The first FI$CY Awards for leadership in connection with fiscal matters were given out Wednesday evening. FI$CYs are awarded to elected officials who demonstrate the policy leadership and political courage to address the large structural deficits that threaten governments at various levels.

Senate Budget Chairman Kent Conrad (D-N.D.), House Budget Chairman Paul Ryan (R-Wis.) and Indiana Gov. Mitch Daniels (R) all won FI$CYs. All three were chosen because they led by example in connection with fiscal matters in some important way. For example, Conrad championed the need for the National Commission on Fiscal Responsibility and Reform, which he served on; Ryan provided his “Roadmap” on how to address the nation’s large and growing structural deficits; and Daniels demonstrated a way to reduce the size of state government and put its finances in order and still get re-elected by a wide margin.

The plain and simple truth is that America is on a dangerous fiscal path. The federal and most state governments have grown too big, promised too much and waited too long to put their finances in order. We must take steps to begin to address structural deficits at all levels of government. At the same time, we must do so in a way that does not undercut our economic recovery and efforts to create jobs.

Governors will be on the front lines in connection with the structural deficit challenge. They have to deal with constitutional or statutory budget controls, can’t print money and must take concrete fiscal actions to maintain high credit ratings. Their challenges will increase when federal stimulus funds run out later this calendar year. Governors will need to focus primarily on cutting spending along with restructuring government operations and off-balance sheet obligations. Any additional taxes must be reasoned, reasonable and competitive. They will also need to make targeted investments in critical infrastructure and other areas that can help to create a better future and partner with business to renew innovation, including in the manufacturing sector.

As typically is the case, the federal government is a lag indicator in addressing structural challenges. It typically waits until a crisis is at our doorstep before it addresses large, known and growing problems. This unacceptable condition has reached epidemic levels during the past eight years.

Now that the 112th Congress has been sworn in, it’s time to get serious about putting our nation’s finances in order. After all, we now have about $14 trillion in debt that is growing rapidly, and the current debt ceiling limit will be reached by the end of March.

If things weren’t bad enough, one of the last acts of the 111th Congress was to enact a “compromise” that will add almost $900 billion to federal deficits and debt levels over the next two years alone. This was the typical Washington deal that the American people rejected in the recent midterm elections. Namely, you give me my tax cuts and more, and we’ll give you your spending increases and more! We’ll charge it all on the nation’s credit card, borrow it mostly from foreign lenders and worry about our structural deficits later!

The 112th Congress needs to pass a fiscal 2011 budget that takes a tough line on the base level of federal discretionary spending. After all, discretionary spending exploded from fiscal 2008 to fiscal 2010 despite low inflation levels. Washington needs to reimpose tough but realistic statutory budget controls along the lines of those recommended by the Peterson-Pew Commission on Budget Reform, possibly as part of the legislation that will raise the debt ceiling limit.

After taking the above steps, Congress should move to reform Social Security to make it solvent, sustainable, secure and more savings-oriented. It’s true that Social Security is a much smaller problem than Medicare and that, absent from hitting the debt-ceiling limit, it does not face a near-term crisis as was the case in 1983. However, Social Security is now adding to our annual federal deficits and is underfunded by almost $8 trillion in current dollar terms. More importantly, Social Security represents the biggest opportunity to reform a social insurance program in a way that can exceed the expectations of every generation of Americans. It is an opportunity that we should not lose.

Congress should also move to create a Federal Transformation and Accountability Task Force to review and recommend ways to reprioritize and re-engineer the base of federal spending programs, tax policies, organizational concepts and operational practices. Based on my almost 10 years as comptroller general of the United States and head of the Government Accountability Office, it is clear that most the federal government is based on the 1950s. It’s time to make government more future-focused and results-oriented. This will require a special process with capable, credible and nonconflicted individuals with the courage to tell the truth and set the table for tough choices by elected officials.

Yes, we need to engage in comprehensive tax reform and a new round of health care reform. However, these issues will not be ripe before 2013. We should, therefore, take steps both within and outside Washington’s Beltway to prepare the way for tough choices and transformational reforms in these areas.

It’s show-me time in Washington. We need leadership, not laggardship, and results rather than rhetoric in connection with fiscal responsibility. The American people and our foreign lenders are watching.

David M. Walker, founder and CEO of the Comeback America Initiative, is a former comptroller general.