Regarding the austerity vs. growth debate, Nathan Lewis made a good point a couple months back.
After Russia defaulted on its debt in 1998, it bucked conventional economic wisdom by implementing a 13 percent flat tax along with a 1/3 corporation tax rate cut. In response, the average Russian income increased 30 percent per annum in nominal terms from 2001-2007, the best economic expansion in Russia in over a hundred years. Government revenues soared.
It's also worth noting that the only time the U.S. budget has been in surplus in many decades was after the 25 percent capital gains tax rate cut of 1997.