With discretionary spending cuts projected, and tax provisions and emergency unemployment benefits set to expire in 2012-2013, this would help lower the budget deficit; however, if these programs were extended by law, the deficit would go down less than expected. PragCap, like Nomura's Richard Koo, has been saying that fiscal tightening in the U.S. would hurt economic growth because of the balance sheet recession taking place, which is similar to the Japanese experience (lost decade of deflation and deleveraging) in the 1990s. Of course the other view is that fiscal policy is unsustainable at this point (the Keynesian endpoint). Keep an eye on government bond yields in both Japan and the U.S to see when the trend changes. I'll be posting more about both of these topics. It's all about timing it seems.
Charts from CBO's January 2012 Budget and Economic Outlook