As of this writing, the Wisconsin budget/union standoff hasn’t been settled. While the state assembly debates, Democrats are offering amendment after amendment to slow things down. The state Senate still lacks a quorum, with 14 Democratic senators having fled the state (and who might lose their paychecks if they don’t come back).

Now the show is hitting the road. Ohio’s capital is also filling with demonstrators angry over an attempt to restrict public employee union collective bargaining powers. Indiana legislators are fleeing the state to scuttle a private sector right-to-work bill prohibiting companies from forcing people to join or pay dues to a union in order to work.

The specifics of the Wisconsin fight aren’t why it’s so important. Collective bargaining rights for public unions may or may not be the right battlefield on which to settle a state’s fiscal future. But Republican Gov. Scott Walker is showing a long-term sophistication, beyond the specifics of this fiscal year’s bottom line, in trying to limit the growth of government spending by preventing collective bargaining by public sector unions. Such "bargaining" is often a charade where both sides support each other financially at a third party’s expense (the taxpayer, that is), as is often the case between public sector employees and politicians.

It’s likely not essential to the survival of Wisconsin that Walker win this fight. As his enemies point out, cuts could happen in other places, taxes could be raised. Still, a loss would be an unsettling sign for how America’s political class (including the vocal voters and media professionals that move them) is prepared to face a depressing fact we’ve been explaining to you here at Reason for a while now: We are out of money, on both the federal and state level.

Wisconsin is an early sign of the stresses that will either shift our system of government action and spending to something unrecognizable to those who lived in the post-WW II boom years or tear that system apart. And everyone seems ready to fight about this necessary shift. The White House has its hands in. The AFL-CIO is reviving the old anarcho-syndicalist dream of the general strike to show that all labor is feeling the pain of Wisconsin's public unions. People all over the globe are delivering pizzas in solidarity. Both sides of the larger debate about government spending are busing in their forces. Progressives are calling for national anti-austerity protests this weekend.

We may not be France yet, but there are disturbing signs that Americans may be ready to take to the streets angrily in defense of their government deals and giveaways. (Some polls showing a lack of support for the very idea of public employee unions are encouraging, but it doesn’t take a majority to cause civil unrest.) Wisconsin may be the first sign that, no matter how much support one can gin up for shrinking government, actual attempts to restrain a free-spending government will be met with strong political counterforce—even when that interest is overpaid teachers and big-money unions.

The threat of federal government shutdown, happening simultaneously with the Wisconsin crisis, demonstrates that the fiscal crisis is multileveled, and no one wants to allow it to be dealt with seriously. When it comes to actual spending cuts, Obama’s most recent budget proposals are a joke (although Reason’s own Nick Gillespie, along with Reason economics columnist Veronique de Rugy, have come up with a credible plan for a glide path to a balanced budget without tax hikes). In Obama's world, even programs that are purely destructive assaults on American liberty, such as the Federal Communications Commission and the drug war, can’t be cut, and indeed must grow.

Right now the Democrats in Congress are willing to bring the government to a fake shutdown over the GOP’s plan to cut $61 billion dollars in spending. Even many Republicans thought adding an additional $22 billion in cuts was going too far. A senior Democratic aid revealed the mentality that’s bankrupting the nation to Politico: Since Republicans “supported these funding levels in the past, it is a reasonable position to have to continue that level of funding while we negotiate the longer-term [bill].” It’s reasonable to not cut a level of spending spinning off trillions in debt. If you believe that, then you have a bankrupt Republic to sell us.

Just as these dual fiscal crises were on the horizon, one of the few politicians who both gets the gravity of the situation and is willing to radically alter the way the system operates, Rep. Ron Paul (R-Texas), won a straw poll of dedicated young activists at the Conservative Political Action Conference for the second year in a row. And a web-based “money bomb” for Paul’s PAC raised $700,000 in a day this week.

This is encouraging, but the fact that nearly everyone who wasn’t one of the young activists supporting him at the conference wanted to mock, deride, or call him a Jew-hating nut, was less heartening. Paul understands what most politicians and pundits can’t let themselves understand, even as fiscal realities should be waking them up: The current system cannot and must not go on. It must be rethought at its roots, from its monetary system to its foreign policy, if this country is to survive and thrive.

The government is spending more and doing more than it should, conceptually and constitutionally, and it will have to stop doing many of those things. Yet there are many people prepared to take to the streets to defend these perks. It’s an ugly situation, but it has to be faced. Ron Paul is about the only national political figure ready to do so. Being uniquely prepared to actually deal with our systemic crisis is, strangely, exactly why the establishment, right or left, can’t accept or understand him.

Wisconsin’s Gov. Walker, on the front lines of the current crisis, is undoubtedly a hypocrite for supporting some policies that will likely cost the state money even as he fights over unions. But if any attempt to cut spending anywhere fails with the public and with other politicians because the cutter in question isn’t also pushing to cut other spending elsewhere, we're screwed.

The only really serious position moving forward about government size and government spending is how to cut it, and how soon. While the fight to cut specifics here and there may seem ugly and unfair, all cuts need to be supported, wherever they seem politically possible.

That doesn’t absolve policy analysts, politicians, and pundits from the responsibility of trying to figure out what spending cuts will be the most sensible, politically palatable, and least disruptive of our social order. This is not something that can be figured out a priori, and it’s the most important debate we can have right now. But even if figuring out the perfect way to cut government proves slow or unsolvable, the cuts still have to happen.

Senior Editor Brian Doherty is author of This is Burning Man (BenBella), Radicals for Capitalism (PublicAffairs) and Gun Control on Trial (Cato Institute).