bailout money.

* Finally, if Washington cannot cut the federal budget, its growth at least should not exceed inflation. According to the Heritage Foundation's Brian Riedl, had fiscal bedwetter George W. Bush's total expenditures merely matched inflation, $3.3 trillion would have gone unspent, averaging some $400 billion annually.

President Obama did not groom himself to become the elegant, eloquent man who steered America into a fiscal Grand Canyon. Instead, he should harness his intellect and charisma to retreat from the precipice. He has just enough time, if he U-turns right now.