Raise taxes first and only. There is no need for spending or benefit cuts to meet a $4B deficit reduction target, according to Robert Reich in recent post.
Jobs not deficits ought to be the concern today anyway, according to virtually all economists. The jobs problem could easily be solved by sufficient deficit spending. As Paul Krugman said this week, we need a greater deficit next year, not a lesser one. A turn to austerity would make things worse, especially austerity in spending. Tax increases on the wealthy right now would not harm this top heavy economy...in fact, they would help, as in 1993, by changing investment incentives away from cashing out and useless speculation, as described by James Galbraith in Predator State. And absolutely no question, tax increases on the wealthy to fund a better society is greater total social optimality since the marginal utility of income deceases with greater wealth. Brad DeLong praised the study that proposed a maximum 71% rate to achieve best compliance--which ought to be the only concern on taxing economic rents and the very wealthy. Economists who use Pareto Optimality show libertarian bias.