Here's the way I see it.
Unemployment has sucked. People lost their jobs and have a hard time getting new ones. If they find a job, it's likely for less than they were being paid before.
Because unemployment is high, there is a general downward trend on salaries. Nobody demands a raise because for every job out there, there's a thousand people waiting to take it. Everyone is replaceable.
Jobs in the private sector have been hit hard. Jobs in the public sector have been relatively stable.
Now we have an alleged "debt ceiling crisis" which resulted in a deal which cuts federal program dramatically. What does this mean?
It means a whole lot of people are going to be laid off. It means more bankruptcies. More foreclosed homes. More retirement savings gutted.
What's the scope of it? $21b in cuts in 2012 - that translates to about a quarter million jobs lost. A quarter million people drawing unemployment and not paying taxes (including state and local). A quarter million people not buying new stuff to support our economy, and a quarter million people added to the group of people competing for the few jobs that are available.
2013? An additional $42b in cuts. So, another half-million people competing for jobs while not contributing to the economy.
So the end result of this debt ceiling debacle is increase unemployment, have a general downward push on salaries, increased pressure on fewer government resources, etc.
Cutting government spending when the private sector is in the crapper is a recipe for disaster. That's when you increase government spending, or at least keep it stable, until the private sector recovers enough to absorb the workforce that is inevitably shed in what's euphemistically called "right-sizing."
In the days since this deal has gone through congress, wall street has taken a dive. And for good reason. Government throwing hundreds of thousands of people out of work right now fucks everyone.
Except maybe for the people who think that their highest priority is making Obama a one-term president.