Nin-Hai Tseng is a journalist that covers economics and finance for Fortune.com. She recently published an article that asks an interesting question, “Defense spending helped create today’s fiscal problems. So why isn’t it being considered seriously as a way to help fix them?…”

First, let’s clear up a couple of things. Raising the debt limit is congressional authorization for the United States of America to increase its line of credit. It’s the equivalent of you, as an individual, accepting a credit limit increase on a revolving line of credit. This is not necessarily a bad thing; businesses call it the degree of operating leverage. Leverage, or debt, can greatly improve your personal finances or business during periods of increasing or stable income. Your home, for example, in a rational market, will increase in value on an annualized basis, at a rate of 5.5% to 10% depending on location and other factors. That appreciation occurs not on your equity but on the appraised value of your home; therefore, your equity grows at a rate of, say, 8% on $250,000 and not your $20,000 down-payment. This is leverage at work. So, having debt is not a bad thing.

Defense spending is a recurring operating expense that accounts for a sizeable chunk of the United States fiscal budget. Defense spending, is no different from your annual expense for going back and forth to work, it’s simply part of your annual budget. Where the problem comes in is when you are spending on an annual basis more than you take home in the form of income. If you make $10,000 per year but spend $12,000 the $2,000 difference is absorbed by your line of credit. In government’s case deficit annual spending adds to the national debt.

The great smoke screen being thrown out is that reducing defense spending will reduce the national debt. Nothing could be further from the truth. Cutting defense spending will only reduce government’s annual expenditures; therefore, you won’t add to the existing national debt by borrowing to cover deficit spending.

Decimating the defense budget has a serious impact on national security that will have a significantly higher cost when discounted to present value. The corrective action needed to respond to future threats will exceed the planned savings; there are also endless intangible costs.

Much of the technology gains that we experience in today’s markets are as a direct result of industry responding to the needs of the military in support of the Iraq and Afghanistan actions, and virtually 96 cents of every dollar spent on defense stays in the United States.

Blindly tightening purse strings on the DoD will do far greater harm than good. The better approach, is process oriented. This involves everything in the ladder starting with flattening organizations – you can start with DHS – to procurement. Clearly defining needs, adherence to COTS, wherever possible, and a leaner bureaucracy are the keys to success.

Dealing with the national debt requires surplus revenues, but you can only do that in an expanding economy. It won’t come with increased taxation and it shure as hell won’t come from the frenetic pace of outsourcing – look at everything in your home to see where its been manufactured and/or assembled.

I reiterate the statement the German government made a year or more ago: “…the United States needs to start building things again…”

Taking a mechanic out of a Lockheed Martin plant, due to a cancelled project, and putting him or her in Target selling toasters will never deliver surpluses, and surpluses is what is needed to reduce the national debt. The peace dividend is no dividend at all.

Get real folks!