Yes, let's test this theory on 300 million people.

Not choosing sides here (both sides are being irresponsible and goofy (or not), one perhaps more than the other).

To address your rebuttal: To get better statistics, more-local democracy, and reduce the likelihood of catastrophic failure, we could partition those 300 million into roughly 50 subunits and let each partition vote on what ought to happen.

Problem is, those partitions are far too leaky as people, goods, and money move across the partition so freely.

What horrific consequences do you imagine will manifest themselves from the government spending only what it takes in?

Do you mean as a strategy, to avoid issues like (and unlike) this in the future? Or as a tactic to avoid exceeding the debt ceiling this month? The answers are different, and the former more debatable than the latter.