Donald Sensing wrote a very good post about tax cuts and federal spending. However, he missed one key aspect of spending that in my experience many people miss, even remarkably intelligent ones (for example, a brilliant professor of mine didn't seem to notice it either).
Backing up one moment, the problem is relatively simple. You can't spend what you don't have, and so if you take in money slower than you spend it, you build up a deficit. If this doesn't change, you will eventually build up so much debt that no one will lend to you any more and everything will fall apart. Tax cuts without reducing spending is doing exactly this: decreasing income relative to expenses and thus creating a deficit which spirals out of control.
Actually, there are two things that are frequently missed, but the other one is less important. To get it out of the way quickly: fear of debt aside, debt is a useful tool for producing wealth. The times when you want to borrow are precisely the times when you don't have: bad economies and wars. The idea is that you shouldn't have too many of those (if you have too many of either, you're already screwed for other reasons), so if you borrow during lean times the good times will come sooner and better and the excess in good times will more than pay for the borrowing in bad times. Hence now is exactly the time to borrow money to stimulate the economy and pay for the war that we're in. But this is of comparatively little consequence. (Btw, the reason that so few democrats seem to get this idea is that they don't frequently think about spending money on these sorts of things; they like social programs which are permanent in nature, so it doesn't occur to them that borrowing money can be a legitimate activity in response to natural cycles, for there are no significant natural cycles in medicare the way that there are in economies or wars.)
The important thing which is so often forgotten is that money is not static. If you hold spending constant over years, you are actually cutting it. Money becomes progressively worth less, and the economy continually grows. If budgets are merely held, or even grow more slowly than inflation and economic growth, they will in effect have been cut. Yet cutting budgets makes a lot of anger on capital hill, and costs a lot of political capital. On the other hand, holding spending constant (or increasing less than inflation) is, while less palatable, much politically cheaper. No one can accuse you of much, since "He has effectively cut the budget over the last five years in time-adjusted dollars". Rallying cries in which you have to define economic terms that most people don't think about just aren't so effective. Moreover, cutting is a harsh word, whereas "failed to sufficiently increase" is a phrase, and one that doesn't conjure up harsh images. The idea that people have to do with what they got last year and don't get extra is just not the same as the idea of things being taken away from them (even when this taking is in the form of reducing gifts).
The real test of whether the president is bringing us into ruin is not whether he cuts spending a dollar for every dollar that he cuts taxes, but whether he reduces the growth of spending enough that incurred debts get paid in a few years. It may be more noble to reign in spending openly, but it is very politically dangerous. And the sad fact of life is that it does not matter how you don't do something, but how you do it. If the president gets voted out for foolishly spending political capital in the name of bold moves, the spending and tax cuts that he would have done but his opponent does not are of no consequence. So if he goes the route of lesser resistance but winds up in the same place, is it not better to get there stealthily than to not get their boldly (since it would not be immoral either way)?
President Bush has shown himself to be either the luckiest man on earth or a very shrewd politician who has vision and the courage to stick to it. I think that there are worse mistakes to make than to believe that he might do the right thing but in a non-obvious way for political reasons. He's done it several times before.
(Note: this does not mean that we as a free people should ever fail to be vigilant over our elected leaders; merely that assuming that if there is the least appearance of imperfection to assume that they're going completely wrong.)
Update: Daniel at Voice of Reason responds to Donald Sensing's post with the assertion that debt is very hard to get out of. The problem is that the truth of this assertion depends entirely on the reasons that you get into debt.
One can borrow money either against future income or against future increase. The first case is what people often do with credit cards to cover expenses that they can't afford in the present merely by deferring them to the future, even though there's no reason to believe that they will be able to afford what they bought in the future, either. Borrowing against future increase, on the other hand, is often done when businesses start up, or when businesses expand. When a restaurant has become very successful and the owner believes that he can start a chain, he may borrow money to start a second restaurant up. Unlike the first case, where his income will remain fixed, this borrowing will enable him to drastically increase his income and it is against that additional income that he will have that he borrows money.
The mistake that Daniel is making is that he's thinking like a democrat -- we want our social programs now, and we can't afford to pay for them, so let's put the problem off for later. This is always a bad idea, though occasionally its practitioners get saved by sheer luck. What I am describing is borrowing against future increase: in economic downturns, we borrow money to stimulate the economy, and pay it back during the economic good times which (as a result) come. This is like a person who borrows money to get him through the month until his job starts and he'll have regular income and can easily pay back his debts.
What I am describing, btw, was done by one of the most famous democrats of them all: FDR. Combating both the great depression and a world war, the government went into debt. This tided us over until we got out of the depression and the war, though unfortunately too many people were comfortable with the national debt and it took until the boom times of the 1990s to pay it off. Times change, and we're in a very different situation, but the economics of borrowing in lean times against future increase in good times that the borrowed money will create has been a staple of success for quite a long time.
Be that as it may, though, this is not, nor ever was, my main point. My main point was that there is a subtle form of cutting spending, and just because Bush may not be trumpeting the unsubtle way does not mean that the subtle way will go unused. But like so many things, we will only be able to find this out in the years to come. However, I think that the government is much more likely to cut spending if taxes are reduced now and the deficit grows too large in the future than if taxes remain high and the deficit isn't scary. After all, who has ever voluntarily stopped spending someone else's money except when it wasn't available?
Update: I forgot that in my remarks above I have failed to discuss borrowing for the purpose of waging war, which fits into neither category I mentioned. Borrowing for war, like borrowing for any other expensive, necessary, and unforeseen or unforeseeable event is a sort of ex post facto insurance. Insurance, essentially, is the practice of spreading a large cost over time before it is incurred. Borrowing for such an event is merely spreading the cost out over time after it has been incurred. Insurance is nicer on accountants and easier to budget, but there are some events which one cannot know before they happen but which must be born in their entirety. While one can take catastrophic event insurance out on a building, those sorts of insurance necessarily cap off the payment at some amount. If Godzilla comes and eats your building, you must make due with the maximum payment.
Unforunately, if Godzilla comes to eat you (though it would be out of character, since he normally defended the earth from other monsters), it is not a good solution to limit your defense at some maximum amount and then let him eat you. There is no amount of debt which is worse than being eaten, and so the only practical solution is to try to steer Godzilla towards other people, and if he must come, fight him with all that you have, and worry about paying for it later, since debt is preferable to death. Please note that selling all of your food to pay for your fighting is also not preferable to taking on debt, since starvation is not superior to being eaten.
This does not change even if instead of Godzilla the creatures which want to kill you are some desert loons who shave their genitals in the service of their misbegotten god. And it is still not superior to wreck your economy to avoid debt, since you will not be able to win without a strong economy.