Well, the first problem I see is the thinking in terms of "sides" - that encourages bullshit grandstanding and that whole rah rah we can't ever say we were wrong about anything because then THE OTHER SIDE wins. It makes us all stupider as a result - we can't ask questions without the other side thinking we're trying to trap them or saying that we're ignorant, we can't admit fault because HOLY SHITBALLS we were wrong about one thing and therefore we must be wrong about EVERYTHING EVER and all that nonsense. Fuck that noise, it's stupid, and we can do better - and I expect people to be better than that.
The good news is that if we're smart we can do small changes that will gently push us onto the right track. The bad news is that we have people who are too fucking stupid to understand any of this, and many of those people are in positions of power. Anyway.
We have 2 parts to this: Raising Revenue and Cutting Spending.
Raising revenue is, by and large, pretty easy: Raise taxes a couple of points, more on people who can afford it, less on those who can't afford it, putting more money in the hands of the people who will most likely spend the money they aren't paying in taxes. I'm not talking about soaking the rich or anything of the sort - a few points, that's it. Also raise revenue for social security by removing the income cap, but still keeping a cap on maximum benefit payout. I know, it's not "fair" to the people who make millions of dollars a year but who will only receive benefits as if they made a hundred k a year or so, but somehow I think they'll be just fine. And no, as long as we don't get stupid ("OMG LOL LETS JUST TAKE EVERYTHING THEY HAVE!!!!!") there won't be some massive "Gone Galt" extravaganza - by and large, living in the US is pretty fucking amazing compared to many other places in the world, and even with higher taxes, living in the US and being rich is HUGELY FUCKING AMAZING compared to many other places in the world. You'll still be able to live the lifestyle you want, and even better you can do so with a slightly lowered risk of being executed by a mob of armed peasants with nothing left to lose. It's a win-win!
But for cuts:
I'm hugely in favor of cutting the fuck out of spending on social programs and defense but we have to do it INTELLIGENTLY. Simply saying "hey, welfare, you have 25% less money to spend, figure it out" is fucking retarded because it winds up being done in the most brutal way - reducing services or cutting some people in need off of services. Simply saying "Hey, DOD, you have 25% less to spend, figure it out" is fucking retarded because there are so many vested interests involved that we would wind up with, like, 3 hot-shit pilots flying the most amazingly expensive fighter jets ever, a couple of billion dollar cigarette boats cruising around the gulf, and I don't know what the fuck else. In any case, I used cuts in my initial comment as a shorthand - and I regret that I did. What I mean to say is that we need to be more efficient in how we spend our money - we need to figure out what mission we want to accomplish with whatever we're spending money on and then really REALLY look at whether or not our dollars are actually contributing to that mission.
One problem we have with many cuts is this: Things that are obviously fucking stupid and can be cut with impunity tend to be actually pretty small portions of any budget. But, yeah - cut them anyway, because it all counts. The things that are REALLY expensive, though, aren't so obvious and easy to cut, and come with trade offs.
Another problem is that so many programs are inextricably linked together, where changes in one have an effect on another. Ex: law enforcement and mental health services. Turns out, if you cut mental health service budgets, you wind up with an increase in crime - many people who are seeking health for substance abuse treatment or depression or other, more serious, issues wind up getting turned away and then committing crimes. It turns out that, when these people commit crimes, it's vastly more expensive (in both financial and human suffering) terms to deal with it through the criminal justice system in both the short term and in the long term (incarceration isn't cheap, and once you're in the CJ system you're pretty much fucked). Some estimates say that a dollar spent on mental health services in areas that need them is worth up to 10 dollars down the road for law enforcement and incarceration. We can't really cut the law enforcement budget because then the people who control the budget will be fired for being SOFT ON CRIME, but nobody except "liberal pussies" gives a fuck about mental illness anyway, so let's just keep cutting that and then making more prisons, and make the cycle even worse.
Another problem is that of vested interests who make money off of the inefficiencies in the government spending process. Nobody (usually) is taking THAT much at any one time directly, but they sure as hell want to encourage budgets to be BIG AND BLOATED so that the stuff they take is essentially a rounding error. The whole system as it is basically winds up being a feedback loop where things keep expanding not as a way to grab control or anything, but just because it's designed inherently to be that way. How to fix that? Beats the fuck out of me. Maybe freeze spending increases and then tell the people running the system that they need to provide the exact same level and scope of services going forward, and let them figure out what inefficiencies need fixing or they get kicked out.
Anyway, we don't need to necessarily cut programs directly - we need to make damn sure that what they are doing is worth doing at all, that they are actually doing it, and that they are doing it efficiently. I think, once we were using a more efficient paradigm and once we can figure out ways to reduce corruption in the system, we would have less need for spending on various programs that are hugely expensive and we can then - hopefully - actually reduce spending.