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It is very dumb to cut spending in uncertain economic times. That's why Bush is so stupid to let it come to this: on the one had we cannot afford to cut spending because it will ruin the economy, on the other hand we cannot afford to keep running deficits like this. The budget should have been balanced then we would have had more reserves and it would have been a lot easier to get through this crisis.
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Sorry, this isn't Bush's doing. At least not significantly more than all the other crooks we've been sending to DC for the last several decades who've run unnecessary deficits in order to buy votes. And while our government Should be run more like a business, there are some inherent differences in how they operate - So long as we aren't on some sort of commodity standard (gold standard, silver standard, etc), government should have a goal of minimizing debt, but not to the point of having or accumulating significant reserves.
As much as I'm anti-entitlement, slashing welfare and such in a down economy is not the way to go. But I think we're over-simplifying (or over-reacting to) the question. Actually, we have 2 scenarios to look at:
1) This is a temporary downturn. Perhaps worse than others recently, but something that will be resolved in 3 yrs or less without horrific impacts. If this is the case then we should make few if any changes based on our current short-term problems, but instead get our house in order for the longer term - phasing out or revamping welfare, phasing out other ineffective or counter-productive programs, improving infrastructure, finding a way to focus on results-based education that isn't so test-based, balancing the budget, phasing out foreign aid, etc.
2) This really is a meltdown, or at least a Major shake-up. I really don't know. Significant cuts to welfare may result in riots in the streets. Significant cuts to military spending mean you'll have a large increase in one of the most crime-prone demographics, and with individuals with combat training and possibly access to weapons. Significant cuts in other areas like education or infrastructure have potential to cause trickle-down effects like increased unemployment and/or longer term problems. Increased borrowing or printing won't be a viable option if our credit is crapped out. The only obvious cut is foreign aid. I'd seriously look at Retro's recommendation of getting us back on the gold standard or some such.