Yes, there is a budget crisis in Washington on what to do in order to reduce the deficit.  The big argument has been, "You can't raise taxes, because it would have a negative impact on the economy".  And that can be argued.  What was proposed instead of raising taxes is to cut spending a LOT.  Some would like to cut the spending and size of government to that of a bathtub, so that it can then be drowned.  But, in light of a sluggish economy, wouldn't also cutting spending by the government also result in an adverse impact on the economy?  If you lay off thousands of workers, and the government stops spending, couldn't that result in businesses possibly going under also, and sectors of the economy around economy spending, shutting down?

Isn't this always the argument when a government finally has to come to grips with its deficits? "Oh, you can't stop spending and you can't fire government workers, you'll kill the economy!" There are lots of examples of governments doing just that in spite of all the usual doomsaying (think: Canada in the '90s), and the economy only took off from there. Can you name even one single instance of an economy tanking because the government stopped racking up absurd deficits?

Short answer... No.

Government spending isn't real economic activity.

It's like the owner of a used car salesmen bragging about his sales because he is buying 5-6 cars from himself a week on bank loans.

It's not REALLY doing anything except building debt.

The economy might LOOK worse, but in reality it won't be changed... and will be able to improve quicker.

Which is largely the big difference between tax raises and spending cuts.

One involves mostly the fake economy, while the other tends to directly effect real economic activity.

If you looked over the past decade, job growth was mostly through the creation of government jobs.  Now that the governments have cut back in the United States, the end result is that the job growth has really been immensely pathetic:

http://www.businessweek.com/the_thread/economicsunbound/archives/2009/06/a_lost_decade_f.html

I would question though about, "not doing anything".  If you totally got rid of all government, and the military, and courts to enforce contracts, and allow every sort of whim to happen, what would be the state of the economy of a nation?  In short, would anyone here argue that good governance has no impact on the state of the economy at all? 

If this money you give back then leaves American shores, and ends up in China and elsewhere, and is not spent in America via government programs, how exactly would this lead to things being better?

I'd argue that cutting back on spending and regulations would help reverse the trend of jobs and money leaving America. But since you always seem to enjoy taking arguments to their most absurd extreme, I'll indulge you: clearly, we should confiscate everyone's passport and seal all borders to keep all people and their delicious, delicious monies in our glorious American economy. Only traitors would want to leave, anyway, so this shouldn't pose a problem.

Alternatively, we could lrn 2 compete, n00b. But that would just be silly.

Tax cuts help small businesses much more then big ones to create more jobs and grow their businesses by investing the money in things they can use.

I mean what's up with the free cellphones? The government shouldn't be providing everyone with cellphones! There are so many cuts like the cell phones that the government can do to get us off this deficit and help the economy.

Nope because any activity or spending done by goverment is less efficient than if those money were spent by private sector.

the exact same fearmongering is being done when people say "oh, you can't raise taxes, you'll kill the economy!".  fact is taxes were higher under clinton before bush's tax cuts for the wealthy and the economy thrived.

...the economy is a complicated beast and if anyone tells you any one aspect of the economy with have a dire impact they are lying or over-exaggerating.  this entire debt-limit crisis is a ton of BS from both sides of the aisle...

In the short term, budgetary cuts that are used to reduce the deficit will result in higher unemployment and lower consumption spending because less money will be in the system. In the long run, the reduced inflation rate, lower interest rates, and lower taxes needed to support the size of government or pay for the government’s debt will more than compensate for the reduced government spending.

Conceptually, it isn't that much different from looking at an individual who spends far more than they earn; if they maintain their current path the amount they spend on covering the interest payments on past consumption will be large enough that they will have to continue to spend far more than they earn to maintain a standard of living far lower than if they didn't have any debt in the first place.