Should US Government Spending Crash Like the Stock Market?

Thanks to Marry Meeker for putting out this slide on her latest Awesome Web 2.0 presentation about the "State of the Web".  This slide struck me the most as a concern for investing in the future of technology.  Until the US Government cuts spending by 50% and gets out of the private sector way we are going to be in stagnant economy for a long time.  This slide is telling me a few things need to happen before our economy has even a chance of turning around.  In Wallstreet terms, I think we need the great capitulation of Government spending in order to right the private sector economy.   I will not get too excited about private sector investing until the following questions are answered . . .
  1. Should US Government spending crash like the stock market? 
  2. Will industries that rely on Government spending be crushed?
  3. Has the Federal Reserve lost all credibility with the markets? 
  4. The VC industry shrunk by 80% in the last decade so why not the Government? 
  5. Rising interest rates might actually be good for the "real economy"?
  6. Are currency wars are going to get even more intense? 
  7. Is the US the new emerging market carrying highest investment risk?  
  8. Where & when will the next tech industry boom (ie jobs) come from?
  9. Is the Obama administration trying to kill capitalism vs government spending?
  10. When will kicking the Government debt can down the road STOP?