While American politicians continue to indulge the unsustainable excesses of a federal government already littered with unnecessary functions, other nations have wisely begun to read the handwriting on the wall.

What does it say?

“Cut, cut, cut!”

Take Ireland, which (like America) found itself buried under a mountain of deficit spending in 2009 as the global economic recession crippled income and revenue growth. Making matters worse, a huge speculative housing boom swept across the nation just prior to the bottom falling out of the global economy, which has made its recession even more severe. In fact Ireland’s unemployment rate is currently 12.8% – the third highest rate in all of Europe.

Things got so bad that at one point last year, the Irish government was borrowing €400 million ($575 million) a week just to keep its head above water, with its deficit rapidly approaching 20% of its gross domestic product. At that level, “the very financial survival of Ireland would have been at risk,” according to the country’s finance minister.

Sound familiar?

It’s almost exactly what’s happening in America, albeit on a smaller scale.

Yet while American politicians are pushing new socialist spending sprees and bigger government power grabs in 2010, Ireland’s government is doing exactly what the country’s businesses and families have been forced to do as a result of the downturn – find ways to make ends meet.

In addition to slashing salaries for more than 400,000 government workers (including its top administration officials), Irish leaders have also shown a willingness to trim back numerous social welfare programs. All told, the Irish cuts will save as much as $6 billion this year – and as much as $22 billion over the next four years.

Ireland is not making these decisions in a vacuum. In fact, the country has already learned the hard way that unchecked government growth does not translate into “recovery.” During the 1980’s, a massive expansion of government debt (and a failure on the part of political leaders to make cuts when they were necessary) spawned anemic economic growth, soaring interest rates and an unemployment rate that soared to nearly 20%.

Irish economists refer to this period as “the lost decade.”

“In the 1980s, we saw what can happen when you ignore the problem of overspending,” Alan Ahearne, a special adviser in Ireland’s Finance Ministry, told The Washington Post in December. “We’re not going to make that mistake again.”

American politicians, on the other hand, are tripping over themselves in a headlong rush to make precisely that same mistake – on a much larger scale.

Not content with a dramatic expansion of the size and scope of the federal government, President Barack Obama and his Congressional allies are planning to pour billions of additional taxpayer dollars down the sinkhole of state government bureaucracies in 2010 – this in spite of clear and compelling evidence that such spending has failed miserably to stimulate economic “recovery.”

Meanwhile, a seemingly un-scalable mountain of government debt grows even higher – while the taxpayers’ ability to repay it is further hamstrung.

In fact, according to a recent report from the Heritage Foundation, Obama’s budget proposals would impose $13 trillion in deficit spending over the coming decade, bringing annual budget deficits in America to more than $2 trillion and the U.S. public debt to more than $20 trillion.

This is beyond reckless – it is courting economic calamity on an unprecedented scale. Yet unlike leaders in Ireland, politicians in America appear incapable of grasping the fundamental reality that nations cannot borrow their way out of debt – or borrow their way into prosperity.

The longer America’s current leaders refuse to acknowledge this self-evident truth, the deeper the hole gets for the American taxpayers.

As states like California, Illinois and New Jersey struggle to make up for steep multi-billion dollar budget deficits while they totter on the brink of insolvency, there is one option for reducing those shortfalls that is making real headway across the Atlantic Ocean.

It all revolves around cutting the public sector. It’s time to try it here.

Ireland is faced with a €20 billion deficit and borrowing €400 million a week just to keep afloat. Colm McCarthy, the chairman of An Bord Snip Nua—a cost-cutting bureau in Ireland—knows the stakes. And he sees no way around cutting public sector pay by some €5.3 billion. Government officials agree. So far, the left-of-center government refuses to rule anything out in the Bord Snip report.

Writes The Sunday Times on July 19th, “Ireland is like a household that has been living beyond its means and now finds itself deep in hock to the bank. Unless we show a willingness to reduce our spending, [international] lending may dry up, forcing us into the arms of the European Central Bank which will have to mount an IMF-style rescue to prevent a euro currency crisis.”

Ireland is not alone. Poland just announced a cut of 12,000 government employees. No silly furloughs or dodgy accounting tricks. A straight reduction in the number of public sector workers. And the government warns that if revenues do not increase, further reductions will be forthcoming. Other nations in Europe are actively considering similar or even deeper cuts.

The basic problems Ireland faces are quite similar to those in California, New York and other states in the U.S.: Public sector workers make far more than their private sector counterpart.

An October 2007 survey from Ireland’s Central Statistics Office showed that the average hourly earnings in the public sector were far greater than in the private sector. Average earnings per hour in the public sector were €26.67 compared with €18.07 per hour in the private sector. Public sector wages are 48% higher.

And how do California, Illinois and others match up?

According to the Bureau of Labor Statistics’ recently published study for 2007, in California, which is still trying to climb out of its oppressive $26 billion deficit, average annual income for state employees was $56,777 versus $49,935 for the private sector, a 14 percent gap. In Illinois, a similar story emerges: $53,925 for state workers, and $48,006 for the private sector, an 11 percent split. New Jersey: $57,845 average state salary, $53,590 for private sector workers, at an 8 percent difference. And these differences don’t take into account the excessive fringe benefits enjoyed by public sector workers. The bottom-line is that we pay the public sector more, in some cases far more, than corresponding workers in private business.

Nationally, the story is even worse. Federal workers made on average $64,871 in 2007, with private sector workers making a meager $44,362, so public sector wages in the federal system are 46% higher.

If California, and other spendthrift state governments ever hope to emerge in the black, they must now implement what some may consider draconian fiscal measures. Cutting public sector pay makes the most sense. In California, for example, if workers received a 12.1 percent pay cut, leveling the playing field with the private sector, the state would save $3.1 billion.

Cutting the total workforce down by 10 percent is a real move that saves $5.4 billion annually and many billions more over time. Similar approaches would save taxpayers annually $1.3 billion in Illinois and New Jersey.

The fact is, the Irish are on to something. By facing the reality of their situation head-on and acting in a responsible manner, they are far more likely to weather the financial storm than are the compulsive spenders in the US. It is high time we embrace the pluck of the Irish here.

The author is Chairman of Americans for Limited Government and Liberty Features Syndicated writer