First, now is just not the time to be worried about the deficit. While we can keep our eye on additional spending, the worst thing we could possibly do is cut government spending in a time of economic crisis such as we have now- it would achieve little except taking that much more money out of circulation.

Second, tax rates are at an historical low. Simply by undoing Bush's tax cuts- putting them back to the level they were under Clinton- we could make significant progress towards balancing the budget. While now would be a bad time to do so because of the recession, once we are fully recovered you could hardly argue that such an increase would cripple the economy since we did just fine in the 1990s under those rates.