I was the Iowa Senate Appropriations Chair in the early 2000s when the nation was experiencing another economic slowdown. The state budget is based on revenue projections, and it became apparent during the legislative session that revenues were not going to meet projections and cuts would need to be made.
The Governor at the time was Tom Vilsack (now US Secretary Of Agriculture). Although I viewed Governor Vilsack as left-of-center, he was also a pragmatist and he knew that he'd have to sign cuts into law.
The greatest challenges for lawmakers in reducing spending are:
1) The fear of being portrayed as heartless in a future election;
2) Government agencies who promise in a public way to make the cuts as painful as possible (then Senate President Mary Kramer called this the "firemen first" approach). The agencies don't want to admit that there are efficiencies to be achieved. They fear that politicians will accuse them of engaging in wasteful spending all along and refuse to increase to approve hearty increases in their future budgets.
3) "Teamism" by legislators: an attitude that any compromise is failure and victory must be total.
Nancy Pelosi is dealing with "teamism" in her own House currently.
Yet, it is possible to achieve compromise and balance the federal budget. Even a conservative economist like Larry Kudlow is voicing some optimism.
As a general rule, progressives don't want to slow entitlement spending and conservatives don't want to raise taxes. A compromise requires both sides to hold their noses and accept some of each.
I had the chance to hear a speech by Alice Rivlin from the Simpson-Bowles commission recently. Her recommendations are right here.
Rivlin clearly acknowledges that every idea contained in her presentation is going to pass. But the former Appropriations chair in me can't help but be pragmatic; you use the commission recommendations as a starting point, assign each portion of the budget to the appropriate subcommittee, and hammer out a "grand bargain."
It can be done.