Front and center to the debate regarding whether or not government spending should be cut is the notion that doing so at this time would be dangerous for the economy. Once again, failure to look at both sides of the equation leads to an erroneous conclusion.
If cutting government spending meant that overall spending was reduced that might be a problem, but money doesn't just disappear. If the government doesn't take as much money--either by taxes or borrowing--more money/purchasing power stays in people's pockets! People who will spend it (and maybe even save a little)!
The difference is that people making their own choices where to spend their money do a much better job of it than the government. Think of the legendary $500 hammers bought by the Defense Department. Or the Big Dig in Boston that was supposed to cost $2.6 billion and ended up costing almost $15 billion!
Of course, right now pundits like Paul Krugman are saying that the problem is people aren't spending enough so the government has to pick up the slack. Can you see why that argument makes no sense? First, any money the government spends has to be taken from consumers--either via taxes or inflation (anyone notice prices rising the last couple of years?)--eliminating an equal amount of purchasing power. Second, government employees actually do the spending, and history has shown that they're really not that good at their jobs. Once again, just think of the hammers.
If, on the other hand, we assume that individuals are only 5% more efficient at spending their money than the government, then even if individuals save 5% of any money the government doesn't spend--and spend the rest--the effect on the economy would be the same. [I used 5% because that is estimated to be the current savings rate in the United States.] If they are more than 5% more efficient (i.e., they can buy hammers for less than $475) then the economy is net-net better off, disregarding the increase in savings!! Since I'm pretty sure that individuals are better at buying hammers--or just about anything else--than the government, what's so scary?
Further, since individuals making rational purchase decisions can buy a lot more goods and services--goods and services that are produced and provided by people employed to do so--for the same amount of money as a government that spends too much on everything it buys, you can see why taking spending out off government's hands would actually increase employment! And why increased government spending has had the opposite effect!
So, instead of Americans spending (or saving) their money as they would like, the government takes it and spends it on the wages of government employees and overpriced goods and services. Is it any surprise this strategy hasn't worked for President Obama the first five times he's tried it? Or that government workers and unions say that spending cuts would be harmful? To them maybe, but not to anyone else.