Every American family can relate -- things seem to be going well financially when disaster strikes. Maybe one of the children needs braces. Maybe the car has broken down. Maybe the house needs a new roof. In any event, the entire family must pull together and figure out: How will we pay for this?

Hurricanes Katrina and Rita were natural -- and financial -- disasters. Our national family must respond effectively. And it's lawmakers in Washington who will have to come together and determine where we'll find the tens of billions of dollars pledged for the rebuilding effort.

Recently, leaders in the House of Representatives released a promising action plan to pay for hurricane relief and rebuilding costs, reduce the growth of spending and limit government. House Speaker J. Dennis Hastert adamantly declared, "We can and will recover, but it will require some serious belt-tightening throughout the federal government." How true. Indeed, it's quite an understatement.

Even before the hurricanes hit, spending was growing out of control, reaching $22,000 per household -- the highest level since World War II. It will require major offsets (dropping one proposal to pay for another) and a high degree of accountability to prevent hurricane recovery and rebuilding from becoming the next excuse to expand the size and scope of government. The House leadership's four-point plan is a major step in the right direction -- towards fiscal sanity.

The plan focuses on four points:

• Increasing mandatory savings from $35 billion to $50 billion in this year's budget reconciliation.
• Holding the line on discretionary spending through across-the-board cuts. 
• Working with the president to rescind prior spending authorizations. 
• Eliminating duplicative, wasteful and unnecessary programs.

This four-point plan is a tall order, and House leaders are to be commended for their leadership. The first proposal might be the most difficult. Lawmakers are trying to figure out how they'll deliver on this promise and cut other federal spending by tens of billions of dollars to fund disaster relief, paving the way for future long-term savings in entitlement programs.

Entitlement spending, of course, is the biggest threat to our economy and must be reformed.

Sen. John McCain, R-Ariz., and the House Republican Study Committee (RSC) have targeted the new Medicare prescription-drug benefit and proposed to cancel, or at least delay, its implementation. The drug benefit alone is projected to cost $37.4 billion next year. Seniors already have Medicare drug cards. If lawmakers would simply continue that program and delay the full-blown drug benefit, they'd buy time to consider whether the country can really afford the program.

Meanwhile, President Bush's budget proposal identified an additional $20 billion in savings to be had simply by eliminating federal programs that are no longer needed or no longer work. That's merely the tip of the iceberg. Agency managers are well placed to find additional waste to accommodate across-the-board cuts.

And there are many more opportunities to redirect federal money to higher purposes. The RSC has released its "Operation Offset" effort, a menu of some $500 billion in specific cuts to pay for hurricane-related spending. The RSC's long list of offset targets include sensible recommendations that Congress should consider, such as redirecting the $25 billion (over five years) earmarked for more than 6,300 pork barrel projects in the recent highway bill, eliminating the Advanced Technology Program, and reducing farm subsidies. Parallel work to offset spending is occurring in the Senate, with the work of Sen. Tom Coburn, R-Okla., earning him the nickname "Coburn the Barbarian" from The Wall Street Journal.

If Congress -- and specifically the House leadership -- is serious about holding the line on spending, lawmakers must take two key steps:

1. Redirect funding from all earmarks in this year's highway bill and reject any earmarks in future appropriations bills. If Congress falls short on this, the president must veto any bill that contains earmarks.
2. Postpone the unaffordable Medicare prescription drug benefit for one year (at a minimum) to consider how to pay for it or whether it should be substantially reworked.

Rep. Mike Pence, R-Ind., chairman of the RSC, challenged Congress and the president to have "courage to make the tough choices." He's right: Writing budgets is about setting priorities and making those tough choices.

We'll know soon if our elected officials are willing to make the difficult choices this financial disaster requires.

Alison Acosta Fraser is director of the Roe Institute for Economic Policy Studies at The Heritage Foundation (heritage.org).