Let's say you cut the budget by X. Part of this X (X') doesn't get invested in money making enterprises any more, and less money goes back as taxes (X" less money).
Now, unless the economy is super efficient, I'd say X > X' > X". And given the realities of public government, usually X >> X".
How is then any better to borrow X just to get back X" (and still owe X), then to simply lose X"?
However, consistently running an unbalanced budget will most definitely lead to a "downward spiral".
If the answer is "entitlement spending", where do you think the money spent by the government on Social Security/Medicaid/Medicare/welfare/jobs programs/etc goes? Into consumer's hands and right back into the economy.