The NY Times today has a great article on what austerity actually looks like, and the awards to be reaped from this particular virtue. This is another case of how catastrophic virtue can be. Let's hope our government has the cojones to ignore the deficit hawks for a little longer until recovery is in full swing. We're like a business under financial pressure that needs to invest to get out of the hole we're in, cuts can only prolong the inevitable. Our only chance is to throw the dice and spend our way out of trouble.
Hey, worst case is that we gamble and fail and the government goes bankrupt. Then we can't borrow and balanced budgets will be forced on us by markets. Heck, this is probably the only way we'll get the balanced budgets and shrunken government small government types want anyhow so there's something for everyone in this particular gamble.
[For more on financial austerity Krugman has been writing on it quite a bit (be sure to check his blog as well). I agree with him on this topic, even if I think he's a bit crazy about China.]