Jem, I can't help but like your response because unlike several others here, you are at least thinking about these things, and I can't say I entirely disagree with you.
1.To begin, I don't look at policy and U.S. politics as left or right. I look at it as good or bad from my personal perspective. So I don't have an automatic spasm depending on whether Mitch, Harry, Nancy, or Barack proposes something. (There is only one Republican name in there because lately they are just blocking without proposing much of anything helpful.) I just try my best to look dispassionately and see whether what's being done makes more sense then not to me personally.
It is theoretically possible for the government to be self insured and save up such a large rainy day surplus by taxing in excess of current needs that no matter what the crisis there would be sufficient excess funds to fall back on so no borrowing would be needed. But that would depress the economy and what would be gained? How would the surplus be invested if the government did not borrow. Would there be any more efficiency, any less corruption? Looking selfishly at such a prospect, would we be wasting our current reserve currency advantage.
We do, and we have, monetized a portion of the debt. And this of course cheats those who hold it, which is all of us because we all contribute to Social Security, and many of us have investment or retirement portfolios partly invested in U.S. Treasuries. It also cheats the Germans, the Chinese, and anyone else who holds our debt. And we all buy things at the inflated price caused by monetizing. It's a balanced cheating! When we find that milk is now 4$ /gal when it used to be 2.50$ we recognize that's how we pay for killing Iraqis, at 7 million per each man women and child blown to bits. We've freed them from their evil dictator by killing them, and surely they have got to appreciate THAT!
But by no means do we monetize all of the debt. And please don't forget that the government can borrow at substantially less cost than any of us as individuals can. In fact, when the Fed finances government deficits the cost is just the operating cost of the Fed plus any inflation created. (All Fed income minus expenses flows back to the Treasury.)
2. I am not sure what you mean by untying borrowing from debt. You seem to be suggesting printing. That's what Zimbabwe did! I think we also did it during the revolutionary and civil wars. Even though people refer to QE as printing, even some economists do!, of course it isn't, not really. Every dollar created is created out of debt, not out of nowhere as in the case of "true printing." That's a BIG distinction. And might I point out that most of the TARP money used to rescue private business has already been paid back with interest!
3. Do you want our government to stop doing most of the things it does? That would allow it to shrink back to the form it was in before the income tax. I don't think you would like the result of that. If you don't want to shrink the government that much how do you want to pay for it and who do you want to administer the collection of operating costs?