There is no doubt that the US has the capacity to retain its status as the world’s most dynamic economy and to create high-value, well-paying jobs for generations to come. Entrepreneurs across the country are forming companies and determinedly racing towards the future. There is a well understood public policy agenda that can facilitate this surge in jobs and prosperity. But it would all come to naught in a fiscal meltdown.

The one decisive action government can take to stimulate economic growth and job creation is to put its own house in order. Today’s high unemployment, sluggish growth, paltry levels of capital investment and bickering over the debt ceiling are of a piece. If we fail to meet even the modest challenge of lifting the debt ceiling, currently $14,300bn, we will signal weakness and disarray to the world. Confidence in the US will be shaken and the financial markets – which expect a deal – will quake. Immediately after lifting the debt limit or ideally as part of it, we must take resolute action on the long-term deficits. Otherwise, our economic future will be at risk as businesses will be cautious about investing with such uncertainty and rather will fortify their balance sheets domestically and channel their resources to faster growing and better managed economies abroad.

Leaders outside the US see this clearly. The International Monetary Fund, turning its sights on the world’s largest economy, has chided us for lacking a “credible strategy” to deal with our deficits; for being the only advanced economy to increase its underlying budget deficit in 2011; and, particularly, for accumulating a level of debt that, if unchecked, could create a risk for the global economy. The IMF’s numbers suggest that, on our current fiscal trajectory, the US has no more than 15 more years of additional borrowing capacity. This is what Erskine Bowles, co-chair of Barack Obama’s deficit commission, describes as “the most predictable economic crisis in our history” because any market participant knows that our creditors will not fund us into an abyss. Already, the rating agencies have announced that our triple A credit rating is at risk – which was historically unthinkable. Well in advance of our theoretical expiration date, credit is likely to evaporate, interest rates to spike, the dollar to wobble and a crisis to unfold – suddenly and ferociously as markets are wont. Having depleted both our financial and reputational capital, we will have only painful remedies left at our disposal.