Here's my two cents.
This new argument for "austerity" is bullshit. First, the US has had a severe structural deficit for the last 10 years. Here is the total debt outstanding from the Bureau of Public Debt for the years 2000-2009:
Notice this started a long time ago. Yet suddenly everyone is up in arms about the deficit. Please.
Secondly, the complete denial about the important beneficial effects of government spending (especially infrastructure spending and unemployment benefits) is maddening. Regrettably, everyone now talks in sound bites instead of facts. So here's a few inconvenient facts.
1.) The US economy grew at a solid rate in the 1960s. Why? A big reason was the US government building the highway system. Now goods and services could move between cities in a far easier manner. If you think that wasn't a big deal then you obviously don't get out much.
2.) Since 1970, government spending has accounted for about 20% of all US GDP growth.
There will be a time to deal with this problem. To deal with it, both parties will have to compromise on core issues: the Democrats will have to cut some spending and the Republicans will have to raise some taxes. That's the reality of the budget (for a closer look at some of the macro numbers, see here, here and here.) Simply put, both sides will have to give.
But the real question is this: should we be cutting spending now. The answer to that is an unqualified no. As has been reported in several publications, austerity does not work. Period.