Method I:

1. Create a new image and fill the 'layer 1' with the background image or color that will show out in the cutout.
2. Create a new layer, 'layer 2'. Fill the 'layer 2' with the foreground color.
3. On the 'layer 2', create the type font you want to use.
4. While the text still selected, Floating Selection, press 'control-J' to defloat the selection; then press the 'delete key'.
5. Copy 'layer 2'. 'layer 2 copy' will be up.
6. Do a Gaussian blur on the lower image copy, 'layer 2'
7. 'Filters > Others > Offset' to offset 'layer 2'.
8. Depend on the choice of foreground and background colors, the effects are dramatic.